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Garamendi: Election Blackmail Scandal Brewing In CA

by: davej

Mon May 15, 2006 at 16:50:01 PM PDT

(Bumped from the diaries. Minor edits and title change. - promoted by SFBrianCL)

There is a scandal brewing over insurance regulation and blackmail in the coming California election.  California Insurance Commissioner John Garamendi, who is now a candidate for Lt. Governor has called in the California Attorney General and the FBI to investigate a blackmail and extortion charge.  The insurance companies have threatened Garamendi over a proposed regulation that would save California consumers millions of dollars on their auto insurance.  They said if he backs off the regulation they will hold off from spending millions on attack ads smearing him.  The only word for this is extortion.

So much more below the fold.

davej :: Garamendi: Election Blackmail Scandal Brewing In CA
To learn more, start with Garamendi says insurers trying to coerce him on auto regulations; asks FBI, state to investigate
State Insurance Commissioner John Garamendi accused automobile insurers of "coercion, extortion and blackmail" for launching a $2.4 million campaign attacking his proposed regulations that would cut the cost of some drivers' coverage in crowded urban areas. He asked the FBI, the U.S. Attorney and state Attorney General Bill Lockyer to investigate his allegations.

Garamendi, a Democratic candidate for lieutenant governor in the June 6 primary, said he was told that if he backed off pushing the regulation, he would be spared an attack by insurers as Election Day neared. [emphasis added]

Here is another story, and this one has a video clip: Auto Insurers Accused Of Blackmailing Commissioner
The state insurance commissioner says he's facing threats of blackmail to keep auto insurance rates higher.

John Garamendi came out blasting Monday, accusing California's largest auto insurers of using political extortion to get him to delay implementing laws that would save California motorists money.

More details are available in a recent op-ed in the LA Times, Auto-insurance ripoff, provides more details,
INSURANCE Commissioner John Garamendi's allegation Monday that the insurance industry attempted to blackmail him could change California politics. Finally, an official of statewide stature has blown the whistle on the corporate pollution of democracy.

After two terms as a pro-consumer commissioner, Garamendi is in a tight race for the Democratic nomination for lieutenant governor. By purportedly threatening to finance a multimillion-dollar attack-ad campaign against him unless he derailed an important consumer-protection regulation, the state's largest insurance companies gambled that Garamendi would acquiesce.

Go read the whole thing.  

The background of the blackmail story is further detailed in an e-mail I received:

By 1998 California voters were fed up with abuses by the insurance industry.  These included such things as high prices and arbitrary cancellations.  One particularly onerous abuse was "territorial rating," the practice of setting your auto insurance rates based on where you live, rather than your driving record.  In that year California voted to end such abuses by passing Proposition 103, which read in part:

1861.02 (a) Rates and premiums for an automobile insurance policy, as described in subdivision (a) of Section 660, shall be determined by application of the following factors in decreasing order of importance:
(1) The insured's driving safety record.
(2) The number of miles he or she drives annually.
(3) The number of years of driving experience the insured has had.
(4) Such other factors as the commissioner may adopt by regulation that have a substantial relationship to the risk of loss. The regulations shall set forth the respective weight to be given each factor in determining automobile rates and premiums. Notwithstanding any other provision of law, the use of any criterion without such approval shall constitute unfair discrimination.

Unfortunately, a California Court of Appeals in 2000 ruling made these provisions unenforceable.  However, Proposition 103 also made Insurance Commissioner an elective office, an office now held by John Garamendi.  Mr. Garamendi has promulgated regulations that banned territorial ratings, very much consistent with the wishes of California voters and much to the chagrin of the insurance industry.

A group of insurance companies -- Allstate, Farmers, Safeco, 21st Century, and State Farm -- is attempting to blackmail John Garamendi, who is now a candidate for Lt. Governor of California.  These companies have raised $2.4 million to run a TV ad campaign against Mr. Garamendi asking viewers to "tell Insurance Commissioner John Garamendi to drop this unfair plan now."  An industry representative contacted him through an intermediary and offered to drop the ad campaign if Mr. Garamendi would withdraw those regulations.

The insurance companies claim that they were merely informing Mr. Garamendi of their campaign out of "courtesy."  Right.

John Garamendi refuses to be intimidated.  He will enforce those regulations.  He has filed formal requests for investigations of this group by the FBI, the U.S. Attorney's Office, and the state Attorney General.  He will continue to work for the rights of California consumers as Insurance Commissioner and as Lt. Governor.

And there is information at Consumer Watchdog,
Insurers to Spend Millions Against Garamendi for Lowering Premiums
Auto insurance companies are planning a $2.4 million campaign to attack California Insurance Commissioner Garamendi because he has proposed rules to lower premiums for California good drivers.
They have And a press release: Group Calls on Commissioner Candidates To Stand Behind Garamendi Insurance Regulations To Protect Integrity of Office.  Go there to read the rest.

If you're still with me, take a look at the PR firm in Sacramento spinning the attack.....Bicker, Castillo & Fairbanks

One last thing -- all of this is especially interesting because a previous Insurance Commissioner was forced to resign after an investigation revealed that he had waived billions of dollars in penalties against insurers in exchange for insurance company donations.  HE didn't call in the law, he took the money and cost the citizens billions.

So go visit John Garamendi's website at http://www.garamendi.org/.  And, of course, if you want to help him out against the big insurance companies, click here and send him a few bucks!

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