Sacramento, CA — Consumer advocates and civil rights leaders testified today before a joint hearing of the California Assembly and Senate Insurance Committees that Prop 33 would turn back the clock on insurance discrimination in the state of California and raise rates for good drivers who have done nothing wrong.

Carrying a life-size cut-out of the insurance billionaire financing Prop 33 with $8.5 million, advocates from Consumer Watchdog, the Consumer Federation of California and Public Advocates questioned why Mercury Insurance’s founder and Chairman George Joseph refused to testify at the hearings and be questioned about his motives.  The legislature refused to allow the life-size photograph of Joseph writing an $8.5 million check to the Prop 33 campaign into the hearing room.

“It’s outrageous that the insurance billionaire behind Prop 33 wouldn’t show at a legislative hearing for a ballot measure he paid $8.5 million for and that the legislature won’t even allow a picture of him to displayed at the only public hearing on Prop 33, which would raise rates on good drivers,” said Jamie Court, of Consumer Watchdog Campaign. “The picture this insurance company and its minions in the legislature don’t want you to see is the real picture of an insurance billionaire spending $8.5 million on a ballot measure that only benefits his insurance company and hurts good drivers.”

Mercury Insurance and its Chairman George Joseph have been the biggest donors to the legislature among all insurance companies over the last decade.

The advocates testified that the claim that Prop 33 extends ‘loyalty discounts’ is particularly hollow given new research showing that the state’s largest insurance companies offer no or little ‘loyalty’ discount to their customers.  Allstate does not offer a loyalty discount. State Farm’s discount is merely 3.8%. Mercury Insurance, sponsor of Prop 33, offers only a 1% discount.

Advocates point out that loyalty discounts are related to insurance company costs because loyal customers cost insurance companies less to maintain, since they don’t have to market or advertise to them. By contrast, Prop 33 is not justified because it charges customers more or less based on whether or not they had insurance previously, even if the reason is they did not drive or own a car.

"Prop 33 will raise insurance rates for drivers with perfect driving records, even if they weren't driving or didn't even have a car. That means students in college, disabled people recovering from an illness, people using public transit and the long-term unemployed will all pay more for auto insurance when they get back on the road," said Richard Holober, Executive Director of Consumer Federation of California.

The civil rights advocates testified that the continuous coverage rating factor had been used by insurance companies in the past to refuse to sell, or redline, certain customers, and that was the impetus for banning the rating factor in 1988.

“As organizations that advocate for the protection of civil rights in California’s low-income communities of color, we oppose Proposition 33 because it would massively concentrate the burdens of the policy Mercury proposes on an extremely disadvantaged minority population,” said Public Advocates Managing Attorney Richard A. Marcantonio.

Read the Public Advocates letter at http://bit.ly/Prop33_Civil_Rights_letter

Read a letter from the Equal Justice Society at http://bit.ly/EJS_No_on_33

Consumer Federation of America released a report Monday showing that 68% of Americans opposed considering whether a driver had prior insurance coverage as reason to charge them more or less for auto insurance. 

“The reason this billionaire insurance executive is running a deceptive campaign falsely promising drivers discounts is because he knows that voters don’t think it’s fair to be charged based on whether they had insurance previously, even if they did nothing wrong,” said Carmen Balber, DC Director with Consumer Watchdog.

Californians who choose not to drive for a time and do not need insurance would be surcharged by Prop 33 when a new job, move or some other circumstance requires them to buy insurance again. Prop 33’s unfair penalty would punish drivers with premium surcharges that could reach $1,000 a year or more just because they took a hiatus from driving their automobile.

For more information about Prop 33 visit www.StopProp33.org

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