Insurer Contribution to Governor’s Fund Draws Criticism

Consumer advocates and political watchdogs are sounding off over a donation from a unit of insurer State Farm to one of Gov. Arnold Schwarzenegger's (R) political committees, saying that health care reform and other issues of interest to State Farm will go before the governor this year, the Los Angeles Times reports.

State Farm's auto insurance division contributed $25,000 to Schwarzenegger's California Recovery Team, a tax-exempt fund that the governor has used to support ballot measures and otherwise advocate for his political agenda. State Farm's donation was accompanied by a letter stating that the company would request its contribution to be returned if it were used for purposes other than supporting Schwarzenegger's "issue and legislative agenda."

State Farm has a ban on contributions to political candidates.

The donation allows company leaders to attend a private reception at Schwarzenegger's home and to participate in several conference calls with him.

Proposals to expand health insurance coverage in California could be of particular interest in the coming months to State Farm, which also markets health insurance.

The company also is backing a bill addressing the legal definition of the fee that insurers charge policyholders for paying premiums in installments rather than a lump sum. The measure could derail lawsuits alleging that insurers overcharge customers.

All told, State Farm officials since January have lobbied California lawmakers on at least 10 measures introduced in the Senate and Assembly (Nicholas/Halper, Los Angeles Times, 5/12).