Ex-California Commissioner Low Praises His Successor, Garamendi

Former California Insurance Commis-sioner Harry Low is singing the praises of John Garamendi, who is both Low’s successor and predecessor as overseer of the state’s insurance industry. In a way, Low’s verbal bouquets seem somewhat surprising. Both are longtime Democrats, yet they are as different as night and day in terms of operating styles as state insurance industry regulators, as well as their personalities and career path.

“Garamendi’s done a very good job, especially this time around,” Low told Insurance Journal in an exclusive interview that was conducted shortly before he addressed a luncheon crowd at the Professional Liability Underwriting Society (PLUS) D&O West Symposium, held Sept. 13-14 in San Francisco.

Low recalled that in Garamendi’s first stint as state insurance czar, Garamendi “was pretty much overwhelmed with Prop. 103 and the efforts to regulate rates. In his second term, he has kind of moderated his stance as a very strong consumer protection advocate. Now, he is less contentious with the insurance industry. He’s doing a much better job of working with the insurance industry now than he did in his first term,” Low said.

The combative and glib Garamendi, a former state lawmaker, served as California’s first elected commissioner from 1991 to 1995, and was elected to another four-year term in 2002.

In contrast to Garamendi, long-time jurist Low comes across as reserved and diplomatic. Before accepting the insurance commissioner’s job, Low worked as an arbitrator and mediator for Judicial Arbitration Mediation Services (JAMS), an alternative dispute resolution firm in San Francisco. Serving as either a mediator or arbitrator for JAMS, Low focused on resolving disputes involving health care protection, builders risk cases and other insurance issues.

Perhaps it is because of his judicial nature that Low issues no caustic or controversial comments in dealings with others. Nevertheless, like Garamendi, Low is very candid. For example, Low told Insurance Journal that he got himself into “quite a jackpot” when he took over as California insurance commissioner, replacing Chuck Quackenbush, who had resigned under pressure.

“The governor’s office in the summer of 2000 contacted me to see if I was interested in becoming insurance commissioner,” the chief overseer of California’s giant insurance industry, the nation’s largest market, Low recalled. “At the time, I already had a job, and I didn’t think that were any Supreme Court vacancies.”

Low acknowledged that taking the job as insurance commissioner “was tough because Quackenbush left under a cloud” in 2000. Quackenbush had been accused of mishandling insurance company fines, so he stepped down and retired when faced with possible impeachment.

Quackenbush allegedly permitted insurers to pay about $13 million to nonprofit organizations instead of to victims of the 1994 Northridge earthquake that caused some $12.5 billion in insured property losses in Southern California. Reportedly, much of the fine money ended up paying for television commercials featuring celebrities such as Quackenbush.

Low said he realized he was getting into something new by taking charge of the Insurance Department. “Most of my career, I spent running a court, but this was something completely different,” he said. The nation’s first Chinese American insurance commissioner, Low spent upward of 26 years as a judge in the Municipal and Superior courts, as well as a presiding justice in the California Court of Appeals.

Stepping in for Quackenbush, Low admitted, “was a very intense workout.”

“I took control of a broken agency with 350 vacancies on staff out of the 1,400 total workers,” he explained. “I had to rebuild a great deal. I personally attended staff meetings and worked closely with staff to rebuild morale and efficiency.”

In addition to filling vacancies and building employee morale, Low had to restore the public’s confidence in the Insurance Department in the aftermath of the scandal-plagued Quackenbush regime. As insurance commissioner, “it was my first job to restore the position’s integrity,” Low said. “I’d like to think that we were able to achieve that.”

Among the ways Low achieved his goals were by appointing a new chief counsel, rebuilding the executive branch of his department and bolstering the division that protects consumers against insurance fraud.

Low also installed a code of conduct. “I made it clear that there would be no more free tickets to ballgames, no more free lunches,” he said, noting he had a lot more on his plate early-on in his two and one-half years in office. “I had to rebuild the fraud unit and the broker-agency licensing structure. We revamped the licensing process using automation to speed up the process from six months to one week.”

In particular, Low admitted he faced a steep learning curve in the regulatory environment when he stepped into the insurance commissioner’s role. “That was all new to me at the time, and it was quite an education,” he said, “but I picked it up pretty quickly.

“There were quite a lot of other issues on my plate,” continued Low, who had to handle huge issues such as Proposition 103, the landmark 1988 California initiative that mandated, among other things, 20 percent rate rollbacks for automobile insurance and various other lines.

Automobile insurers such as State Farm and 20th Century fought tooth and nail with the Insurance Department in contentious rate rollback hearings before administrative law judges, Low said. “Many companies had their day in court, but I was pleased that with some other companies, we were able to secure auto insurance refunds for policyholders through settlements without protracted and costly hearings. We required companies to produce data supporting their claims about their rate rollback liability, and we were usually able to arrive at agreements if they had the data to support their claims,” he said.

Now, Low’s term as Insurance Commissioner is complete, but he continues to use sound judgment skills daily. He has returned to his duties as an arbitrator and mediator at JAMS.

PLUS is a insurance information and education organization based in Minneapolis. The D&O West Symposium attracted approximately 200 attendees, primarily claims representatives and a number of attorneys.