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Insurance Industry-Backed Proposition on California Ballot

Insurance mogul George Joseph has invested more than $16 million in an effort to pass Proposition 33. Supporters describe the measure as pro-consumer; opponents say not so.

Proposition 33, a ballot measure designed to allow consumers who have been with a car insurance company for five years to switch insurance companies while keeping their “loyalty discounts,” is the subject of much debate leading up to election day.

Supporters are adamant about the measure being beneficial to all Californians drivers. Opponents are not convinced and say the proposition is heavily funded by insurance company interests.

Proponents contend consumers will benefit

“We believe it will save consumers money every month on car insurance,” said Rachel Hooper, spokeswoman for the Yes On Prop 33 campaign.

Hooper said Proposition 33 would allow consumers more freedom than they currently have.

“Now they can shop around but not as competitively as we believe they should be allowed,” Hooper said. “It is drafted to have consumer protections that go above and beyond consumer law.”

If passed, those who are unemployed or have been furloughed and young, teenage drivers stand to benefit, according to Hooper. Military families would as well since they are prone to cancel their current coverage when they are deployed.

“They’re in and out of coverage,” Hooper said. “Under Prop 33, they would keep the loyalty discount.”

She points out that organizations statewide have endorsed the proposition, including Veterans of Foreign Wars of California, the American Legion, the American GI Forum and the Peace Officers Research Association of California or PORAC, a law enforcement organization with more than 64,000 members, according to Hooper.

“It’s all about trying to get people under the umbrella of insurance,” Hooper said. “It goes back to competition and lowering prices.”

Opponents point to proposition funding

Carmen Balber, spokesperson for “No on Prop 33,” said it all boils down to benefiting Mercury Insurance since its chairman, George Joseph, has personally invested more than $16 million in an effort to pass Proposition 33.

“This is about one insurance industry billionaire trying to boost his company’s bottom line at the expense of good drivers,” Balber said.

She contended that Joseph has run “deceptive TV advertising” and also emphasized the measure would have a “disproportionate impact on lower-income and minority communities” by reversing consumer and civil rights protections put in place 24 years ago that have protected them.

Her argument is that before 1988, insurance companies would “cherry pick” the drivers they wanted to cover, often raising rates, making them too high for many people to afford or refusing to sell to those who had no prior insurance.

“What we saw was a lack of insurance in low-income and minority communities especially because the rate of the uninsured was higher in those communities,” Balber said.

She said a similar measure, Proposition 17, was already defeated two years ago.

“It is a replay of the same measure voters have already said no to, to raise rates on good drivers,” Balber said.

Civil rights organizations, among them Public Advocates, Incorporated, the Alliance of Californians for Community Empowerment and the Black Economic Council, have also spoken out against Prop 33, including in a letter to the Senate Standing Committee on Insurance.

While the opposing sides of the issue may never meet, one thing they can agree on is that when election day comes, it is California voters who will be in the driver’s seat.

Need help sorting out California's propositions? Here are some resources that provide explanations of the ballot measures, pro and con arguments, endorsements by newspapers, groups that support and oppose, and campaign funding sources:

California Choices - nonpartisan collaboration by Next 10, Institute of Governmental Studies at University of California at Berkeley, the University of California at San Diego Political Science Department, the Bill Lane Center for the American West at Stanford, and the Center for California Studies at Sacramento State. 

MapLight - a nonpartisan organization that researches the influence of money on politics.

KPCC - Southern California Public Radio's Voter Guide based on voter's address.

