Stumble It!
June Ballot Measure May Change Car Insurance Laws
SAN FRANCISCO (CBS 5) ―
In 1988, California voters passed Proposition 103, which lowered insurance rates and regulated the state’s insurance industry like never before. But now comes a challenge to Prop. 103 in the form of an initiative on the June ballot called “The Continuous Coverage Auto Insurance Discount Act.”
“The way the market works today is, if you stay with the provider you’re with, you can get a continuous coverage discount, it could be anywhere from 7 to 10 percent. But if you leave your company because you’re unhappy with the service or for whatever reason, you don’t get that discount,” said Jim Conran, the campaign’s spokesman.
But he said you could get that “continuous coverage discount” with your new insurer, if his initiative passes.
But the initiative has brought out a powerful opponent: the man who wrote Prop. 103 and got it passed 22 years ago: consumer advocate Harvey Rosenfield.
“The big truth is it’s not just a discount, it’s a surcharge for millions of Californians who could find rate increases of up to 277 percent on their auto insurance if this Mercury Insurance Company initiative passes,” Rosenfield said.
In fact, Mercury Insurance is the prime sponsor of the initiative – having put an estimated $4.5 million into the campaign to pass it so far. So is it really a discount?
CBS 5: “But under this initiative insurers would not be forced to lower rates for new customers, right?”
Conran: “No. No.”
CBS 5: “So we don’t have any guarantee that the rates will go down.”
Conran: “There’s never a guarantee, but the fact is that most providers offer that discount today. And so because they offer that discount today, we expect that they’ll say well now we can go after other consumers.”
But Rosenfield sees a worse scenario, based on other states that already have similar rules in place.
“The worst thing is for everybody, premiums will go up because there will be more uninsured motorists on the road. This is what California was like before Proposition 103. If you can’t afford to buy insurance, then you’re driving without insurance,” Rosenfield said. “The rest of us who do buy insurance have to buy extra coverage to cover ourselves against uninsured motorists.”
Responding to opponents’ claims, Conrad said, “Again the laws in California are very different from other states. I don’t know what the other states do. But I do know that under California law, under Proposition 103, which regulates the insurance industry. The only thing that’s going to be changed is your ability to go from one place to another.”
But that change will be up to the voters, in June.
Late Tuesday, Rosenfield’s consumer group asked Attorney General Jerry Brown to change the ballot language for the proposition. They feel the title should not call it an “Auto Insurance Discount.”
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