Insurance Journal senior staff writer Dave Thomas, along with publisher Mark Wells, recently caught up with former California Insurance Commissioner Chuck Quackenbush. Quackenbush, who has been working in Hawaii as a consultant, speaks about a range of topics from the Northridge earthquake settlements to his future plans. Below are excerpts from the interview. The full interview will be available on InsuranceJournal.com beginning Feb. 28.
Mark Wells: You resigned back in June of 2000, I believe, what have you been doing since then? I know you’re living in Hawaii.
Chuck Quackenbush: Actually, it was July of 2000… but we moved here to get away from all the political turmoil in Sacramento. It wasn’t a particularly pleasant time after I resigned. I don’t think you can describe in words the searing experience this was to have everything that you’ve worked for torn down so quickly and your reputation shattered the way it was. We’ve been over here for the last couple of years getting reestablished in another state. I’ve been doing some consulting work with military intelligence out in Pearl Harbor and I’m also putting together a political consulting company in the state. We own a home here in Hawaii.
Wells: Most people in the insurance industry want to know about the Northridge earthquake settlement. Chuck, can you tell us a little bit about what happened, how the settlement originated, and how you felt about the settlement?
Quackenbush: Well, it’s interesting. The Northridge earthquake kind of defined, book-ended my administration. It started right before I became Insurance Commissioner, and we did the enforcement action at the very end of my administration. The goal was, at the time, was to bring an end to a lot of the controversies that had occurred during the claims handling portion of the Northridge earthquake. The quake had been a devastating hit on the industry, but I don’t think the industry was equipped to handle the huge amount of claims that came at it very quickly. Inevitably, in a claims handling situation like that, mistakes are made, injustices sometimes are perpetrated on people accidentally. There was a lot of things stuffed in the cracks. Years after the earthquake, there was still complaints coming out about claims handling from that particular earthquake. My administration had always had a bias for accuracy where we wanted to get the situation fixed quickly. We found a pattern of problems in our initial market conduct exams. We thought we could settle the issue quickly for all the consumers as best we could. Now, normally if we had done a long-term enforcement action against several companies, it would have dragged on for many years. Going through the administrative process, which is iffy at best, it’s very problematic for the Department to win in a long hearing process. I made a determination that we wanted to settle this thing quickly. I thought that the best thing to do would be to put together a settlement that maximizes benefits to consumers. And by that, I mean anyone who felt they had been mistreated by insurance companies or not gotten a favorable settlement on their particular problem, we have their claims reopened. And that was really the gist of the settlement, was to go back to all the claimants, say, ‘Did you have a problem with your claim? Do you want to have it reopened and examined again?’ Another look. This was revolutionary, and we really thought we had accomplished something great, because the industry essentially walked away from the protection of the Statute of Limitations, which has been a major bone of contention between me and some of the companies. They wanted to have a date certain for when claims could be filed and could not be opened again, and I was mandating that they go back and open claims again. So, I thought that was quite significant, and it was taken care of with just about everyone who might have had a problem. It’s also important to remember, some people were engaged in litigation with the insurance carriers, and it wouldn’t have affected any of their particular cases either. That was the thrust of what the settlements were all about.
Dave Thomas: Looking back several years later, is there anything you would do differently, given the opportunity right now, in the way it was handled?
Quackenbush: That’s quite an interesting question. Sure, there’d be several things that I’d do differently. One of the things we had tried to do was put together some foundations that were going to be used to do some other work. It was a very ambitious idea that we had about moving insurance products into underserved communities where the insurance market had not really penetrated. We were trying to take care of the uninsured motorists, make sure that they had insurance, and make sure that all segments of society were educated to the value of insurance and indeed the necessity for insurance in a risk-based economy. I think we had set those up as independent foundations, and the political mistake was to make them independent foundations because it’s very clear that when money is changing hands and there’s a politician near it, even if he doesn’t know what’s going on, he’s going to get the blame for it. So that obviously would have been something I would have done differently.
Thomas: Do you think the image was out there that this money was going specifically to Chuck Quackenbush, you know, the politician down the road, and not where it needed to be going?
Quackenbush: It certainly didn’t come to me. The idea of the foundations was to do a variety of things—outreach to minority communities and underserved communities, but also earthquake education issues. We had tried to do some of those things. Obviously, for various reasons, some of the parties involved with one of those foundations went in another direction and got involved with some illegal activity. That tarred my administration and hurt a lot of people. I do regret that happening. In retrospect, I should never have trusted certain people to the extent that I did.
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