nonoise October 25, 2012 at 03:40 PM
The purpose of the loyalty discount is to reward customers for staying with the same company. Why would someone get to keep that discount by switching companies? That makes no sense. The loyalty discount is a thank you from your insurance company for keeping your business with them. And, this may hurt low income people that do not have the money to stick with one company and are never able to build up a loyalty discount. Some companies like State Farm allow you to cancel and if you come back within a certain amount of time, like one year, you get to keep the loyalty discount or the amount of time you put in before you left toward credit of the loyalty discount. I am sure other companies have the same kind of deal. My opinion is I don't think this is a good proposition. I don't think it will help consumers. And, if only Mercury is backing this up, that is not a good sign. A friendly reminder that the State has a program for low income people for auto insurance. It is $347 a year. It makes no difference what kind of car you have or where you live. There are certain qualifications. Call to find an agent in your area. https://www.aipso.com/PlanSites/CaliforniaLowCost.aspx https://www.aipso.com/PlanSites/CaliforniaLowCost/LowCostEligibility.aspx
James West October 25, 2012 at 04:49 PM
ALL you need to know is the the billionaire owner of MERCURY Insurance has been trying to manipulate the system by abusing Proposition(S) he has bankrolled for years- as they say when its a loser..."It's for the children" People if you have a brain think about it, do insurance companies present laws &/or propositions for the benefit of consumers? And every been hit by a person insured by Mercury, dealing with them on a claim is a friggin joke, they have more money then the Gov't or religion- & fight you like a cat going into a bathtop. George can kiss my arse...VOTE NO on 33!!!!! (It's for the children!)....
Daniel Groff October 25, 2012 at 05:04 PM
As an Independent Insuance Agent representing over 15 Different Auto Insurance Carriers I think that Prop 33 is good for all California Drivers. This proposition is endorsed not only by the groups mentioned in the article above but also by the Independent Agents Alliance, American Legion, Vietnam Veterans of America, CDF Firefighters, CA Association of Highway Patrolman and USAA. If you can take the discount that you have with your current insurance company and shop that discount to other carriers, that will lead to more competition and competition leads to better rates! Prop 33 looks to give the same privileges and discounts to California drivers that 48 other states already enjoy. Prop 33 provides a discount to the people that follow the law by purchasing and maintain continued auto insurance coverage!
KingSlav October 25, 2012 at 05:05 PM
Being a billionaire is a bad thing?
Daniel Groff October 25, 2012 at 05:46 PM
James I think that you should look at the most recent report published by the California Department of Insurance on the California Consumer Complaint Study of 2012. The report shows the 50 Large Automobile Insurers RATIO for COMPLAINT YEARS 2009, 2010 and 2011. The report shows Mercury Casualty Company and California Automobile Insurance Company had ZERO Justified Complaints and Mercury Insurance Company only had 12 out of 1,525,315 approximate exposures in 2011. Please feel free to look at the report and I have included the link for your review. http://www.insurance.ca.gov/0100-consumers/0040-studies-reports/0020-complaint-study/AutomobileComposite.cfm
Libi Uremovic October 25, 2012 at 06:14 PM
"...allow consumers who have been with a car insurance company for five years to switch insurance companies while keeping their “loyalty discounts,” ..' the loyalty discounts are agreements made with the company they have been loyal with in the past... if the consumer wants to change insurance companies that's their choice - but they lose their loyalty discounts because they are no longer loyal to the company... if their new insurance company wants to win over customers by offering to include any old companies discounts that is their choice - but it should not be forced on them by the state...
James West October 25, 2012 at 06:21 PM
Dan, please say "Hi" to Mr. George- no I am referring to 3rd party claims- I would NEVER have Mercury, my friend got hit by a drunk driver & was injured- when he brought a claim against his uninsured motorist coverage Mercury brought in the drunk driver to the arbitration to testify AGAINST their insured!!! Justified, hell if they spend $15,000 fighting a $3,000 claim of course they were justified. Al I need to know if they/George are for it.....103 must live......The car insurers (ALL OF THEM) were thugs before 103, they have hated it from day 1, saved consumers milions......cost dudes like George to suffer with a $20m annual salary v. $22 million boo hoo....Yes indeed trust Mercury, trust Allstate, they are in it for YOUR good...hey it's only a cold sore.....
Libi Uremovic October 25, 2012 at 06:21 PM
why do you need a law to offer better rates...? insurance companies are in the business of making money...they can already offer rates as low as they want... ...but they don't want to...
Libi Uremovic October 25, 2012 at 06:26 PM
