Industry Seeks Change To Enable Rate Increases

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Days ago, the California Department of Insurance cracked down on an
insurance company that has been overcharging motorists for 15 years.
The company, Los Angeles-based Mercury Insurance, wrote and is
bankrolling Proposition 17.  Mercury wants you to believe that its
measure will save everyone money.

When was the last time an insurance company spent $5 million on a
ballot initiative to lower your rates?

In fact, Mercury’s Prop. 17 gives insurance companies the power to
raise rates for millions of Californians. That is why you should vote

This deceptively written initiative would allow insurance companies
to surcharge people who have not been previously insured – even if they
are perfect drivers but never owned a car. Prop. 17 also penalizes
anyone who had to drop coverage for more than 90 days over the past five
years or who missed one insurance payment.

These surcharges are illegal in California today: The voters banned
them in 1988. But in states that have laws similar to Prop. 17, the
surcharges can raise the price of car insurance by 200 percent or more,
adding thousands of dollars to the annual cost of insurance.

We must stop Prop. 17 because, if it passes, everyone will pay more:

People who use mass transit for a period of time. Ditto for college
students who don’t need a car until the summer. Or people who, in this
horrible economy, simply can’t afford to pay for insurance even if they
are good drivers. Prop. 17 would even punish Californians who serve in
the military stateside and must interrupt their coverage while in boot

Californians are rightly suspicious when big corporations try to
manipulate the initiative process for their own self-interest: Prop. 17
is one of two special-interest initiatives funded by big corporations
on the June ballot. (The other is PG&E’s Proposition 16.)

Mercury has proved that it cannot be trusted. Arguments about 17 made
by the company and its paid spokespeople have been repeatedly reviewed
and rejected as false by the courts and state regulators.

And just last week, the insurance commissioner brought an
administrative lawsuit against Mercury alleging that it had engaged in
55 practices that are illegal in this state, victimizing thousands of
Californians. Investigators discovered that Mercury did not give
customers the discounts they were entitled to and overcharged people
just because they were self-employed, worked out of their homes, were
waitresses or had health problems. The company even broke its own
pledges to regulators that it would stop violating California laws. The
company faces tens of millions of dollars in fines. Mercury Insurance’s
sponsorship of Prop. 17 is like Bernie Madoff backing a ballot
proposition claiming to protect investors.

The last thing California families can afford right now is an
initiative that makes insurance companies less accountable for their
actions and leads to more uninsured motorists and skyrocketing auto
insurance premiums. That’s why Consumers Union, the nonprofit publisher
of Consumer Reports magazine, veterans groups and seniors all agree:
Vote no on Prop. 17.

For more information, go to:

From official ballot summary for Proposition 17:
Permits companies to reduce or increase cost of insurance depending on
whether driver has a history of continuous insurance coverage. Fiscal
Impact: Probably no significant fiscal effect on state insurance
premium tax revenues.

Harvey Rosenfield is founder of Consumer Watchdog and author of the
insurance measure Proposition 103 passed by voters in 1988.

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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