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California Wildfires - Who Really Gets Burnt? Follow The Money - Part 2

In the wake of the Southern California wildfires, lawmakers proposed six bills that, among other provisions, would have forced insurers to provide consumers with more information about policy choices, made it harder for companies to raise rates or cancel coverage and reduced the documentation that homeowners must provide to collect on a claim.

Those provisions, like others strongly opposed by the insurance industry, never made it to the Assembly floor.

The less ambitious bills that passed into law, with insurers’ consent, extended living expenses for those awaiting rebuilt homes, gave homeowners more options for mediation as an alternative to lawsuits and prevented insurers from canceling coverage while a home’s reconstruction was underway.

What happened to the homeowners bill of rights?

“What happened to the homeowners bill of rights is certainly an example of the power of this industry,” said state Insurance Commissioner John Garamendi, referring to a package of legislation that his office helped write in response to the wildfires.

The committee’s members and insurers alike said donations and gifts had no influence on legislative decisions. Insurers praised the panel for understanding that the proposed rules would have cost them so much that they would have raised premiums on all California homeowners.

“A lot of the bills were written because a natural disaster had happened, and people were writing bills that weren’t fully thought out,” said Juan Vargas (D-San Diego), chairman of the Assembly panel. Insurers, he said in an interview, “have to be held accountable, but at the same time you have to look at the whole picture: These guys are going to make money no matter what, so you have to keep the prices down.”

Rex Frazier, general counsel for the Personal Insurance Federation of California, commended the panel for finding compromises that produced “better bills.” “A number of the bills that were introduced were well-intended,” Frazier said, “but were not good policy.”  

The industry does not rely solely on the force of its arguments to sway lawmakers. Vargas has received more than $325,377 in campaign contributions from the industry, most of it since he took over the panel in 2003. Insurance donations were 17% of the money he raised for his two Assembly races. He is now making his third run for Congress, trying to unseat U.S. Rep. Bob Filner (D-Chula Vista) in the June Democratic primary.

In addition to the campaign donations, insurers with interests before the committee bought Vargas 13 meals, including one for $181 at Morton’s steakhouse in 2004. They paid for his flight to Boston to attend an industry conference and for rounds of golf.

Such events provided the industry with opportunities to present its perspective on legislation. Vargas said his legislative decisions derived not from the gifts and donations, all of which were legal, but from his moderate, pro-business views.

Wildfire survivors who came to Sacramento to press for changes said the committee’s position rarely deviated from that of the industry.

“When it came time to vote on one bill, lobbyists literally ran up to the dais and slipped them notes,” said Rebecca Huston, a screenwriter whose home in Cedar Glen was destroyed in the fires and one of a dozen wildfire victims who came at Garamendi’s behest to testify about their experiences.

“I watched insurance lobbyists mouth things to the Insurance Committee,” Reimus said. “You hear about people being in the pocket of an industry, and I really got to see it firsthand.”

Erik Strahm, a computer project manager at UC San Diego who also testified and met with lawmakers, said: “Always what we ended up hearing was, ‘Well, the insurance lobby is really strongly against this.’ At dinner one night, we actually ran into the insurance lobby giving a party to a lot of the lawmakers we had spoken to.”

See which California lawmakers, that represent you, make the biggest bucks from the insurance industry in Part 4.

Source: Times reporting
Los Angeles Times

See the article on Los Angeles Times website

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