Insurer Veils Its Funding Of Measure

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Literature For Prop. 17 Omits Mercury’s Millions

In what is shaping up to be a hotly contested ballot measure, Mercury Insurance — the state’s third-largest auto insurer — is bankrolling an initiative that would allow insurers to base their rates partly on how long drivers have kept up their policies.

Yet, as often happens with ballot propositions, it would be hard to know that judging from the campaign literature on Proposition 17, the California Continuous Coverage Discount Act.

Officially, the proposition is the handiwork of Californians for Fair Auto Insurance Rates or Cal-FAIR, which describes itself as “a growing coalition of consumer advocates, businesses and insurers from across the state.”

But Cal-FAIR is actually the creation of a Sacramento public-affairs firm, Bicker, Castillo & Fairbanks, that has so far earned $200,000 from Mercury for its work on the campaign, part of the insurer’s $3.5 million total contribution to the effort.

Kathy Fairbanks, a partner in the firm, said the name is supposed to reflect the “broad support among consumers groups and businesses” for the proposition. “The objective of Mercury and consumers is exactly the same — to have a competitive insurance market,” she said.

But one of the four “consumers groups” that Cal-FAIR lists as supporting the proposition is a Sacramento consulting firm being paid $5,000 a month for the Proposition 17 campaign. Two are basically one-person operations that have often taken pro-industry stances. And one denies that it even supports the measure.

“That’s really an issue that we’re not willing to get involved with,” said Don Lively, executive director of Citizens Against Regulatory Excess in the East Bay city of Lafayette.

It has become increasingly common for corporations to use groups with innocuous-sounding names to float ballot propositions.

In 2008, for instance, a trio of natural-gas companies owned by Texas billionaire T. Boone Pickens funded Californians for Energy Independence in an unsuccessful ballot initiative to require the state to provide billions of dollars in subsidies to natural-gas-powered vehicles.

Similarly, Pacific Gas and Electric Co. has spent $6.5 million on Proposition 16, coming before voters in June, which would require a two-thirds-majority vote to create a community-funded utility. But the measure’s official backer is the PG&E-backed Californians to Protect Our Right to Vote, which makes no mention of public utilities.

“It’s pretty standard on all sides to set up a committee with an appealing name, designed to make it more likely to attract support,” said Mark Paul, a senior scholar with the New America Foundation, a public-policy institute.

James Smith, a political-science lecturer at San Diego State University, said such committee names are especially useful during the petition-gathering process. Once the proposition is accepted, state law requires major backers to disclose their names and include them names on campaign literature. But there are no such requirements on petitions.

“People sign the petitions when they’re in a hurry, entering the DMV or the supermarket,” Smith said. “They don’t really look at the fine print or think about the fact that somebody’s paying a lot of money to collect the signatures.”

Mercury paid $2.3 million for the petition drive, averaging $3.12 per name compared with the typical $1 to $2.

Fairbanks, however, said that “Californians are sophisticated voters, and as we move though this campaign, it will be very clear that literature and ads are paid for by Mercury. We’re not trying to hide that — and neither are our opponents.”

Proposition 17 would allow insurers to give discounts to drivers based on how long they have been making consistent payments on their insurance, which is currently not allowed in California.

A number of consumer groups, including Consumer Watchdog, Consumers Federation and Consumers Union, oppose the initiative because they fear that it could raise rates for some drivers.

To counter such claims, Cal-FAIR also says Proposition 17 is backed by consumer groups, specifically:

• Consumers First Inc., which is the Sacramento campaign consulting group being paid $5,000 a month for its work on Proposition 17.

• Consumers Coalition of California, based at the home of its president, Virginia Jarrow, in Austin, Texas. Jarrow, whose background is in marketing, describes the group as a “bridge between businesses and consumers” that is funded by grants from entities she declined to disclose.

• California Alliance for Consumer Protection, operated by Sacramento lobbyist Michael Ross from the offices of his firm, MCR Public Affairs and Advocacy. Ross said he funds the alliance himself and does not accept money for endorsements. But the alliance, which has no members, has supported the causes of some MCR clients.

Ross said he is backing Proposition 17 because he was assured that it would create more competition among insurers. But he added that he “didn’t look at all the particulars of the bill” before he signed on. “In every ballot initiative, there’s always somebody who’s hurt,” he said. “The question is whether it’s something that’s good for society as a whole.”

• Citizens Against Regulatory Excess, a small group that focuses on homeowners’ rights and taxes in Contra Costa County. Lively said he has no idea how its name found its way onto Proposition 17 literature. He added that he has been involved on the same side of a couple of regulatory issues as Consumers First. Fairbanks said she has a document with Lively’s signature supporting the proposition.

With the help of the Cal-FAIR name and the imprimatur of its cadre of consumer advocates, Proposition 17 has also gained backing from some more notable groups, ranging from the state Chamber of Commerce to San Diego Tax Fighters. But some of these groups appear to have relied solely on Cal-FAIR’s representations when making their decisions and were not aware that some insurance rates might rise because of the bill.

Mike Culley, who heads the East County Chamber of Commerce, said his group knew little of Mercury’s connection to the bill or its potential to raise prices on some consumers. “If it turns out it’s misleading or it doesn’t make sense, our position may change,” he said.

Dean Calbreath: (619) 293-1891; [email protected]

Consumer Watchdog
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