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Quackenbush Under Fire for Fund-Raising Tactics

By Stefani Mingo

California Insurance Commissioner Chuck Quackenbush collected political contributions from insurance companies and transferred $100,000 to his wife's campaign accounts to repay her for personal loans she made to her failed state Senate campaign, the Los Angeles Times reported on March 26.

Political finance records show that Fremont Compensation Insurance Co. deposited $93,350 into the Commissioner's political bank account just nine days after he proposed an 18.4 percent increase in workers' comp rates, the newspaper reported.

After reviewing Quackenbush's 1999 political finance reports, California Assembly Insurance Committee Chairman Jack Scott decided it was time to investigate the department's regulatory practices.

Through a spokesman, Quackenbush said he kept his political business separate from his regulatory operations and one does not influence the other. In the last six months of 1999, the Commissioner collected $245,000 in political contributions, according to records filed at the Secretary of State's office.

Contributions came from insurance interests throughout 1999, including Metropolitan Life ($20,000), Progressive Insurance ($10,000), and 21st Century Insurance Company ($5,000), the L.A. Times reported. In addition, Allstate Insurance Co, a division of Allstate Corp., donated $50,000 to the Commissioner. The company was the subject of a highly critical California Department of Insurance (CDI) review for the handling of Northridge earthquake claims.

Six months prior to the donation, Quackenbush decided not to fine Allstate for unfair claims practices. Instead, he ordered Allstate to contribute $2 million to the California Research and Assistance Fund, a nonprofit educational foundation. Deputy Commissioner Dan Edwards said that Quackenbush considered the contributions to the foundation to be the same as a fine.

According to the L.A. Times, State Farm Insurance Companies was also directed to pay $2 million to the foundation, while Farmer's Insurance Group was required to make a $1-million donation; Fireman's Fund Insurance Co., $550,000; and Farmer's Home Group, $100,000. Meanwhile, 21st Century Insurance Co. was fined $100,000 and directed to pay $6 million as well.

The generous contributions seem to have opened a big can of worms. On March 27, lawmakers demanded that the Commissioner appear at an April 26 hearing and produce confidential reports his office prepared on the handling of Northridge claims by Allstate, Farmer's Home, Farmer's Insurance, Fireman's Fund, State Farm and 21st Century.

In 1990, the office of California Insurance Commissioner was converted from an appointed to an elected position. Quackenbush first ran for office in 1994 and again in 1998. Even though California state law bars him from seeking a third term, Edwards said it is appropriate for Quackenbush to continue to raise political money because he may seek another office. Current California law puts no limit on political contributions, and a candidate can legally transfer funds from one campaign to another.