Consumer Federation of California

Last year, California voters rejected Proposition 17, a measure that would have allowed insurance companies to raise rates on millions of motorists with perfect driving records. Mercury Insurance sponsored the measure and contributed $16 million to the unsuccessful campaign.  

But like a zombie that is killed, only to walk the earth again, Mercury Insurance Chairman George Joseph just donated $8.2 million to bring Prop 17 back from the grave for the 2012 ballot. It’s the latest chapter in one insurance company’s relentless quest to destroy consumer protections that voters enacted through Proposition 103.

Mercury Insurance’s record of failed efforts to deregulate insurance dates back to 1988, when it joined other insurers in spending over $70 million against Proposition 103. Voters approved the measure, which gave the Insurance Commissioner the authority to reject excessive premium rate hikes.

On top of funding Proposition 17, Mercury has spent seven million dollars on political contributions and lobbying since 2000.  Mercury’s largesse failed to win its goal of rolling back Prop 103’s anti-gouging protections.

Prop 103 allows insurers to make a fair rate of profit, while it empowers the Insurance Commissioner to reject rate hikes that are not justified.  A study conducted by the Consumer Federation of America found that Prop 103 saved California motorists $62 billion in premium costs over a 16 year period.

George Joseph’s proposed 2012 ballot measure would allow insurance companies to raise rates on motorists who have had a break in continuous insurance coverage. This is against the law in California, because a break in continuous insurance coverage has no effect on a driver’s risk of causing an accident.

Eliminating this rule would fatten Mercury Insurance’s profits.  In Nevada, where discrimination against motorists without continuous coverage is allowed, Mercury’s rate quote went up over 70% when a potential customer switched his answer on current coverage from ‘yes’ to ‘no’.

Losers under Mr. Joseph’s proposal include graduating students who need to drive to work, folks getting back behind the wheel after recuperating from a disability that prevented them from driving, and workers who get a new job in a location that is only accessible by car after commuting to an old job by mass transit.

Mr. Joseph’s record of persistent attacks on Prop 103 brings to mind Samuel Johnson’s definition of second marriages: ‘a triumph of hope over experience.’ Forbes Magazine recently pegged Mr. Joseph’s net worth at $1.1 billion. His 2012 initiative provides a textbook example of a member of the wealthiest 1% lavishing money on a self-enrichment scheme.