Insurance Reform

Published on

City News Service

SANTA MONICA — Auto insurance rates in California have fallen 22 percent in the 15 years since voters approved an insurance reform plan, the author of the initiative said today.

Proposition 103 was enacted to “curb insurance company profiteering and it worked,” Harvey Rosenfield said at the Santa Monica offices of the Foundation for Taxpayers and Consumer Rights.

According to a study commissioned by the consumer watchdog group, motorists’ premiums around the country over the same period have risen 30 percent.

Approved in 1988, Proposition 103 called for rollbacks in insurance rates and rebates of up to 20 percent for excessive premiums charged in the 1980s.

Critics, including the Personal Insurance Federation of California, a Sacramento-based trade group that represents carriers that sell nearly half of the state’s homeowners, auto and earthquake coverage, call 103 a “straitjacket” for insurers. Jerry Davies of the PIFC did not return a call today.

Under Proposition 103, insurance companies were required to justify any rate changes. The initiative also required auto insurers to base their rates mostly on a motorist’s experience, safety record and miles driven, and allowed consumers to challenge proposed rate hikes.

The FTCR said two of the 20 largest insurers have requested auto insurance rate increases in 2003, and so far none of them has been approved.

The FTCR also said 103 has been so effective Sen. Fritz Hollings, D-S.C., is sponsoring a national version.

The group said it has used 103 in the last three months to block or reduce proposed homeowners and medical malpractice rate increases.

“California’s experience under Prop. 103 proves that the way to rein in skyrocketing insurance rates is through active regulation of insurance companies,” said Douglas Heller of the FTCR.

Earlier this year, the California Supreme Court upheld the initiative, but did allow for insurers to get relief if they can demonstrate the rollback would deprive them of an adequate return.

Gov. Gray Davis signed a measure into law earlier this year that allows insurers to charge more to those seeking insurance for the first time or those who have allowed their coverage to lapse.

The FTCR and other groups have sued to repeal that law.

Consumer Watchdog
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