Consumer Federation of California

Two years ago, billionaire George Joseph, chairman of Mercury Insurance, spent $16 million of the company’s money on Proposition 17, a direct attack on California’s strong insurance rights laws. At the time, we called it the worst abuse of California’s initiative process on the 2010 ballot, which was saying something, since it was competing with PG&E’s $46 million assault on its potential competitors.

Like an irritating mosquito, Joseph and his millions are back again this year with Proposition 33, essentially a new version of the law voters rejected two years ago.

California voters should vote no on Proposition 33 on Nov. 6 in such large numbers that Joseph never tries to dupe Golden State residents again.

Joseph isn’t lacking for chutzpah. Two years ago, the California Department of Insurance said Mercury Insurance had overcharged and discriminated against California customers for 15 years, and Mercury Insurance was fined $500,000 for other violations before 2010. But Joseph, whose company sought an $89 million rate hike last December, wants you to believe that he is spending millions on Proposition 33 to save consumers money on their auto insurance.

What he really wants is to score a direct hit on Proposition 103, the 1988 initiative that forced auto insurance companies to justify rate increases before imposing them. That proposition significantly lowered rates, saving Californians hundreds of millions of dollars.

Californians should prepare to hear a lot of ads in the coming weeks claiming that Proposition 33 will allow insurance companies to give a "continuous coverage" discount to new customers who, for whatever reason, want to switch from one insurer to another. But Proposition 33 would actually allow insurance companies to substantially increase rates for drivers whose insurance has lapsed for 90 days or more. That practice was outlawed by the 1988 initiative, with good reason.

Since California requires car owners to have insurance coverage, insurers would have drivers whose insurance lapsed over a barrel if the law changes. Proponents of Proposition 33 say that won’t happen because competition between insurers would be too fierce. But before Proposition 103 was passed, there were all kinds of examples of insurers gouging drivers in this manner.

It’s too bad it’s so easy for wealthy individuals and corporations to abuse the state’s initiative process. But voting this turkey down once should have been enough. Let’s hope a landslide vote this time around does the trick.