In 1988, California voters who were fed up with high auto-insurance rates passed a ballot measure they thought would both reduce premiums for urban drivers and create an elected watchdog to make sure insurance companies couldn't gouge consumers.

Twelve years later, it's clear that neither of these things ever happened.

Proposition 103 was intended to roll back rates for drivers in big cities like Los Angeles by forcing insurers to de-emphasize a driver's home zip code when setting premiums. The same measure also created the office of insurance commissioner, an elected official who would regulate insurers and their agents and investigate consumer complaints.

In the 1988 voter's pamphlet, opponents of Proposition 103 wrote that the measure would create an insurance czar who would be a politician first and a regulator second. "As a politician, this official would be preoccupied with raising campaign money from special interests all too willing to 'buy influence.'" Today, these words sound remarkably prophetic.

Insurance Commissioner Chuck Quackenbush is in the hottest of seats as investigators turn up evidence of increasingly questionable regulatory actions and use of campaign funds. Instead of fining big insurers millions of dollars for improper handling of claims related to the 1994 Northridge earthquake, as Department of Insurance staff recommended, Quackenbush ordered comparatively tiny contributions to a nonprofit research foundation then the politically ambitious commissioner spent much of the foundation's money on TV commercials starring himself.

New revelations about Quackenbush's questionable activities have appeared fast and furious in recent weeks, but none of this should be particularly shocking for anyone paying attention. Consumer advocates, and even state auditors, have been criticizing Quackenbush for years. A 1996 study by Consumers Union found that if the commissioner had enforced profit-margin ceilings called for by Proposition 103, Californians would have saved more than $800 million in premium costs in 1995. A state audit, also in 1996, found that Quackenbush failed to report more than $327,000 in contributions to his 1994 campaign most of it from insurers. He was later fined $50,000. A 1997 report by the state auditor blasted Quackenbush and his department, saying they failed to protect consumers from illegal or unfair insurance practices.

Meanwhile, auto-insurance rates for Angelenos have dropped hardly at all since the passage of Prop. 103. The reason is a loophole approved by Quackenbush in 1997 that allows insurance companies to average the price of a list of optional risk factors, including zip code, thus ultimately giving geographic location nearly as much weight as it had before.

Yet California voters hardly seem to care. Quackenbush was easily reelected over Diane Martinez in November 1998. The election results might have had something to do with the fact that Quackenbush raised a campaign war chest of $2.3 million that year, three-quarters of it from the insurance industry; Martinez raised a paltry $125,000.

Quackenbush is not the first insurance commissioner who is, at best, toothless. His predecessor John Garamendi was widely criticized as well, opening the door for Quackenbush's election in 1994. What is clear is that the system created by Proposition 103 just isn't working out, leading to two possible solutions: either make the insurance czar an appointed rather than elected position, or forbid insurance companies from making contributions to the commissioner's campaign. Anything else is tantamount to sending the fox to guard the chicken coop.

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