Zombie Initiative Alert: Prop 17 is Back from the Dead
by Richard Holober, Executive Director, Consumer Federation of California
Like a zombie that is killed by the people only to walk again, Mercury Insurance’s Proposition 17 is coming back for the November 2012 ballot.
Funded by $8 million from its billionaire chairman George Joseph, the ballot measure is Mercury Insurance’s latest attempt to roll back automobile insurance rate regulation.
When was the last time a billionaire insurance magnate spent a fortune to save you money? Never. This proposition is nothing more than an insurance tycoon’s self-enrichment scheme.
The measure has the same goal as Proposition 17, which voters rejected in 2010. It would impose insurance surcharges on California drivers simply because they had been car-free for a time.
If the initiative became law, millions of Californians would face big premium surcharges for motor vehicle insurance. Losers under the Mercury Insurance scheme include motorists seeking insurance coverage after a period of commuting by car pool, public transit or bicycle; seniors who had dropped coverage because an extended disability prevented them from driving; workers who could not afford to drive during a lengthy period of unemployment; and graduating students who need to drive to a new job after completing college or trade school.
The initiative would modify voter-approved Proposition 103. That law stops insurance rate discrimination against motorists who had no previous coverage or who had a break in continuous insurance coverage because they stopped driving a car for economic, environmental or health reasons. Discriminating against these motorists is unlawful because a break in continuous insurance coverage does not increase your risk for causing an accident.
Prior to Prop 103, low-income consumers who were trying to purchase auto insurance and comply with the mandatory insurance laws often faced insurmountable cost barriers to coverage. In states where discrimination against motorists who had a break in continuous coverage is allowed, insurance rates for these motorists is as much as 40% higher than in California.
In 2011, Forbes Magazine reported Mercury Chairman George Joseph’s net worth at $1.1 billion. Since 2000, Mercury Insurance has poured seven million dollars into other political and lobbying efforts to weaken Prop 103′s anti-gouging protections.