Most of the Money Against Clean Money Initiative Prop 89 Comes from Insurance Companies—Wonder Why?

"We pay enormous premiums for inadequate insurance protections, we have seven million people without health coverage, soaring chronic asthma rates as Californians breathe the nation's most polluted air, insufficient funding for our schools, and some of the highest gas and electric rates in the nation,” said Rose Ann DeMoro, executive director of the California Nurses Association, which is leading the drive to pass Prop 89. "The present system works for the insurance companies and the other big donors, it just doesn't work for the rest of us."

According to the Foundation for Taxpayer and Consumer Rights, millions of dollars of insurance company donations to politicians, particularly those in key committees, have driven a string of anti-consumer votes in the State Capitol in recent years.

Assembly Insurance Committee chairman Juan Vargas, for example, has received at least $315,000 in campaign contributions from insurance interests. In recent years, his committee has blocked desperately needed homeowner protections in the wake of Southern California wildfires and has passed legislation allowing auto insurance surcharges on low-income drivers. As was reported in the California Progress Report in April, the committee passed a measure, AB 2840, that would have blocked Insurance Commissioner Garamendi’s landmark rules lowering rates for good drivers throughout the state.

“For years the insurance industry has held a death-grip on the State Legislature, using the Assembly Insurance Committee as its boneyard,” said Douglas Heller, Executive Director of the Foundation for Taxpayer and Consumer Rights. “Insurers know that their political donations buy them extraordinary power right at the key bottleneck for consumer protection bills. Prop 89 would relieve lawmakers of their dependence on industry cash and that scares insurance executives.”

Insurers spent “$25 million on lobbyists, campaign contributions and perks”

An example of how the insurance industry benefits financially from its huge campaign contributions was vividly cited by the Los Angeles Times in a February 27, 2006 article.

Following disastrous Southern California wildfires, lawmakers proposed six bills that would have made it harder for insurers to cancel insurance or raise rates, reduced paperwork homeowners needed to collect claims, and required insurers to provide consumers with more information about policy choices.

These provisions, hotly challenged by the insurance industry, died in the Assembly Insurance Committee whose members, Democrats and Republicans alike, had received more than $1 million in insurance industry money just in 2003-2004. Overall, the Times reported, “insurers have spent $25 million on lobbyists, campaign contributions and perks for lawmakers” since 2003.

Schwarzenegger Received $105,000 From Insurers on Day of Veto of Insurance Bill

Gov. Arnold Schwarzenegger is another major beneficiary of insurance industry largesse, and responded with vetoes and other policies rewarding them. Among his insurance donors, Zenith has contributed over $244,000 to Schwarzenegger, Mercury just over $200,000 (see www.arnoldwatch.org).

Insurers were rewarded on October 7, 2005, when Schwarzenegger vetoed SB 399, a bill that would have required insurance companies, not Medi-Cal, to pay medical costs for uninsured drivers who are injured in an accident caused by an insured driver, saving taxpayers $225 million a year. On the same day that Schwarzenegger vetoed SB 399, the American Insurance Association gave Schwarzenegger $105,000.