California voters are getting a chance to tweak the state’s car insurance rules when they consider the fate of Proposition 33. The November ballot item asks voters to change the way car insurance rates are calculated in California. The measure proposes tweaking current rules to allow companies to consider a driver’s insurance history when setting how much they will pay.

It is not a new idea. In fact, Proposition 33 is similar to Proposition 17, a measure voters rejected just two years ago. Under Prop. 33 people who have had car insurance continuously for five years can get a discount. People who have an interruption in coverage would face much higher car insurance fees. In an effort to separate itself from the failed Proposition 17, Prop. 33 adds some exceptions that include the military, workers who have lost their jobs and children living with their parents.

It is a message the “Yes on 33” camp is putting on television spots hitting the airwaves on stations around California, according to Rachel Hooper, a consultant for the campaign. One ad features several drivers including a young woman who calls it a great idea for all drivers. Another person in the ad says Prop. 33 rewards drivers for maintaining car insurance.

You can watch the ad here.

Hooper argues the initiative makes the car insurance market more competitive by creating the continuous coverage discount — and making it portable.

“I have a colleague who has insurance with one carrier. He’s had it for 20 years. And he wanted to go to a different carrier because he likes their customer service better,” said Hooper. “But when he called that new company, they said he couldn’t match what he was currently paying. They couldn’t match his rate because they couldn’t give him that continuous coverage discount.”

The owner of Mercury Insurance, self made billionaire George Joseph, funded 2010’s Prop. 17. He’s also the major supporter of Prop. 33. Joseph spent nearly $15 million the first time he tried to get the car insurance rules changed. This time he has put up another $8 million.

“Yeah, it’s no secret that it’s the personal funds of George Joseph,” said Hooper. “But I think he really values competition in the marketplace and sees that if Proposition 33 passed, there’s more competition. And that benefits consumers because if there’s more competition you have lower rates.”

It is not an argument that sits well with opponents of Proposition 33.

“Voters just have to ask themselves one simple question,” said Carmen Balber of Consumer Watchdog, a consumer advocacy group. “When was the last time an insurance company executive spent $8 million to save you money on your car insurance? Everyone knows the answer is — never.”

Consumer Watchdog is working with just a fraction of the “Yes on 33” budget. Instead of television spots, its ads are online only. One features Kyle, a college student who worries he’ll pay more for car insurance later because he doesn’t drive right now. In the ad, Kyle says, “With this new Proposition 33 it’s going to make it even more difficult to afford car insurance on top of all the other loans and payments I’m going to have to make. It feels like I’m being punished.”

Barber says that no driver should have to pay more for car insurance just because they have not had continuous coverage for five years. Balber calls this a thinly-veiled retread of Prop. 17. Prop. 33 does not change loyalty discounts, Balber says. Those are savings some companies give to long time customers, and those discounts would not be portable, she says.

“This idea that you get to take your discount with you is completely wrong. That’s not what Prop. 33 would do,” said Balber.

Prop. 33 would create a new provision in California’s insurance law that bases rates on history of insurance coverage. That circumvents consumer protections put in place by California voters 24 years ago. Rules set up by the consumer-based Proposition 103 only permit insurance companies to set car insurance rates based on a driver’s safety record, number of miles driven and years of experience. The law specifically prohibits companies from setting rates based on insurance coverage history.

“Insurance companies can’t charge you more just because you don’t have current insurance,” said Balber, “just because of your history of insurance coverage. Because that was a way for insurance companies to just redline out customers that they just didn’t want to cover.”

UC San Diego professor Thad Kousser said there is a reason this issue is back in front of voters so soon after voters defeated the concept two years ago. That, he said, is how California’s direct democracy system works. Money can and does buy ballot access. However, it does not guarantee success.

“We’ve seen in the past — whether it’s Pacific Gas and Electric’s initiative that failed in the past, this other Mercury Insurance initiative — is that voters are often skeptical when there’s one group behind this process that’s supposed to be for us all,” said Kousser.

If Prop. 33 passes about 80 percent of the state’s drivers could qualify for a continuous coverage discount. That discount will be paid for by drivers that don’t qualify — and they will likely end up paying substantially higher car insurance rates.

Learn More
KQED’s Forum featured a discussion on Prop. 33 Monday morning. Be sure to scroll down through the comments which provide a fascinating perspective from listeners.