Insurance Foundation’s Assets Seized; LA Times Says Quackenbush Should Resign

The troubled California Department of Insurance received several more blows over the weekend. On Friday, a Sacramento Superior Judge seized control of the earthquake foundation set up by Commissioner Chuck Quackenbush and funded, in large part, by “donations” from several large insurance companies.

Investigations have revealed that the donations were made only after the CDI agreed to dismiss $3 billion in fines against the insurers for alleged claims mishandling following the Northridge earthquake.

The foundation was seized after California Attorney General Bill Lockyer argued that it was a “sham” and was controlled by George Grays, a former top aide to Quackenbush who resigned a few weeks ago.

Lockyer said the California Research and Assistance Fund was actually run from Grays office and “the corporation served as a mere shell for his own purposes.”

On Sunday, the LA Times, which has uncovered much of what is being investigated, called for Commissioner Quackenbush to resign. In its editorial, the Times said that Quackenbush has lost all credibility as an insurance industry watchdog.

“This is not just politics. These are serious matters of ethical responsibilities of an elected public official, a matter of public trust. Quackenbush has abused that public trust. …He should not be on the public payroll.”

When a group of consumers called for his resignation last week, Quackenbush said he would never resign and be run from office by his political opponents.