Is State Senator Behind High Insurance Rates?

KRON TV4 – San Francisco

SAN FRANCISCO (KRON)  –  $25,000 is a lot of money. But is it enough to make an East Bay lawmaker betray his constituents?

Those are the charges being leveled against a state senator who’s behind a bill that critics say will drive up rates.

25% of California’s drivers are currently uninsured.  Most of them are good drivers who can’t afford the high rates. 12 years ago, California voters approved Proposition 103, an insurance reform bill that forbids insurers from charging higher rates to the low income drivers.

Harvey Rosenfield of the Foundation for Taxpayer & Consumer Rights says when he wrote a provision into Prop 103 which said the insurance companies could not surcharge you just becuse you didn’t have prior insurance before you applied.

Despite that, Harvey Rosenfield — who authored that bill — says the previously uninsured have been paying more. He says that every insurance company in California in one way or another has been violating this provision of 103.

But with the industry facing lawsuits and a crackdown by the state department of insurance for violations, consumer groups say State Senator Don Perata is behind a bill that would gut Prop 103.

Rosenfield says one comany has decided it can no longer comply with the law so it’s going to change the law.

Consumer advocates say that Mercury Insurance of Southern California paid Senator Don Perata $25,000 in donations so he’d push its bill, SB 689 through. He says, “so what you have is a very powerful insurance company trying to buy its way out of accountability in the legislature and the person carrying that legislation is Oakland State Senator Don Perata.”

Perata admits he took the money, but says his bill will help middle income drivers. He calls the accusations a cheap shot.

Sen. Perata says, “What they’re saying is somebody is going to come into the market place and they’re going to pay a higher rate because you’re going to get a lower rate. I don’t believe that. I don’t think any actuarial shows that. What it really means is if I can drive down my rate and I’ve been carrying insurance for awhile, why not?

Perata is apparently the largest recipient of Mercury‘s check writing efforts, the insurer has made over a million dollars in contributions to other lawmakers.

But when asked if would give the money back, he said, “No, I think you’d still beat your dog. There’s nothing wrong with what I did. I would only be showing them that there was something wrong. Absolutely not.”

If this bill passes, consumer advocates say there will be more uninsured motorists on the road and that means insurance premiums go up for everyone.