Insurer proposes measure to alter California insurance reforms

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Associated Press

LOS ANGELES, CA — The head of Mercury Insurance is trying to get an initiative on the November election ballot that would undo new auto insurance reforms and reduce the state’s ability to regulate the industry, it was reported Thursday.

George Joseph, chief executive of Los Angeles-based Mercury General Corp., submitted a proposed ballot measure to the state attorney general’s office last week and has hired campaign strategists, lawyers and others to work on qualifying the initiative, the Los Angeles Times said.

Among other things, the proposal would roll back the current system for determining auto insurance rates to last August.

That is several months prior to a proposal announced last month by Insurance Commissioner John Garamendi that would force California insurers to change how they calculate the rates.

Garamendi said his regulations would require insurers to focus on three factors – a motorist’s driving record, years of driving experience and miles driven.

Insurers have opposed the changes, saying the current system is more accurate and changing it could prompt rate increases for people in rural areas, senior citizens and new drivers.

Joseph’s proposed ballot measure also would make it easier for the state Legislature to make wholesale changes to Proposition 103, the insurance reform measure passed by voters in 1988 even though insurers spent tens of millions of dollars to defeat it.

Under Proposition 103, auto insurance premiums dropped significantly.

The reform measure has survived dozens of lawsuits by insurers.

Proposition 103 attempted to minimize the geographic differences in auto insurance rates by requiring companies to focus on a motorist’s personal driving record, although insurers were still allowed to consider 16 optional factors including ZIP code, marital status and school grades.

A consumer group on Thursday said it would launch a counter-campaign against the insurance company proposal, arguing that it was an attempt to gut Proposition 103.

“California motorists, homeowners and businesses can expect to pay hundreds or thousands of dollars more every year for insurance if the insurance industry is able to trick the voters into passing their initiatives,” Harvey Rosenfield, author of Proposition 103 and head of the Foundation for Taxpayer and Consumers Rights, said in a statement.

Garamendi condemned the proposal Wednesday as “something very bad for consumers” and said making large changes in Proposition 103 could “unleash an extraordinary war” between insurers and consumer groups.

Consumer Watchdog
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