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The Daily News of Los Angeles

It’s been a 20-year battle fraught with court challenges and millions in legal bills, but California drivers should emerge victorious in a contentious battle for fair auto insurance rates by August 2008.

By then, insurance companies have to be in compliance with state rules that say your driving history matters more than where you live when determining rates.

We’re nearing the conclusion of the long, drawn-out battle over Proposition 103, which was approved by voters in 1988 and imposed stringent regulations on the insurance industry.

“I was only 37 when I wrote this, and I’ll be 55 next year,” said Harvey Rosenfield, author of Proposition 103 and founder of the Santa Monica-based Foundation for Taxpayer and Consumer Rights. “In a way, I’ll tell you, it reflects very poorly on our government and judicial system.”

Of the state’s 23 million motorists, those with good driving records should eventually see some relief when their car insurance bills arrive in August 2008 or later — in particular city dwellers who have fumed about paying more than suburbanites simply because of their ZIP code — a practice commonly referred to as redlining. Some have already seen changes.

But what makes the savings even sweeter is the triumph over a mega-sized industry that fought to keep the rules in their favor.

Car insurance became mandatory in California in 1970. And it didn’t take long for motorists to become angry and frustrated with insurance rates — emotions that led to the birth of Proposition 103.

A main component of the measure — a 20 percent rate reduction that forced insurers to refund more than $1.2 billion to policy holders — took hold in 1993.

And the call for an elected rather than an appointed insurance commissioner was also answered, along with greater regulation of home, auto and business insurance.

But the 18-year journey to implement the entire ballot measure involves one of the longest delaying tactics ever seen, said Bob Stern, president of the Center for Governmental Studies, a nonprofit, nonpartisan research organization.

Stern said it was a huge surprise when voters passed it in the first place because of the intense opposition by the insurance industry, which mounted an $80 million campaign against it.

The legal battle continued afterward in what Stern compares to the tale of David and Goliath.

“The problem is that David slew Goliath in a much faster way. It didn’t take 20 years,” Stern said.
“But things moved quite faster in the old days. And Goliath did not have car insurance.”

Advocates still hesitate to say the war has been won, because insurance companies could still appeal a court decision over regulation.

But the rules are in place and people are already beginning to see some signs of relief.

The Automobile Club of Southern California agreed in 2006 to base rates on a driver’s history instead of ZIP code, the first company to do so.

Some rates ticked up about 5 percent, but most saw rates decrease by 7 percent, an annual savings of about $134, spokeswoman Carol Thorp said.

Over the course of the next year, customers of other companies will see the changes, said Doug Heller, executive director of the Foundation for Taxpayer and Consumer Rights.

“Sometimes the only thing worse in the delay of justice is to give up the pursuit of it,” Heller said. “Here we have resolution. Finally the peoples’ word will finally take hold. It’s taken a darn long time though.”

In the end, California has dropped from one of the most expensive states in the nation for auto liability insurance to No. 20, according to a 2004 study from the National Association of Insurance Commissioners. Policy holders pay an average of $832.

New Jersey, Washington, D.C., and New York are the top three contenders for priciest rates, paying an average of $1,192 for liability insurance.

If you’re looking for cheapest, you’ll have to move to Idaho, South Dakota or Iowa, where the average cost for liability insurance is $585.

How do your car insurance rates fare? What are your thoughts about mandatory insurance and regulation? Tell our blog at

Contact the author at [email protected] or (818) 713-3746.

Consumer Watchdog
Consumer Watchdog
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