Out-of-State Insurance Executive and Spouses Donate As Insurer Seeks Lara’s Approval of its Pending Acquisition

Los Angeles, CA – Reversing a three decade tradition among elected Democrat California Insurance Commissioners – and reneging on his own campaign pledge – Insurance Commissioner Ricardo Lara has accepted contributions from an insurance company executive and spouses of executives tied to a company with business before the Commissioner.

The author of the voter-approved law that made the insurance commissioner an elected post and the group he founded, Consumer Watchdog, called on Insurance Commissioner Ricardo Lara to return the campaign contributions and commit to rejecting insurance industry money in the future. 

Read the San Diego Union-Tribune news story: https://www.sandiegouniontribune.com/news/watchdog/story/2019-07-05/states-top-insurance-regulator-accepted-tens-of-thousands-of-dollars-from-industry-executives-records-show

“Proposition 103 made the office of insurance commissioner an elected position in order to make the commissioner accountable to the voters who pay insurance premiums, not to the insurance companies the commissioner regulates. Honoring the voters’ trust, all but one of the previous elected insurance commissioners have refused to accept campaign contributions from the insurance industry,” wrote insurance reform Proposition 103 author and Consumer Watchdog founder Harvey Rosenfield, and Consumer Watchdog executive director Carmen Balber, in a letter to Lara today. “Taking that money is a violation of the pledge you made to voters to not accept campaign contributions from the insurance industry.”

Download the letter: https://consumerwatchdog.org/sites/default/files/2019-07/LtrLara7-8-19.pdf

The only elected California insurance commissioner to accept insurance industry contributions was Republican Commissioner Chuck Quackenbush, who resigned in 2000 over an industry pay-to-play investigation. Quackenbush was embroiled in a year-long scandal and faced prosecution for soliciting contributions from insurance companies who were under scrutiny by the Department of Insurance after the Northridge earthquake.

An insurance executive and two spouses of insurance executives, all with ties to workers’ compensation insurer Applied Underwriters, made $46,500 in contributions to Commissioner Lara’s 2022 reelection fund in April. One month later the Berkshire Hathaway-owned Applied Underwriters submitted a request to Commissioner Lara seeking his approval of a pending acquisition. A third person married to an insurance executive gave Lara an additional $7,800.

Applied Underwriters has a history of questionable practices across the country. Its California subsidiary, California Insurance Company, settled an action brought by the Department of Insurance in 2017 after its sales of its workers compensation insurance policies were halted for bait and switch marketing. It is currently fighting legal actions brought by five other businesses it insured alleging the same unlawful practices. Past misconduct is typically part of a Department of Insurance review of a proposed acquisition.

The insurance industry contributions totaling $54,300 include:

• $15,500 from Stephen Acunto, managing director of the Constitution Group, which wholly owns Constitution Insurance Company and whose directorate interlocks with Applied Underwriters and California Insurance Company. Acunto is also a spokesperson for Applied Underwriters.
• $15,500 from Carole Acunto, identified in campaign reports as the president of a production company and the wife of Stephen Acunto.
• $15,500 from Theresa DeBarbrie, identified in campaign reports as an administrator at a nursery school. She is the wife of Carl DeBarbrie, an insurance broker for Applied Underwriters and former executive with Constitution Insurance Company and California Insurance Company.
• $7,800 from Darlene Graber, identified as a homemaker in campaign reports and the wife of Larry R. Graber, Senior Vice President and Director of Independence Holding Company which has multiple health insurance subsidiaries. 

View the reports at the California Secretary of State campaign finance website: http://cal-access.sos.ca.gov/Campaign/Committees/Detail.aspx?id=1415175&view=late1

Commissioner Lara also appears to have kept $6,000 in campaign contributions he accepted last spring from The Doctors Company, a medical malpractice insurance company, despite his promise during the campaign to return the funds and not accept industry money. 

Lara denied taking insurance industry contributions in a debate that aired on KQED one month before the election, stating: “I haven’t taken for this race any insurance money and it’s unfair to say that I’ve taken insurance money. In my past campaigns I have, in this campaign I have not.”

UPDATE: Late Monday we received a communication from The Doctors Company stating that “we processed a $6,000 refund from the Lara campaign on May 15, 2018.” That refund is not reflected in Lara’s campaign reports.  We look forward to clarification from Commissioner Lara, and to learning whether he will return the $54,300 in industry money he took this year.

Rosenfield and Balber wrote: “As Insurance Commissioner, you oversee insurance policies worth hundreds of billions in annual premiums paid by Californians. Such decisions should not be made under a cloud of improper industry influence. To preserve the integrity of your office, and to demonstrate your personal independence from the insurance industry, you must immediately return the contributions in question and commit to rejecting insurance industry money in future. To do otherwise would be a betrayal of the people of California.”

“The recent contributions to your 2022 reelection campaign fund appear intended to covertly grease the wheels for a legal matter currently pending before the Department of Insurance.”

“The company’s request for your approval also contains troubling statements that seem to be intended to solicit your personal favor. As the Insurance Commissioner of California, you chair the National Association of Insurance Commissioners’ Cannabis Insurance Working Group, and you have made wildfire and cannabis insurance priorities during your first months in office.   Applied Underwriters’ application promises that the workers compensation insurer “will expand its business operations to include Wildfire Home Insurance to California homeowners, Home Insurance to California homeowners in inner-city areas, and workers’ compensation to employers involved in the cannabis industry.” 

“No insurance commissioner should take money from the industry he or she regulates. Applied Underwriters appears to think its executives and their families can buy your support. Disabuse it of that notion by returning the money immediately and pledging to reject any future insurance industry contributions. It is the only way to prove your independence from the industry you regulate and keep faith with the voters whose interests you have sworn to protect,” the letter concluded.

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