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.
He said he was informed that “if I abandoned my political responsibilities and delayed implementing the will of the people, I would not be hit by a $2 million negative advertising campaign,” Garamendi said Monday. “I firmly believe that this amounts to a serious attempt to blackmail me in my role (as insurance commissioner).”
Insurers and their representatives dismissed Garamendi’s allegations, saying the campaign represents an effort to educate consumers about auto insurance rates. Californians to Stop Unfair Rate Increases, the coalition financed by insurers and including an array of local government officials, urges people on its Web site to write in to “tell Insurance Commissioner John Garamendi to STOP his department’s unfair regulation that would raise our rates.”
Insurers contend Garamendi’s proposed regulations downplay the importance of a driver’s address, and thus prevent insurers from accurately determining risk–the key element in pricing coverage. They say that requiring insurers to cut costs in some counties, such as Los Angeles, Orange and San Diego, would force carriers to raise premiums elsewhere. Insurers estimate that six out of 10 policyholders would experience price spikes of up to 30 percent, under Garamendi’s proposed regulation.
The commissioner said the regulations are needed to meet the requirements of Proposition 103, the voter-approved ballot initiative that requires automobile insurance to be based mainly on a driver’s safety record, miles driven and level of experience.
Garamendi said veteran political consultant Darry Sragow telephoned him two weeks ago to alert him that automobile insurers planned to move forward with their campaign if Garamendi proceeded with the regulations. Sragow, who learned of the insurers’ plans from an insurance executive, said he had contacted Garamendi at the executive’s request.
“I thought, ‘Well, if there’s going to be a messenger, it might as well be me,'” Sragow said, adding that he had been told that “they (insurers) planned to move ahead unless John was willing to let this issue go and leave the issue to be dealt with by his successor. That’s what they were looking for.”
“I played a very specific role. I was asked to make a call