Consumer Federation of California

Ignoring a deceptive $16 million campaign by Mercury Insurance Company, California voters rejected a ballot measure that would have amended 1988 insurance reform Proposition 103 to allow insurance companies to impose surcharges on motorists who were not previously insured or had a break in coverage for virtually any reason. A majority of Californians voting against Proposition 17, despite ads promising $250 premium reductions.

"Once again, David defeated Goliath," said Harvey Rosenfield, author of Proposition 103, which mandated stringent rate regulation and was passed by voters in 1988 despite an $80 million campaign against it by the insurance industry. "Californians asked themselves when was the last time an insurance company spent $16 million to save consumers money, and the answer was clear: never. California voters refused to be duped by corporations using the people’s initiative process to enrich themselves at the expense of consumers." Proposition 17 would have legalized surcharges banned by Proposition 103.

Campaign for Consumer Rights, which led the campaign against Mercury, was outspent approximately 12 to 1.  Campaign for Consumer Rights is the campaign affiliate of the nonpartisan, nonprofit organization Consumer Watchdog.

Voters Reject Corporate Takeover of Initiative Process

Consumer advocates hailed the defeat of the Mercury Insurance initiative as proof that California voters do not intend to allow insurance companies or other big corporations to subvert the initiative process. The campaign in support of Prop 17, which was run by the corporate political consulting and advertising firm of Goddard Claussen, lost despite spending about $15 million more than the Stop Prop 17 campaign.

"Mercury spent millions on advertising, PR hacks, and paid spokespeople posing as consumer advocates, senior and business leaders, but the voters saw through the scam," said Rosenfield. "Like PG&E’s measure, Prop 17 is the initiative that money could not buy."

The campaign against Prop 17 produced and aired a 15 second television ad and one radio ad, that it developed with its small team of experts, including Chris Lehane, Ace Smith of SCN Strategies and Lisa Grove of Grove Insight.

"The consumer advocates’ vanquishing of the Mercury Insurance initiative scam is a powerful win for consumers and puts a horses head into the collective beds of the insurance industry," said Chris Lehane, an advisor to the Stop Prop 17 campaign.

The consumer advocates opposing Prop 17 worked with a limited budget and a broad coalition. The California Nurses Association, Consumer Attorneys of California, Consumer Federation of California, Brave New Films, VoteVets.org, Consumers Union, California Alliance of Retired Americans, USAA, California Labor Federation, California Democratic Party and hundreds of organizations, groups and individuals joined in active opposition to the well-funded insurance company campaign.

"We are extremely grateful to all the voters, organizations, editorial boards, campaign experts, activists and online friends who took this battle seriously and sent a strong message to companies that want to buy laws through our initiative process," said Doug Heller on behalf of the Stop Prop 17 campaign.

Group Sees Legal Actions Against Mercury

Consumer advocates noted that over the last five months, state regulators have released documents showing that over the last fifteen years, Mercury Insurance Company repeatedly violated state law, overcharging and discriminating against members of the military, the self-employed, people who worked out of their homes, and consumers who had health problems. Legal documents showed that Mercury also discriminated against those whose last names were difficult to pronounce.

"Mercury should not be allowed to do business in California, much less sponsor a ballot initiative," said Rosenfield. "We will take all necessary action to make sure this renegade company complies with state and federal laws."

Stop Prop 17 sponsored by Campaign for Consumer Rights  – a coalition of consumer advocates, nurses and consumer attorneys.