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Review of 1997 Insurance Department Pattern of Misinformation

January 15, 1998
Consumers Union West Coast Office
(415) 431-6747

Alert: Review of 1997 Insurance Department News Releases and Statements Reveals Pattern of Misinformation

Consumers Union Urges Department to Make 1998 New Year’s Resolution of Honesty

SAN FRANCISCO, CA A review of public statements from the California Department of Insurance (CDI) during 1997 reveals a “disturbing trend” of misinformation, according to Consumers Union, nonprofit publisher of Consumer Reports. Consumers Union consulted CDI news releases, quotes in the media, other statements and public education efforts in compiling a credibility audit of the Department. In a letter accompanying the report, Consumers Union challenged Insurance Commissioner Chuck Quackenbush and his staff to engage in honest and helpful communication with California consumers in 1998.
The report documents a number of instances where CDI provided misleading, inaccurate, incomplete or false information to the public. These included the following:
A misleading million-dollar media campaign claiming that “billions of dollars are available to be returned to California consumers.” While Commissioner Quackenbush defended these ads as “education,” information provided by other CDI officials questioned the amount and accessibility of those funds.
Contradictory statements regarding whether campaign contributions create a conflict of interest or affect a government official’s decision-making. After accusing another official of such a conflict and then apologizing, Quackenbush then said statements from his office were “inaccurate.”
Falsely asserting that in new rating plans, ZIP Code would no longer be a primary factor in deciding the premiums for auto insurance. Insurance companies, consumer groups and industry journalists agree the new plans allow ZIP Code to continue to be a priority. As Consumers Union’s Bill Ahern says, “Either Commissioner Quackenbush hasn’t seen the rating plans, or he isn’t telling the truth.”
An inaccurate history about who banned the uninsured motorist surcharge. Commissioner Quackenbush permitted the surcharges, denied a Consumers Union request to challenge them, and defended them in court. After a judge ruled against the surcharges, press releases from his office eventually trumpeted “Commissioner Quackenbush’s ban on uninsured motorist surcharge.”
Misinformation on the ease with which consumer organizations are granted intervenor funding, and one-sided references that do not include the amount of money saved for consumers by some consumer groups’ efforts.
Finger-pointing to previous administrations and dodging responsibility when a hard-hitting audit pointed to significant agency deficiencies under Commissioner Quackenbush.
“Taken together, in the course of just one year, this level of misinformation represents a disturbing trend at CDI,” said Bill Ahern, senior policy analyst and insurance expert with Consumers Union. “This is a disservice to consumers who need to rely on information from CDI. It also serves to validate an increasing public cynicism toward government agencies.”
“We know that agencies and individuals will sometimes ‘spin’ an issue in a positive way,” Ahern said. “However, this report doesn’t document mere positive ‘spin.’ It illustrates a pattern of misinformation that misleads the public. It would be dangerous for the public or the media to become accustomed to this level of misinformation.”
Consumers Union conducted this review after noticing a number of inaccuracies or misinformation from CDI during the past year. Additionally, news reporters and consumers frequently contacted Consumers Union to assess the validity of claims made by CDI, sometimes expressing doubt that they could believe what they received from the agency. Consumers Union then decided to review CDI news releases and public statements and document those instances where the agency provided information in a misleading or less than truthful manner.