Kelso Criticizes CDI Management

August 10, 2000

Clark Kelso, who took the reins as California’s insurance commissioner after the July 10 resignation of Chuck Quackenbush, severely criticized the state’s Department of Insurance before the Senate Insurance Committee yesterday.

Kelso, a law school professor, told lawmakers that the department had lacked effective management for at least 10 years and described a loosely managed environment, rife with potential for abuse, in which highly important decisions affecting millions of dollars were made arbitrarily.

He also told the committee that the two major dilemmas facing the department upon Quackenbush’s departure were what to do with the settlement agreements made between Quackenbush and insurers after the Northridge earthquake, and how to stabilize California’s workers’ compensation market.

While it was indicated that negotiations with insurance companies had been initiated in an attempt to dissolve the Northridge settlements, Kelso noted that proposed legislation requiring companies to re-open Northridge claims could hamper his efforts to settle an agreement with the insurers.

To expedite an accord between the department and Northridge insurers, Insurance Committee Chairwoman Jackie Speier said lawmakers might consider the use of state funds for the reimbursement of $6 million to companies that contributed to nonprofit foundations created by Quackenbush.

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