News & Features » News

Driving in Circles

Proposition 33, funded by a billionaire insurance-company owner who says he's acting in your best interests, reappears on the ballot

by

comment
TUNNEL VISION The CEO of Mercury Insurance has spent millions to overturn voter-approved insurance reform.
  • TUNNEL VISION The CEO of Mercury Insurance has spent millions to overturn voter-approved insurance reform.

If approved in November, Proposition 33 would allow auto insurers to offer discounts to new customers who have had continuous coverage for the past five years.

Sound familiar?

It should. The initiative is a reincarnation of Proposition 17, which was shot down by a narrow margin in June 2010. It now rises from the dead, equipped with some changes that proponents hope will sway voters.

The new proposition now allows exemptions for military personnel, individuals who have been unemployed for up to 18 months and children living at home with their parents. Furthermore, the initiative would provide currently uninsured drivers a discount proportional to the number of years they have had insurance in the previous five years—"an 80 percent discount if you can piece together four years of coverage" and "up to a 40 percent discount for two years," calculates Rachel Hooper, spokesperson for the supporting campaign.

So far, Proposition 33 seems to have some bipartisan support—along with the Republican Party, former Senate president pro tempore Don Perata and California State Sen. Juan Vargas, both Democrats, openly endorse it.

"Proposition 33 benefits both those that currently have car insurance and those that don't," explains Hooper. "It gives more power to the consumer with the power to shop for insurance companies," she adds, likening it to the ability to switch mobile phone carriers.

As with its predecessor, Proposition 33's main proponent is Mercury Insurance, and to date, founder George Joseph has personally provided over $8 million to fund the proposition.

Going bumper to bumper against the practically single-handedly supported proposition is Consumer Watchdog. The proposition will negatively affect millions of California drivers, states spokesperson Carmen Balber.

In previous years, according to Balber, Mercury Insurance had illegally surcharged customers without prior coverage by 40 percent. Additionally, in states where Mercury had been legally allowed to add the surcharge, rates rose from 35 to over 100 percent.

"We're talking at least a 35 to 40 percent increase in insurance rates; in the standard family, that could easily increase rates by a thousand dollars a year or more," she concludes.

The two opponents have been driving up each other's walls since 1988 with the passage of Proposition 103, composed by Consumer Watchdog founder Harvey Rosenfield. Proposition 103 illegalized the practice of determining auto insurance rates based on a person's history of insurance, instead requiring rates to be based on the insured's safe driving record, annual mileage and years of driving experience. Before Proposition 103, insurance rates were set by companies without approval from an insurance commissioner.

Add a comment