Consumer Group in Ballot Fight Denies Allegations of Campaign Finance Violations

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May 13, 2010 Thursday 10:37 AM EST

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Consumer Group in Ballot Fight Denies Allegations of Campaign Finance Violations

Sean P Carr

SACRAMENTO, Calif.

Opponents of a controversial automobile insurance proposition on California’s June 8 primary election ballot denied allegations that they have violated campaign finance reporting laws.

The Campaign for Consumer Rights and the Stop Prop 17 committee failed to report a $100,000 contribution from the California Nurses Association and reported a $250,000 contribution from the same group one month late, according to a complaint filed with the state Fair Political Practices Commission by Yes on 17 – Californians for Fair Auto Insurance Rates. Donations within 90 days before an election are required to be reported within 24 hours of receipt, according to the Secretary of State’s office.

The allegations are incorrect, said Jamie Court, a board member of CCR and president and chairman of its affiliated organization, Consumer Watchdog. The cited $100,000 donation was a “clerical error,” he said. “We never saw the money,” Court added. In its online campaign finance report for the California Nurses Association, the Secretary of State’s office now has that $100,000 donation listed, but crossed-out.

As for the $250,000 donation, the campaign finance web page for CNA lists it as an April 8 donation to Stop Prop 17, reported on April 9. But the Stop Prop 17 campaign reported the funds on May 6 as having been received the previous day.

“Consumer Watchdog is not above the law,” Mike D’Arelli, executive director of Alliance of Insurance Agents & Brokers and a spokesman for Yes on 17, said in a statement. “Consumer Watchdog needs to be honest about who contributes big money to their campaign and when they get it, just like everyone else.”

Court said the donation was made to CCR and not the Stop Prop 17 campaign. It was designated for a multiyear CCR project on ballot questions that CNA is supporting, he said. CCR later decided to “deploy” the funds to the anti-17 campaign to finance television advertisements, Court said. “The committee couldn’t report it until it had it,” he said.

CNA must have reported the donation the way it did “out of prudence,” Court said. Attempts to reach CNA for comment were unsuccessful.

Proposition 17 would allow insurance companies to lower premiums for drivers who have continuously maintained auto insurance coverage, even if they switch to a different insurer. According to opponents, because those with lapses in payments may be disqualified from any discounts, the initiative would effectively invalidate a component of Proposition 103 that barred insurance companies from charging customers more for not having had auto insurance coverage in the past.

Mercury General Corp. is the primary sponsor of Proposition 17. Mercury Insurance Co. (NYSE: MCY), a member of Mercury General Group, currently has a Best’s Financial Strength Rating of A+ (Superior).

The top five writers of private passenger auto insurance in California in 2008, according to BestLink, were: Farmers Insurance Group, with a 15.9% market share; State Farm Group, 12.9%; Mercury General Group, 9.4%; Auto Club Enterprises Insurance Group, 9.0%; and Allstate Insurance Group, 8.4%. BestLink provides online access to A.M. Best’s Global Insurance & Banking Database.

(By Sean P. Carr, Washington Correspondent: sean.carr@ambest.com)

May 14, 2010

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