Consumer Federation of California

Consumer Watchdog issued the following news release:

In an attempt to deny voters access to arguments against his self-serving ballot initiative, Mercury Insurance Company billionaire George Joseph and his Prop 33 campaign consultants have filed a lawsuit to hide the cost of Prop 33 from voters. The lawsuit, filed in Sacramento late Friday, asks the Sacramento Superior Court to edit the Attorney General’s official description of Prop 33 and consumer and senior advocates’ arguments against the initiative. The Mercury Insurance campaign wants the court to delete facts about how the initiative will allow insurance companies to raise rates for responsible drivers.

Mercury brought a similar, unsuccessful legal challenge to silence the Attorney General and consumer groups opposed to Proposition 17, a nearly identical measure sponsored by Mercury Insurance on the June 2010 ballot. That initiative was defeated by the voters in an upset after the company spent $16 million.

The latest Mercury initiative, Prop 33, would allow auto insurance companies to raise rates on millions of Californians, including good drivers who did not purchase insurance during the preceding five years for legitimate reasons like a serious illness, long-term unemployment or going to college, even if they did not own a car. Under current law – enacted by the voters in 1988 as part of Proposition 103 – insurance companies are not allowed to set their prices based on whether or not a customer previously purchased auto insurance.

The fact that Prop 33 will give insurance companies new power to increase premiums for good drivers led the California Democratic Party to vote to oppose Prop 33 at its Executive Board meeting this past weekend.

Proposition 33 is funded 99% by George Joseph, whose company Mercury Insurance has a "deserved reputation for abusing its customers and intentionally violating the law with arrogance and indifference," according to the California Department of Insurance. The initiative’s official proponent, Michael D’Arelli, is an executive in a Sacramento insurance lobbying group funded by Joseph.

"George Joseph and Mercury Insurance refuse to accept even the nonpartisan analysis of Prop 33 and are using his virtually unlimited resources to try and maintain the deceptive marketing of this insurance deregulation initiative," said consumer advocate Doug Heller with Consumer Watchdog Campaign, which is part of the coalition opposing Prop 33. "Prop 33 is just another insurance industry trick aimed at helping insurance companies at the expense of Californians, and now Joseph is trying to enlist the courts in another of his frequent battles to overcharge consumers."

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Challenge to Attorney General Summary, Opponents’ Ballot Arguments

In its lawsuit, the Mercury Insurance campaign wants the court to change the first line of the Attorney General’s summary,

From:

Changes current law to allow an insurance company to set prices based on whether the driver previously carried auto insurance with any insurance company.

To:

Changes current law to allow an insurance company to offer a continuous coverage discount based on whether the driver previously carried auto insurance with any insurance company.

Mercury also wants the court to strike central points of ballot arguments signed by Consumers Union, Consumer Federation of California, California Nurses Association, California Alliance For Retired Americans and Consumer Watchdog. Among the facts about Prop 33 that George Joseph wants kept out of the voter pamphlet are:

"Proposition 33 unfairly punishes anyone who stopped driving for a good reason but now needs insurance to get back behind the wheel."

"Proposition 33 raises insurance rates for students completing college who now need to drive to a new job."

"Proposition 33 raises insurance rates for people who dropped their coverage while recuperating from a serious illness or injury that kept them off the road."

The lawsuit also want to deny opponents the right to conclude their argument with the phrase: "Tell this insurance company billionaire it’s not okay to deregulate auto insurance."

This lawsuit is not the first time the insurance industry supporters of Prop 33 have tried to silence its opposition. Earlier this month, Joseph’s campaign had to return the StopProp33.org domain name to initiative opponents after illegally purchasing the domain and pointing it toward its own website in support of Prop 33, in violation of California’s Political Cyberfraud Abatement Act.

"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: That Prop 33 allows insurance companies to charge good drivers more," said Carmen Balber with Consumer Watchdog Campaign.

Prop 33’s unfair penalty would punish drivers with premium surcharges that could reach $1,000 a year or more just because they took a hiatus from driving their automobile.

Copies of the Attorney General’s Official Title and Summary and the Ballot Arguments submitted by the Mercury Initiative campaign and organizations opposed to it can be found at the Secretary of State website.