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Analyzing Prop. 33: Car Insurance

Insurance mogul George Joseph has spent more than $16 million to pass the ballot measure. Supporters describe the initiative as pro-consumer; opponents say not so.

Prop. 33, a ballot measure designed to allow consumers who have been with a car insurance company for five years to switch insurance carriers while keeping their “loyalty discounts,” is the subject of much debate leading up to election day.

Supporters are adamant about the measure being beneficial to all Californian drivers. Opponents are not convinced and say the proposition is heavily funded by insurance company interests.

Proponents contend consumers will benefit

“We believe it will save consumers money every month on car insurance,” said Rachel Hooper, spokesperson for the Yes On Prop 33 campaign.

Hooper said Proposition 33 would allow consumers more freedom than they currently have.

“Now they can shop around but not as competitively as we believe they should be allowed,” Hooper said. “It is drafted to have consumer protections that go above and beyond consumer law.”

If passed, those who are unemployed or have been furloughed, and young, teenage drivers stand to benefit, according to Hooper. Military families would also benefit she said, since they are prone to cancel their current coverage when they are deployed.

“They’re in and out of coverage,” Hooper said. “Under Prop. 33, they would keep the loyalty discount.”

She points out that organizations statewide have endorsed the proposition, including Veterans of Foreign Wars of California, the American Legion, the American GI Forum and the Peace Officers Research Association of California or PORAC, a law enforcement organization with more than 64,000 members, according to Hooper.

“It’s all about trying to get people under the umbrella of insurance,” Hooper said. “It goes back to competition and lowering prices.”

Opponents point to proposition funding

Carmen Balber, spokesperson for “No on Prop. 33,” said it all boils down to benefiting Mercury Insurance since its chairman, George Joseph, has personally invested more than $16 million in an effort to pass Proposition 33.

“This is about one insurance industry billionaire trying to boost his company’s bottom line at the expense of good drivers,” Balber said.

She contended that Joseph has run “deceptive TV advertising” and also emphasized the measure would have a “disproportionate impact on lower-income and minority communities” by reversing consumer and civil rights protections put in place 24 years ago that have protected them.

Her argument is that before 1988, insurance companies would “cherry pick” the drivers they wanted to cover, often raising rates, making them too high for many people to afford or refusing to sell to those who had no prior insurance.

“What we saw was a lack of insurance in low-income and minority communities especially because the rate of the uninsured was higher in those communities,” Balber said.

She said a similar measure, Proposition 17, was already defeated two years ago.

“It is a replay of the same measure voters have already said no to, to raise rates on good drivers,” Balber said.

Civil rights organizations, among them Public Advocates, Incorporated, the Alliance of Californians for Community Empowerment and the Black Economic Council, have also spoken out against Prop. 33, including in a letter to the Senate Standing Committee on Insurance.

While the opposing sides of the issue may never meet, one thing they can agree on is that when election day comes, it is California voters who will be in the driver’s seat.

Need help sorting out California's propositions? Here are some resources that provide explanations of the ballot measures, pro and con arguments, endorsements by newspapers, groups that support and oppose, and campaign funding sources:

California Choices - nonpartisan collaboration by Next 10, Institute of Governmental Studies at University of California at Berkeley, the University of California at San Diego Political Science Department, the Bill Lane Center for the American West at Stanford, and the Center for California Studies at Sacramento State. 

MapLight - a nonpartisan organization that researches the influence of money on politics.

KPCC - Southern California Public Radio's Voter Guide based on voter's address.

Pete Moraga November 01, 2012 at 05:41 PM
It's unfortunate that Carmen Balber and Consumer Watchdog state that Prop. 33 would have a "disproportionate impact on lower-income and minority communities," but never once tells consumers that these same lower-income communities can take advantage of a state-run "Low Income Auto Insurance Program." This policy, available to all California drivers, whether they had previous insurance or not, is available for an average of about $300 a year. Ms. Balber, why don't you ever promote this program that your organization championed?
megan smith November 01, 2012 at 10:03 PM
The program with this low cost insurance program is that it's very difficult to qualify. Most of the low-income & minority groups that would be affected by Prop 33 are not "poor" enough to receive this insurance. Also, this is a campaign and campaigns are focused. When not in the middle of a campaign, Consumer Watchdog has worked very hard to promote this low cost auto insurance program. Lord knows the insurance brokers aren't promoting it.
Ashley Brookes November 01, 2012 at 11:21 PM
You can go to the Department of Insurance's website and pull up the rate filing for any major insurance company and see how the rates are structured. Right now basically every company gives a discount to their existing policyholders, which translates to higher rates for people who are buying insurance for the first time, people who have a lapse, or people who are switching from another insurance company. This Proposition targets the latter and allows people to keep that discount when they switch insurance companies. This speculation over the creation of a surcharge on the uninsured is wrong simply because the surcharge already exists. This is about people who already have insurance and making it easier for them to switch. It also creates new exceptions for people with their own insurance companies if they have a lapse. When a law very similar to Prop 33 was in place the number of uninsured drivers in California fell from 28% to 14%. Rates did not go up. Go to the Department of Insurance's own website to see the studies. Allegations that there would be more uninsured on the road are completely contradicted by the facts and by historical data.

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