Insurance Proposal Proposition 33 Fails at California Ballot Box

California voters headed to the ballot box yesterday and rejected Proposition 33, an auto-coverage-related initiative that would have modified the state’s long-standing pricing structure.

As of 8 a.m. Wednesday morning, the tallied vote was 54.6 percent “no” and 45.4 percent “yes.”

Proposition 33 sought to allow insurers to consider a driver’s coverage history as one of the factors playing into policyholders’ premiums. Those 19 factors that California car coverage providers are currently allowed to use to price policies were established by Proposition 103, which was passed in 1988, and currently include factors such as driving history and type of car insured.

Proponents of Proposition 33 said that the additional rating factor would have allowed consumers to take their discount for being previously insured from insurer to insurer for possible discounts and subsequently encourage competition within the industry.

As a result, consumers can still get a discount for maintaining coverage with the same insurer, but not simply for maintaining coverage.

In Oft-Testy Campaign, Consumer Advocates Faced Off with Executive

The main arm of the campaign against Proposition 33 was the Santa Monica-based Consumer Watchdog, which took often heated shots at the initiative’s chief backer, Mercury chairman George Joseph.

Consumer Watchdog derided Joseph as a wealthy executive and “billionaire chairman” whose initiative was “crushed by voters” in a press release issued yesterday night.

“Self-interested corporate campaigns could not disguise themselves or their proposals to fool voters, and other corporate interests should take note,” the group stated in the release, adding that consumer groups opposing Proposition 33 were “outspent 70 to 1.”

“California voters have proven once again that they won’t be fooled by big insurance money,” said Carmen Balber, campaign manager of Consumer Watchdog’s effort against the proposal. “This is a victory for fair insurance laws that have protected Californians for 24 years.”

Joseph rarely engaged the public criticism aimed at him, his company or proposal, but issued an open letter to “members of the Mercury family.”

“From what I’ve read, it seems the biggest complaint from opponents is that, since some insurance companies are for it, it can’t be good for consumers. I disagree,” he stated in the letter. “I founded Mercury Insurance in 1962 with the vision of providing coverage for a wide range of drivers.”

According to media reports, Joseph personally spent millions on this year’s campaign, which was a follow-up to a similar initiative brought to voters in 2010 called Proposition 17. That initiative failed by a slimmer margin than Proposition 33 and was largely backed by funds from Mercury.

Consumer Watchdog Looking at Next Election

Consumer Watchdog had hoped to put its own proposal on the ballot called the Insurance Rate Public Justification Accountability Act (IRPJA).

The measure sought to establish a regulatory structure around health and homeowners coverage similar to auto coverage that is based on prior rate approval; a provision within that measure would bar insurers from considering past coverage and credit history as rating factors.

However, IRPJA narrowly fell short of verifying the minimum number of signatures required to put the initiative on this year’s ballot, although it qualified in late August for the 2014 ballot. Consumer Watchdog vowed to revive the efforts it brought to IRPJA this year for the following election and repeated its pledge after Proposition 33’s defeat.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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