Agents Association Accuses Garamendi of Using Office to Win Votes

August 14, 2006

The Western Insurance Agents Association, Rancho Cordova, Calif., has issued a statement responding to California Insurance Commissioner Garamendi’s auto rate regulations.

It reads:

Americans would be hard pressed to find anyone across the United States that has exploited his public position as an elected regulator for personal political gain more than California Insurance Commissioner John Garamendi. It is unfortunate that instead of working as a fair regulator, encouraging competition, making sure insurance companies are financially stable and committed to doing business in California, Mr. Garamendi continues to attack the very industry he was elected to regulate.

“Since January 1st, 2006, Mr. Garamendi has introduced over 40 regulations, many of which are a direct attack on the insurance industry. Mr. Garamendi knows that the more he fights with the insurance industry, the more press coverage he obtains, and the more he is able to pander to voters,” said Michael D’Arelli, vice president of legislative and regulatory affairs for the Western Insurance Agents Association.

This past Thursday, August 10th, a Superior Court judge in Sacramento refused to grant a preliminary injunction against Department of Insurance auto insurance regulations that will force insurers to develop rates that are arbitrary and unfair to their customers.

“These regulations will reduce the significance of where a car is garaged as a rating factor in developing auto insurance rates. As a result, insurers will be forced to charge unfair rates, compelling a majority of drivers – particularly in rural areas – to subsidize premiums paid by other Californians who choose to live in more urban areas. It is a subsidy, plain and simple. This takes pandering to a new level. California consumers should be outraged that Garamendi is not so tacitly using his elected office to reach out to high propensity Democratic voters in urban areas to subsidize their auto insurance premiums in exchange for their support as he is running for his next elective office, lieutenant governor,” said D’Arelli.

“The California Court of Appeal ruled in 2000, in a case known as Spanish Speaking vs. Low, that the auto rating regulations used today are legal and comply with the requirements set forth in Proposition 103. Many believe that these new regulations violate Proposition 103 because they require insurers to charge rates that do not reflect the actual risk of loss. Plain old common sense tells us that there is a higher risk of loss in an urban area like San Francisco than a rural area like Placerville, and the premium charged should reflect that risk of loss,” said D’Arelli.

“This pandering effort is not only pathetic, but it is also transparent and an insult to California consumers. The press release put out by the Department of Insurance Thursday stated, ‘This is a great victory for California voters and good drivers wherever they live.’ This comment really says it all, with the word ‘voters,’ which is exactly to whom Mr. Garamendi is pandering. Other elected officials who seek to do public good, rather than exploit their public position for personal gain, may have more appropriately used the word ‘consumers.’ Regardless, many voters and consumers look forward to November, when, at best, Mr. Garamendi sets up his press shop in the office of the lieutenant governor, with a staff of three or four, no bully pulpit, and plenty of red tape to cut lengthwise,” said D’Arelli.

Mr. Garamendi should limit the self-congratulatory praise coming from his press machine. Thursday’s minor victory on the injunction is not a victory on the merits of the case, which may in fact be the war that is won by the insurers, as opposed the battle won Thursday on the injunction.

Until December 31st, 2002, the Western Insurance Agents Association was an affiliate of PIA in California, Nevada, Arizona and New Mexico and operated as the PIA Group. WIAA no longer has any affiliation with the PIA. The association has been in business since 1947 and represents more than 900 insurance agencies in California, Nevada, Arizona and New Mexico.

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