Poizner Proposes to Undo Garamendi’s Good

Amber Wheat

Contributor
(866) 735-1102 Ext 578

0 CommentsPrint ArticleSubscribe

When Lt. Governor John Garamendi was California’s Insurance Commissioner, he worked to protect insurance consumers. Among his many causes was that of prohibiting insurers from reducing group disability insurance benefits to account for pensions, workers’ compensation payments, or wages. During his second term as Commissioner, Garamendi tried to stop this practice without regulations in place. He was subsequently sued by disability insurance companies who claimed they could not be held to rules that were not clearly spelled out.

Garamendi drafted the regulations and they were implemented after he left the commissioner’s office. They state quite clearly that pension payments, workers’ compensation payments, and estimated earnings received by a policyholder while they are disabled cannot be taken into consideration to cut the amount of benefits.

California’s current Insurance Commissioner is Steve Poizner, after already starting to undo regulations affecting rates charged for different insurance policies, has now set his sights on these rules that spell out what the disability insurers can and cannot do. He maintains that the Commissioner has the right under the law to restrict the reductions of benefits based on those factors and that a law is not needed. He calls it “red tape” and unnecessary.

Recent history shows that the regulation is necessary to enforce the law. And quite frankly, it seems unfair to make insurance companies follow regulations that are ambiguous and easily changed by the mind of one man. It’s like playing a board game when you don’t know the rules.

For everybody’s sake I hope that the regulations will stay in place. What harm is there in having a clear understanding of the rules? Of course, the insurance companies don’t want the rules spelled out because then they would be expected to follow them. They claim that policies are written based on the additional income... well, they shouldn’t be. If you know you’re not supposed to do something, why do you operate your business as if you’re going to do it anyway? The fact that the law is being enumerated should not change anything, but the insurers claim that rates will go up and many more people will not be able to afford disability insurance at all if this rule is not rolled back.

It is true that we don’t want to have libraries of regulations upon regulations upon regulations, but I how can we expect anybody to follow the law if it is unclear and unspecific? There is a middle road that must be found, but until then, err on the side of caution. I would prefer to know what is legal and what is illegal to make the most informed choices.