STATE LEGISLATORS SLAMMED FOR INSURANCE-INDUSTRY TIES

STATE LEGISLATORS SLAMMED FOR INSURANCE-INDUSTRY TIES

Two consumer groups Thursday accused legislators on insurance committees in 10 states of having conflicts of interest because of their ties with the industry.

At a press conference in Washington, D.C., J. Robert Hunter, director of insurance for the Consumer Federation of America, said that legislators "who are employed by an industry should not be writing the laws to regulate that industry. That's plain common sense."Mr. Hunter and Stephen Brobeck, the federation's executive director, said states should tighten their conflict-of-interest laws and force lawmakers to recuse themselves from legislation that could affect them.

The report, co-authored with Common Cause, "raises important questions about the ability of some state legislators to make disinterested public policy," Mr. Brobeck said.

"Not just insurance agents, but also real-estate agents, trial lawyers, and attorneys representing private interests should recuse themselves from legislative matters affecting their interests."

Also coming in for criticism was the National Conference of Insurance Legislators, which Mr. Hunter said is financially "so intertwined with the industry and so apt to support every industry position that it is a classic wolf in sheep's clothing, whose statements should be viewed with caution."

The conference's president, state Sen. Leo Fraser, R-N.H., responded in a statement, calling the report "an old and erroneous yawn that has gained no credence over the years."

The study reviewed the financial statements of 278 legislators on insurance committees in 10 states, including Texas, where Mr. Hunter was insurance commissioner until he resigned last year. The report found 52 legislators had industry ties. Thirty-eight of them were insurance agents, 12 were attorneys whose firms have large insurance practices, and two had other fiduciary relationships with insurers, the report said.

"I have seen conflicted legislators introduce and push bills supplied to them by companies they represent," Mr. Hunter said about Texas. "I have also seen them lobby other legislative bodies without disclosing their conflicts."

Missouri had the largest percentage of committee members with industry ties, at 36.8 percent, the survey found. This was followed by North Carolina (36 percent), Florida (30.6 percent) and Texas (25 percent). At the other end of the spectrum were California and Massachusetts, which had no committee members with industry ties, followed by New York (8.6 percent), Pennsylvania (14.7 percent), Illinois (15.2 percent) and Ohio (21.2 percent).

The federation praised Massachusetts and California for their conflict-of- interest laws and urged other states to enact similar measures requiring

financial disclosure for all government officials.

But American Insurance Association President Robert E. Vagley blasted accusations of undue influence on legislatures, and said the reports' findings ''don't hold water."

"They praise the ethical standards of legislatures in Massachusetts and California, whose citizens pay the fourth- and eighth-highest average combined automobile-insurance premiums in the country," he said. "If anything, this makes the case that states like Massachusetts and California could use a little expertise from the insurance industry within their legislatures."

David M. Farmer, a senior vice president with the Alliance of American Insurers, agreed that "there is a need for a certain amount of expertise in order to make laws. Where are you going to get that expertise from? The reality is, you have to have people with knowledge of the industry to arrive at good public policy."