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California Wildfires - Who Really Gets Burnt? Follow The Money - Part 4

Wednesday, January 21st, 2009

In 2005, the wildfire survivors pressed for passage of an ambitious proposal by Jackie Speier (D-Hillsborough), chairwoman of the state Senate’s insurance committee, who held her own hearings on the industry’s actions after the wildfires and believed that the previous year’s legislation was insufficient.
Speier proposed that insurers pay out 85% of the limit for personal property without demanding a list of everything lost. Only homeowners wanting to collect the policy limit would have to submit a complete inventory. The concept was endorsed by a Republican senator from San Diego County, Bill Morrow of Oceanside, and it passed the Senate.

When the measure moved to the Assembly, it could not get through the lower house’s Insurance Committee. Insurers complained that they would have no way to stop homeowners from exaggerating the value of lost contents and said most people’s possessions were not worth 85% of their coverage.

The Assn. of California Insurance Cos. wrote to Vargas that the provision “provides another easy vehicle for fraudulent behavior on the part of policyholders.”

Vargas said he agreed. Although homeowners shouldn’t have to document the loss of “clothes, underwear, the stuff in your kitchen,” he said, they should provide proof of “super-expensive stereos, mink coats, flat-screen TVs.” He said insurers should not have to pay out more than 30% of a policy limit without an inventory of things lost. Speier  ” who is widely disliked by insurers even though they have donated at least $264,247 to her since 2000  ” saw that Vargas’ panel would not pass the measure, and she removed the provision so the rest of her bill would pass.

The final version required insurers to provide two years of living expenses, rather than one, for people who lose their homes, but Speier called the bill “a ghost of its previous self.”

“It’s common knowledge,” she said in an interview, “that the Assembly Insurance Committee has become the graveyard for any consumer protection measures relating to insurance.”

Industry-supported laws that passed gave homeowners more options for mediation and required insurers to give a specific reason when they choose not to renew a policy. Lawmakers also placed restrictions on public adjusters’ soliciting victims of natural disasters, by passing a bill that Vargas introduced.

Insurers also must now renew a policy at least once after a house is destroyed by a natural disaster, and cannot leave disaster victims without insurance while their homes are under reconstruction.
Garamendi and Speier, who are competing this year for the Democratic nomination for lieutenant governor, say these laws are major improvements. Consumer advocates and many wildfire survivors say they are insufficient responses to the problems uncovered during the fires.

“We can’t ever get the tough medicine,” said Bach, whose group has been pressing for changes since the 1991 Oakland Hills fire. “Every time, we’ve had the same challenge: The insurance industry has an extremely powerful lobby in Sacramento. All the reforms we’ve been able to get through are watered down.”

John Raymond Garamendi (born January 24, 1945) is a U.S. politician and a member of the Democratic Party. He became the 46th Lieutenant Governor of California on January 8, 2007. He had previously been the California State Insurance Commissioner from 2003 - 2007, having previously been the first occupant of that office from 1991 - 1995. He was the U.S. Deputy Secretary of the Interior from 1995 - 1998

(Source: Wikipedia)

 Political insurance

Members of the Assembly’s Insurance Committee accepted more than $1 million in donations from the industry in 2003 and 2004.

These are the industry donations to the 17 legislators who sat on the panel during that time:

Juan Vargas (D-San Diego), committee chairman … $215,136
Ronald S. Calderon (D-Montebello) …$112,900
Dario Frommer (D-Glendale) … $ 95,116
Dave Cox (R-Fair Oaks) … $93,199
Keith Richman (R-Northridge) … $71,275
John Benoit (R-Palm Desert), vice chairman … $69,550
John Dutra (D-Fremont) … $57,600
Manny Diaz (D-San Jose) … $51,546
Rebecca Cohn (D-Saratoga) … $41,800
Jerome Horton (D-Inglewood) … $37,805
Lou Correa (D-Anaheim) … $34,578
Dennis Mountjoy (R-Monrovia) … $32,500
Russ Bogh (R-Cherry Valley) … $31,500
George Nakano (D-Torrance) … $31,200
Paul Koretz (D-West Hollywood) … $25,350
Mark Wyland (R-Escondido) … $23,500
Mark Ridley-Thomas (D-Los Angeles) … $19,600
Committee total $1,044,155

Source: Times reporting
Los Angeles Times

See the article on Los Angeles Times website

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

Thursday, January 15th, 2009

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

Feeling burnt? Help us get the message out.

Donate now through the International Documentary Association, our fiscal sponsor.

Big Kudos to California Clean Money Campaign. Visit them at CCMC

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