Consumer Federation of California

Prop 103 has saved California drivers over $100 billion dollars since 1988, which is about $8,125 per California household.

Back in the 1980s, the California Legislature passed a law requiring drivers to have auto insurance but didn’t limit how much insurers could charge. Predictably, insurers hiked prices by double digits.

Voters revolted against the price gouging by passing Prop 103 in 1988, and the result was billions in savings.

Proposition 103 requires auto, homeowners, medical malpractice and other business insurance companies to publicly justify and get rates approved by the state insurance commissioner prior to taking effect. It created an elected insurance commissioner, requires auto insurance rates be based primarily on driving record, miles driven and experience, and prohibited insurance companies from discriminating against drivers based on ZIP code or whether they had previously been insured.

Today, the Consumer Federation of America released the findings in a new report, “What Works: A Review of Auto Insurance Rate Regulation in America and How Best Practices Save Billions of Dollars.”

Prop 103 has saved California drivers over $100 billion dollars since 1988, which is about $8,125 per California household. In fact, California is the only state in the country where auto insurance rates actually went down over the last 25 years. In part that’s because, as the 25-page report notes, “Consumer groups such as Consumers Union, Consumer Federation of California and Public Advocates have … intervened in various proceedings under this provision of California law.”

Tags: Insurance