The Last Honest Man

I didn't mean for this to be Anti-Corporation Day, but this warrants attention. John Garamendi is a candidate for Lieutenant Governor in California. He's also the current Insurance Commissioner, an elected position which has the task of regulating state insurance rates over a variety of industries. Recently he called for implementing a change in how car insurance rates are set. Specifically, he would reduce the role of location in setting rates, instead going by driver history, age and miles driven. In Los Angeles this makes perfect sense. My rates went way down just for moving to Santa Monica from Hollywood (in other words, technically outside the city of Los Angeles), even though I was essentially using the same roads. This change was part of a ballot initiative (Proposition 103), which was passed by the voters EIGHTEEN YEARS AGO. It wasn't even his idea: he was simply trying to fulfill his mandate as a public official, a mandate which has sadly been ignored by previous officeholders.

But insurers didn't like this because they like to jack up the rates in urban areas. They've threatened a $2.4 million-dollar advertising campaign right in the middle of Garamendi's primary battle to force him to drop the proposal. And they apparently did more than that:

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)." [...]

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… I did that. He gave a very clear response," Sragow added.

Reasonable people can disagree about whether or not location should factor in determining risk and setting insurance rates. But the insurance companies are literally trying to blackmail this guy. The sad news is that this isn't unprecedented: quid-pro-quo relationships happen all the time between politicians and Big Business. The good news is that John Garamendi is taking his office seriously and refusing to cow to corporate pressure.

Allstate, Farmer's, State Farm, Safeco and 21st Century are spearheading this effort. I'm happy to say I don't have insurance with any of them. You shouldn't either. Corporations should not be able to bully government officials and I hope the FBI follows through with their investigation.