Auto Insurance Debate Drives Prop. 17

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It’s been said that motorists in Ventura County — and all across
car-centric Southern California — can’t part with their automobiles. How
much of that can be attributed to auto insurance is yet to be seen,
although an upcoming ballot measure could change the way people choose
to insure themselves, according to supporters and opponents of
Proposition 17.

Prop. 17 is a statewide initiative on primary
ballots, asking voters to approve changes in the way auto insurers
provide discounts to their clients; namely, between those people who’ve
maintained continuous coverage, and those who haven’t.

Backers of
the measure say that Prop. 17, the “Continuous Coverage Auto Insurance
Discount Act,” is needed because it does just that — provides the
opportunity for rate discounts to drivers who’ve allowed their insurance
coverage to lapse.

Groups like the Alliance of Insurance Agents
and Brokers, and local chambers of commerce, also believe Prop. 17, if
it passes, will serve to increase market competition because it will
allow Californians to shop around for better insurance rates without
being penalized for switching companies.

Prop. 17, in effect, is
proposed to alter standards set by 1988’s Proposition 103, which
disallowed the practice of offering discounts to new clients even if
they’ve consistently carried insurance coverage with another carrier.

lack of “portable persistency,” as it’s called by Prop. 17 supporters,
damns motorists both ways: they might like to switch insurers for
cheaper rates, but if they do, they’re penalized.

“A lot of people
stick with the same company or they lose that discount. It’s a penalty
on drivers,” says Kathy Fairbanks of the Yes on Prop. 17 campaign.

supporting it because we feel it’ll bring insurance rates down and
increase competition. That’s good for our business climate and good for
consumers, too,” says Brendan Huffman, director of the Chambers of
Commerce Alliance for Ventura and Santa Barbara counties.

He cites
statistics from the Department of Insurance that show that 80 percent
of Californians maintain auto insurance and qualify for such a
persistency discount, which could save someone an average of $250 per

Supporters are also calling the opposing side’s stance an
insidious “shell game” meant to unfairly attack Mercury Insurance, the
big-name company with a near-$14 million investment behind the measure.

think the opponents would like to characterize it as special interest,”
says Mike D’Arelli, executive director of the Alliance of Insurance
Agents and Brokers. “Truth be told, all insurers in California would
like to take advantage of the initiative.”

But Mercury is the
culprit, according to No on Prop. 17 campaigners, led by the Santa
Monica-based Consumer Watchdog. Its director, Doug Heller, says that
it’s rarely mentioned that Prop. 17 would give Mercury and other
insurers free will to hand down hefty $1,000 surcharges to drivers —
four times the savings touted by Prop. 17 supporters.

The “Stop
the Surcharge” campaign frames low-income residents and those affected
by the bad economy as the victims. Heller noted that Prop. 17 could
result in a spike in more people opting out of being insured, despite
never having had a poor driving record or a prior lapse in insurance

“When they’re back on their feet and trying to get
insurance, if they face a Prop. 17 surcharge, they may be stuck driving
uninsured, and that’s bad for all of us,” Heller said.

group points a finger to blemishes on Mercury’s own record. Last month,
an investigation into the insurer’s practices, which was led by state
insurance commissioner Steve Poizner, concluded that Mercury may have
overcharged thousands of state residents on both their auto and
homeowners insurance policies.

Added support for Prop. 17 comes
from groups like the California Alliance for Consumer Protection, the
League of United Latin American Citizens and the 60-Plus Association.
Opponents include the California Nurses Association, the California
Alliance of Retired Americans and a host of major regional newspapers.

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