Exec Again Tries To Alter Insurance Law

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George Joseph gives $8.1 million to 2012 initiative campaign to up-end Prop. 103.

SACRAMENTO, CA — Los Angeles insurance executive George Joseph has raised the stakes in his years-long effort to change California's landmark automobile insurance law, Proposition 103, by putting millions of dollars into a ballot initiative that would give discounts to some motorists and likely raise rates for others.

On Friday, Joseph, the chairman of insurer Mercury General Corp., personally contributed $8.1 million to an initiative campaign called the 2012 Auto Insurance Discount Act, which is gathering signatures from voters with the aim of making the June ballot.

Earlier in the month, the secretary of state's office reported that Joseph gave an initial $150,000 to the campaign, sponsored by the trade group American Agents Alliance in Sacramento.

The proposed initiative would allow insurers to offer discounts to new customers who could prove they were continuously covered by any licensed auto insurance company over the previous five years. Current law lets insurers offer these so-called loyalty discounts only to their existing customers.

A break in coverage of 90 days for any reason would not make the motorist ineligible for the lower premium. Neither would unemployment for periods of up to 18 months, or coverage breaks resulting from active military service.

Proposition 103 requires that drivers' insurance rates be primarily based on the number of years they've driven, their driving record and how many miles they drive.

Joseph has been trying to change that law in the Legislature, the courts and on the ballot for more than a decade. In 2010, Mercury General spent $16 million on an unsuccessful initiative, Proposition 17, to offer so-called loyalty discounts.

Insurers currently are not allowed to base rates on how long a motorist has been insured. Joseph and proponents of the 2012 Auto Insurance Discount Act want insurers to be able to attract drivers with good safety records away from rivals by offering them competitive rates as well as the proposed discount for continuous insurance coverage. Such drivers tend to file fewer, less costly claims.

Opponents, led by Consumer Watchdog, a Santa Monica activist group whose founder, Harvey Rosenfeld, wrote Proposition 103, contend that Joseph's proposed initiative would unfairly rewrite the 1988 initiative by allowing insurers to discriminate against drivers who did not have coverage during the previous five years.

"The measure would repeal Proposition 103's prohibition on insurance companies from considering a driver's coverage history when a motorist applies for insurance," Consumer Watchdog said in a statement Monday.

Joseph did not respond to requests for comment.

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