Big Bucks Advantage in Fight Over Prop. 17

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SACRAMENTO — The Mercury Insurance Co. is spending millions of
dollars to sell its ballot measure, Proposition 17, as a surefire
pocketbook winner for voters.

Opponents, being outspent at a ratio of 20-to-1, are hoping that
voters’ suspicion of Big Insurance will outweigh the promise of extra
cash in their wallet.

Voters historically have gone with their gut: They don’t trust
insurance companies, said Bruce Cain, director of the University of
California Center in Washington, D.C., who noted the historic 1988
campaign when voters rejected two ballot measures sponsored by insurers
and approved Prop. 103, the measure that limited auto insurance
companies’ ability to raise rates.

“This is basically insurers testing the waters to see if they can get
away with what they could not get away with in 1988 — putting something
forward that benefits them in the guise of the public interest,” Cain

But, with the monetary advantage that the Mercury-backed initiative
has — Mercury has essentially single-handedly financed the campaign with
$10 million, compared with the $500,000 raised by opponents — voters
may not get the full picture.

“You’ve got an insurance company that’s already spent $10 million and
could spend another $10 million,” said Harvey Rosenfield, a longtime
consumer rights attorney who authored Prop. 103 and founded Consumer
Watchdog, which is funding the No On Prop.17 campaign. “They’ve been
carpet-bombing the state with ads. We’re just throwing a rock back with a
sling shot.”

Consumer Watchdog’s political committee started airing its first-ever
TV ad this week, a 15-second spot that, at a cost of $250,000, will run
for one week around the state. It plays on the public’s suspicions of
insurance companies, as a voice asks “Why are car insurance companies
spending millions to pass Prop. 17?”

“That’s our secret weapon,” Rosenfield said. “Since when has an
insurance company spent tens of millions of dollars to save people
money? With the public’s natural distrust of corporate money in
initiative politics, we think we have a shot.”

Rosenfield sent a letter to 100,000 supporters asking for financial
support to extend the ad’s airtime, and is hopeful that opposition to
Prop.17 by the majority of editorial pages around the state will have an

If voters feel whipsawed by competing populist appeals, they’re
justified. The measure, on the June 8 ballot, promises to allow insured
drivers to switch to new insurers while keeping their $250 discount for
being insured continuously. But, it will also allow insurance companies
to impose a surcharge on those drivers buying auto insurance for the
first time, or those who haven’t kept up continuous payments for five
straight years. Supporters of the measure chafe at Rosenfield’s attempt
to frame the battle as consumers versus greedy corporations. Eighty-two
percent of California’s drivers — those who have carried insurance for
at least five straight years — could benefit under the measure, they
say. And it would open up competition, which would enhance consumers’
ability to shop around for the best deal.

Drivers looking for the best deal will help lower rates, supporters
say, because insurance companies will have to be competitive to attract
newly mobile customers.

“This would benefit all insurance companies — every carrier would
have the ability to offer discounts, and that’s a tremendous benefit to
consumers, 82 percent of whom are punished for their inability to shop,”
said Mike D’Arelli, executive director for the Alliance of Insurance
Agents and Brokers, who spoke on behalf of Mercury’s ballot initiative
campaign, Californians for Fair Auto Insurance Rates.

Drivers who have kept up insurance payments are penalized —with a
surcharge — if they want to change insurers because they lose their
continuous coverage discount, D’Arelli said. And drivers who don’t keep
up insurance payments already pay more than drivers who continuously
maintain auto insurance.

“I challenge you to find a reason to be against something that
benefits 82 percent of California drivers,” D’Arelli said. “They’re
hungry to save money. And this will benefit people further down the food
chain even more than you or me because $250 represents” a significant
savings to a low-income driver.

Cain said voters “may go for it” because most drivers — should they
switch companies — would be eligible for a discount.

“It comes down to how popular are insurance companies,” he said. “But
somebody’s got to put a little money into this to make it clear this is
put forward by insurance companies. Like in 1988, when people learn
that the sponsor is an insurance company, they don’t need to read the
fine print.”

Contact Steven Harmon at 916-441-2101.

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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