Chuck Quackenbush is long gone from the office of state insurance commissioner, but every owner of a California home, condominium, or commercial property is still paying for his sweetheart arrangements with the insurance companies he was supposed to regulate.
Nowhere is this more apparent than in earthquake insurance, where prices are sky-high and so are deductibles, the twin reasons why only 755,000 Californians have ’quake insurance, barely over 10 percent of the state’s property owners.
Hard as it is to believe, the ethically-challenged Quackenbush, a former Republican state assemblyman chased from office in a scandal that saw him depart voluntarily rather than face possible criminal corruption charges, has been a deputy sheriff in Lee County, Florida (the Fort Myers area) since 2005.
But the victims of his questionable political machinations can’t escape so easily. While he’s busy these days arresting people who usually have wreaked far less harm than he did, the victims of his dealings either go bare in the face of the large earthquakes everyone knows are certain to hit California again sometime, or they accept policies with deductibles usually amounting to 15 percent of the value of their homes and other structures. Coverage also is reduced from pre-Quackenbush days, with fences, walkways, separate garages, and other outbuildings generally not included in ’quake policies.
State officials, too, are still dealing with the stunningly disgraceful Quacko legacy. Under his deal with insurance companies that blackmailed the state after the 1994 Northridge earthquake by refusing to sell any new property insurance of any kind unless they were allowed to stop writing earthquake policies, insurance companies were supposed to have absolutely no liability in any ’quake striking after December 1, 2008.
Get this straight. Instead of saying to insurance companies, “If you don’t sell earthquake policies here, you can’t sell any more of your extremely profitable car insurance,” Quackenbush agreed to set up something called the California Earthquake Authority.
Since 1999, the CEA has written almost all ’quake insurance in the state. It is responsible for the first $8 billion or so in payments to insurance policy holders in any one earthquake, with insurance companies picking up the next $2.2 billion – for about another year.
It was this looming deadline that forced the CEA’s three board members – current Republican Insurance Commissioner Steve Poizner, Republican Gov. Arnold Schwarzenegger, and Democratic state Treasurer Bill Lockyer – to grapple with the uncertain ’quake insurance future this fall.
First, they voted 2-1, with Lockyer dissenting, to raise the current average ’quake insurance premium from $700 to about $755 per year. Under that deal, insurance companies would continue to have some liability after December 2008, but only about $1.2 billion worth. The difference would be made up partly by those higher premiums.
The plan needed approval from the Democratic-controlled state Legislature, where it never had much of a chance because of its emphasis on up-front money from consumers and the accompanying reduction of just-in-case liability for insurance companies. It was seen as a Republican bow to the insurance industry, one of the GOP’s largest special interest donor groups.
Poizner responded with a constructive action, forging a compromise that will see ’quake insurance rates remain stable – still very high at about 30 cents per $1,000 of insurance value – and thus hopefully not spurring even more property owners to go bare in the face of virtually certain future earthquake damage.
Meanwhile, insurers will have to pay up to $1.5 billion if the CEA ever runs out of money paying off claims from any one event. The insurance company obligation reduces each year until it hits zero in 2018. Of course, if damages ever top $10 billion, property owners will be stuck for the difference, unless nature holds off new temblors long enough for the CEA to build its reserves much higher than they are today.
It all goes to show how long the ultimate victims of government corruption have to pay, while the man who victimized them remains free and working as – absurdly enough – a law enforcement officer.