ELECTIONS ‘94: IMPACT ON BUSINESS : Quackenbush’s Election: A Stark Philosophical Shift : Insurance: The next industry watchdog is likely to enter office with a more hands-off attitude than Garamendi.

California voters, who six years ago enacted sweeping reforms that gave their new insurance commissioner some of the nation’s strongest regulatory tools, have elected as his successor a man who pledged to wield those tools lightly.

Assemblyman Charles W. Quackenbush (R-Cupertino), who handily defeated state Sen. Art Torres (D-Los Angeles) on Tuesday, maintains that the $2 million in insurance industry contributions that helped him do it will neither affect his independence nor make him more likely to raise rates.

Still, Quackenbush provides a stark contrast to his predecessor, Democrat John Garamendi, whose term as California’s first elected insurance commissioner was marked by bitter legal and political clashes with the industry.

While Garamendi sees insurers as inherently untrustworthy and in need of strong supervision, Quackenbush--formerly a successful businessman in Silicon Valley--counts on open competition and a lighter regulatory hand to deliver the best deal for consumers.

“I think the Republican message--free markets, free enterprise, individual initiative--is really resonating with the people,” Quackenbush said in an interview early Wednesday morning, when his victory was clear. “I think they’re rejecting central government planning for the economy, across the board.”

What happened to the anti-insurer wrath that fueled Proposition 103, the 1988 rate-cutting initiative that made insurance commissioner an elected office with broad new powers?

Proposition 103 author Harvey Rosenfield said Wednesday that the virtual rate freeze Garamendi imposed for most of his four years has reduced voter concern over insurance issues. “There’s no longer the outrage level of 1988,” he said.

Besides, Rosenfield added, Quackenbush steered clear of most insurance issues during the campaign, and devoted much of his money and attention to Torres’ legislative record, particularly on crime-related measures.

However, Quackenbush did promise to enforce Garamendi’s Proposition 103 rate regulations, which were affirmed Aug. 18 in a unanimous decision of the California Supreme Court. He also said he will reallocate Insurance Department staff to improve anti-fraud efforts.

“Quackenbush pledged publicly to continue the work we’ve done, and I take him at his word,” Garamendi said Wednesday.

“While the tradition of the department prior to my arrival was to serve the industry, the laws of this state require the commissioner to serve the public.”

Consumer advocates were skeptical Wednesday.

Michael Shames, executive director of the Utilities Consumer Action Network, said he is concerned that Quackenbush, in his avowed desire to expedite the rate-setting process, may limit the ability of consumer groups to intervene in rate hearings.

If Quackenbush “attempts to repay the insurance industry for electing him by raising rates and undermining Proposition 103, we will challenge his every illegal move with all the tools at our disposal,” Rosenfield said.

The insurance industry, meanwhile, exulted in Quackenbush’s victory.

“We now have a better chance of getting a real hearing,” Steven Goldstein of the Insurance Information Institute in New York City said, adding: “We support the consumer too, but the industry has got to make a vital profit in order to pay shareholders and policyholders alike.”

Elsewhere in the country, Republicans, who Goldstein said tend to be more open to industry concerns than Democrats, have won the governorships of New York, Texas and Pennsylvania. Those governors will have the power to appoint their own insurance commissioners.

There was no indication as to whether the Republican landslide in congressional races would improve chances for passage of the federal disaster insurance program that the industry favors, but Jerry O’Kane, executive vice president of the Independent Insurance Agents & Brokers of California, said the group’s representatives were already at work Wednesday contacting key committee staff members to let them know the legislation is “our No. 1 priority.”

In defeating Torres, Quackenbush exploited a crushing advantage in television advertising and managed to get out a mailing to his most likely voters in the last weekend before the election.

In the last month, Quackenbush surpassed Torres in fund-raising by more than 2.5 to 1, thanks to the tide of insurance industry contributions. Torres took some money from elements of the industry not regulated by the commissioner, but they amounted to about 10% of what Quackenbush got from industry sources that are regulated.

In discussing those contributions Wednesday, Quackenbush said: “You have to have money to be credible, but I raised it from thousands of people across California. Individual small-business people. Individual agents and brokers. . . . I’m not going to reject money from legitimate members of our economy who fulfill such an important function.”

Times staff writers Kenneth Reich and Eric Bailey contributed to this report.