Consumer groups: Proposition 33 is a lemon

by Richard Holober, San Francisco Business Times

Seven independent consumer organizations oppose Proposition 33, which legalizes arbitrary insurance surcharges on millions of motorists.

Proposition 33 allows premium rate hikes on anyone who suspends coverage for 90 days within five years and on newly insured customers, including good drivers.  Mercury Insurance’s billionaire owner George Joseph contributed $16.4 million to Prop 33. He recently acknowledged that his goal is to give Mercury a license to charge customers more.

Consumer advocates say:

Consumers Union (publisher of Consumer Reports): "Prop 33 will give insurance companies far more power to raise rates on millions of good drivers who deserve a break, not a rate hike.  Allowing insurance companies to base their auto premiums primarily on continuous coverage will make insurance coverage unaffordable for many low-income drivers." Mark Savage, Senior Attorney

Consumer Action: "Prop 33 is a dagger in the heart of California’s insurance regulation law. It eliminates an effective safeguard that prevents insurance companies from imposing an arbitrary surcharge on good drivers." Joe Ridout, Customer Services Manager

Consumers for Automobile Reliability and Safety (CARS): "George Joseph is trying to sell voters a lemon. Prop 33 rewards Mercury Insurance by punishing responsible drivers." Rosemary Shahan, Executive Director

Consumer Federation of California: "An insurance tycoon doesn’t spend a fortune to save you money. Proposition 33 is a billionaire’s self-enrichment scheme." Richard Holober, Executive Director

Consumer Watchdog: "Lies and deception are at the heart of this insurance billionaire’s campaign for Prop 33, because he can’t win if the public knows the truth: Prop 33 allows insurance companies to charge good drivers more." Carmen Balber, Consumer Advocate

TURN (The Utility Reform Network): "Prop 33 is based on the fiction that you can’t shop around for better rates. Turn on your TV and you’ll see non-stop ads from auto insurance companies competing for your business, promising lower rates.  Don’t let Prop 33 destroy the only law that protects customers from being overcharged by insurance companies." Mark Toney, Executive Director

United Policyholders: "Proposition 33 claims that it targets scofflaws, but it uses a scattergun that hits millions of responsible drivers with massive surcharges. Prop 33’s unintended consequence will be more people priced out of the insurance market driving uninsured, and higher premiums for uninsured motorist coverage for the rest of us." Amy Bach, Executive Director