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[Cross-posted at The Hill's Congress Blog.]

In the worst economy in generations, California's 3rd largest auto insurer hopes to fool voters into allowing higher auto premiums. Mercury
Insurance has written a state ballot initiative that would let companies penalize motorists who have had a lapse in insurance coverage
for any reason, whether they stopped driving and dropped their policy
for a few months or were canceled when they missed a premium payment.
The proposal would also allow insurers to hike rates on policyholders
who file a claim for innocent accidents—rear-ended at a stoplight, for
instance, or broadsided by an uninsured drunk driver. Currently
California drivers can only face higher rates when they file claims for
which they were at fault.

Last week, the California Attorney General released its Title and Summary for the initiative, authorizing Mercury to begin signature gathering to place its plan on the ballot.

The story of this attack on consumers, though, is not just that of a
greedy insurance company looking for a new way to make a buck.

Dial back to 1987. The state of California required motorists to
carry auto insurance, with substantial penalties on anyone caught
without it. Yet insurance companies put hefty surcharges on anyone
without previous insurance or with a short lapse in coverage, no matter
how perfect their driving record. Some were refused insurance
altogether. In a civil rights case decided that year (King v. Meese),
the California Supreme Court recognized the Catch-22 faced by drivers
who couldn't comply with the law because of this discriminatory
no-prior-coverage penalty. But, the Court said, fixing it was a matter
of legislation, not adjudication.

The next year, state voters passed Proposition 103 to regulate auto
and most other insurers. The law banned using prior insurance coverage
as a factor in premium costs. Under Proposition 103 (which is far
broader than just this prohibition), California drivers have enjoyed
the smallest premium increase in the nation for 20 years and one of the
most competitive auto insurance markets, according to a 2008 study by
the Consumer Federation of America.

And during that span, insurance executives like Mercury Chairman
George Joseph have constantly fought to undermine these consumer
protections.

At it again, billionaire George Joseph appears content to attack
consumers struggling with layoffs, foreclosures and economic malaise in
hopes of returning to a happier time (for insurers) when companies
could discriminate and gouge to their hearts' content.

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