Sacramento, CA — “Corporations are abusing California’s initiative process for their own profit,” said Harvey Rosenfield, the author of insurance reform Proposition 103 and founder of Consumer Watchdog, at a conference celebrating direct democracy’s 100th birthday in California. “The Legislature is more beholden to special interests than it has ever been, and now these special interests are attempting to seize control of the initiative/referendum process that was put in place by California voters one hundred years ago today to protect us against that kind of government corruption.”
“Exhibit A,” Rosenfield said, is Mercury Insurance Company’s latest ballot proposal. Mercury Chairman George Joseph has spent $8 million to promote a June 2012 ballot measure that will allow insurance companies to arbitrarily raise auto insurance premiums for millions of Californians. California voters defeated a nearly identical measure last year, despite $16 million spent by Mercury.
“California’s initiative process is suffering from ‘Mercury poisoning,’” said Rosenfield, who highlighted the point by wheeling into the conference eight thousand mock $1,000-dollar bills. “Joseph is the California poster child for the 1% in our country that wants to prosper at the expense of the 99%. He is number 375 in Forbes’ 400 richest people in America. He and his company have spent tens of millions of dollars attempting to enrich himself and his company by manipulating the Legislature and the ballot initiative process at the expense of Californians. The immediate antidote is voter vigilance; the long term solution is to prevent special interests from interfering with the rights the Founders gave to the American people.”
Grassroots Insurance Reform At the Ballot Box in 1988 – An Example of the Power of the Ballot Initiative
Rosenfield made his remarks during a panel presentation at the Citizens in Charge Foundation conference in Sacramento, commemorating the 100th anniversary of the establishment of California’s initiative and referendum process by California voters on October 10, 1911.
The story of Proposition 103 highlights the value of the initiative process, Rosenfield said. In the mid-1980s, auto, home and business insurance rates skyrocketed, as insurance companies sought to recoup investment losses. At the time, California law did not provide government officials with authority to limit unjust insurance rates or practices. Insurers were also exempt from state antitrust, civil rights and consumer protection laws. When insurance company lobbyists killed modest legislation sponsored by consumer groups to regulate rates in 1987, Rosenfield authored Proposition 103 and led the grassroots campaign for its passage on the November 8, 1988 ballot.
Proposition 103 mandated an immediate 20% rate rollback and refund; regulation of auto, home and business insurance rates; public disclosure and prior approval of rate increases; a further 20% discount for good drivers; auto premiums be based on driving safety record rather than zip code; a ban on penalties for persons applying for insurance for the first time; application of state laws to the industry; right to challenge violations of the law; and the election of the insurance commissioner.
Insurers, including Mercury, spent $63.8 million against Prop 103 in 1988. But the grassroots-backed 103, with only $2.9 million in spending based on donations averaging $8, passed. All totaled, the insurance industry has spent about $100 million on ballot campaigns alone to defeat or overturn Prop 103. (For more information on Mercury, see this fact sheet). Insurers have spent tens of millions more on unsuccessful attempts to block the law in the courts.
Proposition 103 has saved California drivers more than $62 billion since its passage in 1988, according to a 2008 study by the Consumer Federation of America. Insurance companies paid over $1.2 billion in refunds. Data published in 2007 show that between 1989 and 2004, California auto insurance premiums declined by 7%, while rates nationally increased 47%. During that period, California went from 2nd most expensive state for auto liability premiums in the country to 21st. Californians, who paid 52% more than the national average for auto insurance in 1989, paid less than the national average in 2004.
“I am a strong believer in the initiative process and the wisdom of the voters,” said Rosenfield. “Like democracy itself, the initiative process does not always work perfectly. And when it doesn’t, it’s usually because of problems endemic to democracy in general, such as the influence of special interest money in our government and elections. Dangerous and deceptive initiatives like Mercury’s designed to reward the wealthy and powerful at the expense of the rest of us threaten the integrity of the precious ‘battering ram’ of the initiative process that California voters bequeathed to us 100 years ago today. But the brilliance of California’s initiative process is the faith it puts in voters who know enough to see through an insurance company power grab. California voters must be exceptionally vigilant at the ballot box."
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