For the second time in two months, California Insurance Commissioner Steve Poizner is being accused by his predecessor, Lt. Gov. John Garamendi, of proposing regulation changes that will weaken consumer protections.
The latest dispute involves Poizner’s proposal to roll back regulations that prohibit insurers from reducing group disability insurance benefits to account for pensions, workers’ compensation payments or wages that the policyholder might receive.
Poizner, a Republican who succeeded Garamendi as California’s chief insurance regulator in January 2007, said the regulations are unnecessary. He maintains the insurance commissioner already has the authority under state and federal law to ban insurers from including so-called offset clauses that reduce benefits in disability policies.
“Given that it’s already illegal, it strikes me that we should be striving to simplify the government code and not layer additional regulations to make something even more illegal,” said Darrel Ng, a Poizner spokesman. “This is the essence of cutting red tape.”
But Garamendi and some attorneys who deal with disability insurance issues say the state would be treading on shaky legal ground if it attempted to control the offsets without the regulations.
“If the regulations go away, insurance companies will go back to doing what they’ve been doing for the last 30 years,” said Glenn Kantor, a Northridge attorney who deals with disability issues. “They’ll do what they want.”
Garamendi, a Democrat, said removing the regulations would be a “disaster for policyholders.”