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PD Editorial: No on 33: This retread is no bargain

  • Proposition 33 would allow insurers to offer "continuity" discounts to long-term customers of other insurance companies. (KENT PORTER / The Press Democrat)

Two years ago, a Los Angeles insurer bankrolled a ballot initiative to change voter-approved rules for setting auto insurance premiums.

That was Proposition 17, and voters wisely said no.

Voters ought to say no once again when they decide Proposition 33, a virtually identical initiative on the Nov. 6 ballot. Maybe this time George Joseph will get the message.

Joseph, the chairman of Mercury Insurance, spent $16 million on Proposition 17. So far, he's spent at least $8 million trying to pass off Proposition 33 as consumer friendly.

Ask yourself, when's the last time an insurance company spent that much to save you money?

California drivers pay more than $20 billion a year in auto insurance premiums. Mercury is one of the five largest auto insurers in the state, and Joseph's initiative would create an avenue for his company to pursue a larger market share.

That's the real intent of Proposition 33.

Under the present rules, auto insurance premiums are based predominantly on a driver's safety record, annual driving miles and years of experience behind the wheel. These factors are objective and, to a large degree, they can be controlled by individual drivers.

Until 1988, when voters approved Proposition 103, where you lived was as important as your record and experience in determining how much you paid for auto insurance.

Insurers are allowed to offer loyalty discounts to long-term customers.

Proposition 33 would allow insurers to offer a similar “continuity” discount to lure long-term customers from other insurance companies. Joseph argues that this would promote competition and reduce prices.

What he doesn't say is that one person's discount would become another person's surcharge. That's because Proposition 33 allows insurers to charge more if people let their coverage lapse for 90 days or more. The losers in this equation wouldn't be people who don't bother to obtain insurance — we know there are plenty of uninsured drivers on the road, and we favor stiffer penalties for them.

Proposition 33 would raise rates for people who temporarily drop their coverage due to illness, because they can't afford to operate a vehicle or because they choose to use public transit. If they resume driving, they would get hit with higher premiums. Steep prices may prompt some of these people to drive without insurance, which is a hazard to responsible motorists. In turn, that would almost certainly drive up rates for uninsured motorist coverage.

In states where Mercury is allowed to charge more for drivers without continuous coverage, Consumer Watchdog says its rates have increased as much as 100 percent. In California, regulators have accused Mercury of deceptive practices and discrimination.

So we remain skeptical of Mercury's true intentions and recommend a no vote on Proposition 33.

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