A Lap Dog on Duty

There’s never been much question about how good a buddy state Insurance Commissioner Chuck Quackenbush has been to the nation’s giant insurers. He has plainly never been the independent watchdog that California policyholders need. But now it’s clear just how cozy a lap dog the second-term commissioner is.

Consider this: In routine audits of more than 2,000 claims paid to homeowners after the 1994 Northridge earthquake, department examiners found that more than 40% were flawed. The damage estimates and settlement offers were low-balled, and companies failed to inform policyholders of their benefits.

Faced with that evidence, The Times’ Virginia Ellis reported Sunday, Quackenbush’s staff lawyers recommended he levy $3.3 billion in fines against three big insurers and require them to contribute $233 million more to a fund to reimburse shortchanged homeowners.

And what was Quackenbush’s response? A single fine of $100,000 and no payments to the reimbursement fund. Rather, Quackenbush had the firms--State Farm, Allstate and 20th Century--”contribute” a total of $12 million to an earthquake research and education foundation. Some of the foundation money paid for a TV commercial featuring Quackenbush himself, during his campaign reelection period. Coincidence? We think not.

Quackenbush, refusing to defend his own actions, sent a deputy out to tell Ellis that “these are very significant fines.” They were not in fact fines, and the $100,000 was certainly not significant compared with the staff lawyers’ recommendations.

Jack Scott (D-Altadena), chairman of the Assembly Insurance Committee, calls it “a slap on the wrist.” It’s also an affront to every insurance policyholder in California. If the companies’ cribbing was so extensive in one event--granted, a monstrous one--how much do the insured lose every day on mishandled claims for auto accidents, house fires and the like?

There’s no way of knowing because we do not have a vigorous independent insurance regulator. That was something promised by the passage of Proposition 103 in 1988, creating an elected insurance commissioner after years of industry-friendly gubernatorial appointees. The first elected commissioner, John Garamendi, did a fair job during his one four-year term. But Quackenbush, now 15 months into his second term, has never seemed to shy from an insurance company campaign contribution or pose a serious challenge to their rates and practices.

Quackenbush has been invited to defend himself before Scott’s committee April 26. The commissioner has a lot of explaining to do. The evidence also suggests at least the need for a preliminary investigation by the state attorney general to determine whether any laws were violated.