An automobile insurance discount initiative, more than 99% bankrolled by the chairman of Mercury Insurance, has qualified to go before voters on November's ballot.

Officially sponsored by a trade group, the American Agents Alliance, the proposal would provide motorists, who switch insurance companies, with a discount if they had been previously insured.

Passage of the initiative, whose petitions got signatures from almost 505,000 registered voters, would make the automobile insurance market more competitive, supporters argue.

"It rewards consumers for following the law and allows a new discount for continually having automobile insurance," said alliance President Ken May.

Critics, led by the Santa Monica activist group Consumer Watchdog, contend that the proposal is unconstitutional and violates the 1978 auto insurance reform initiative, Proposition 103.

Proposition 103 requires that auto insurance premiums primarily be based on a driver's safety record, the number of miles of driving per year and years of driving experience. The proposed discount, Consumer Watchdog says, would unfairly penalize previously uninsured motorists when they are buying a legally required insurance policy.

Securing the so-called persistency discount has long been a goal of George Joseph, the octogenarian founder of Mercury, a Los Angeles company that specializes in selling low-cost coverage. Joseph has repeatedly and unsuccessfully tried in the courts, the state Legislature and on the ballot to make changes in Proposition 103 that would authorize his proposed discount.

In 2010, Mercury spent about $16 million on a failed initiative campaign, Proposition 17,  that would have created a similar discount proposed in the latest initiative.

Joseph personally has contributed $8.2 million to the new campaign, according to the California secretary of state's office.