'...Military families would as well since they are prone to cancel their current coverage when they are deployed...." is that true? why would anyone cancel their auto insurance just because they're deployed...they still need the vehicle covered ... there's a cheaper 'not driven' rate... especially if they have a family...what kind of jerk leaves his wife and kids without car insurance when he's deployed...
Bob Peppermuller October 25, 2012 at 06:37 PM
It is a ploy by Mercury Insurance Company to steal customers away from their competitors for a short while. They tried this once before - prop 17. What Mercury is doing is, in affect, making the loyalty discount worthless. Why offer it if you can transfer it to a competitor. This will make insurance rates go up for all of us. Bad deal.
James West October 25, 2012 at 06:38 PM
And if you lost your job, car, etc. & rejoin society 33 will allow insurers (who really miss the RED lining days) to jack up your rates.....It is always interesting to see who sponsors these things, Daniel, why has George brought what 3-4 propositions to attack 103 over the years, spending maybe $100,000,000 on it w/advertising, etc. FOR THE GREED the money.......duhhhhh yes indeed Mercury et al, are out there fighting for YOU......I know you are an unbiased INSURANCE SALESMAN!!! ha ha
nonoise October 25, 2012 at 06:44 PM
Libi is correct. Loyalty discounts are a reward to the customer for staying with the same company. Any company, including Mercury can lower their rate, they just file a request with the Department of Insurance. This measure does nothing to help consumers. It gives an incentive for people that are long time happy customers to move their business to a crappy company like Mercury. Sometimes you do get what you paid for.
James West October 25, 2012 at 06:55 PM
When you use your $$ like a whale to get what you want...come on King Slav he got the $ now wants to use it to make laws to favor him & his company....to the detriment of many of the citizens.....kind of like Citizens United on a state scale....
James West October 25, 2012 at 06:58 PM
Let`s see the husband is in Afghanistan for a year....the wife does not drive or if she does he cancels his, because unlike Mt. Joseph he cannot just peeee away his $$$....Libi is you believe this is good for CA )& not car insurers) I have some beachfront land in Utah to sell you, also a genuine Picasso for $100!
Robert Livesay October 25, 2012 at 07:00 PM
I do believe all companies are in business t provide a service. With that profits also. If not successful out of business. Anyone that even mows your lawn is doing it for a profit. That is the American way.
nonoise October 25, 2012 at 07:13 PM
An independent agent would consider this measure good because it gives them one more incentive to switch customers to a different company and make a new commission. Don't blame anyone for wanting to make money. But that is not always good for the consumer.
Libi Uremovic October 25, 2012 at 07:15 PM
it's 2012 james...what percentage of women can't drive... and 'insurance' covers more than just driving the vehicle... i believe it would be wiser for someone to change their policy to the 'on blocks' rate because they would still want the vehicle protected while in storage... but this is speculation on my part.... if we need a law 'to protect the vets' ...and that's one of our key words used to get legislation passed right...throw in 'military' or 'kids' whether it applies or not....so let's test this theory in san diego county which has a higher than average rate of military personnel... let's take a poll: what do you guys do with your vehicles when you're deployed...do you cancel your policies every time ?
Marcus Boyd October 25, 2012 at 07:42 PM
What you are calling a *loyalty* discount is actually a persistency discount, and it currently becomes worthless when *your* carrier raises *your* rate. Prop 33 would allow you - the consumer - to take your discount elsewhere. The truth is that that "AllStateFarmers" as I group them, also known as, "captive insurance companies", which is what is commonly referred to as the "insurance industry" do not want Prop 33 to pass, only brokers do, and brokers - by law - work for the consumer - not the carriers. Prop. 33 is actually a way to take your discount with you to a company that has lower rates.
John Galt October 25, 2012 at 07:44 PM
Just say NO. Another bad idea.
John October 25, 2012 at 07:48 PM
People are going to hear horror stories about insurance companies all the time. These stories are very few and far between and the majority of the auto insurance companies do a good job. The one item that really needs to be questioned by the D.O.I. is that how insurance companies base settling claims for certain areas. Years ago the good hands people designed a computer program to keep track of claims. In the areas where the insurance companies were most likely to be sued and lose the case, they would try to settle out of court for the least amount of money. Hence in the areas where they would be sued but most likely win no matter who was at fault, they would fight the case vigorously based on numbers. This practice has spread to other insurance companies using the same developed program. The automobile insurance side of the business is the biggest money maker for them. Believing the commercials is like taking everything said in the last three presidential debates as gospel and no fact checking. Ask your local / favorite body shop who they prefer to work with after an accident. Even ask them who they have as their insurance. You might be surprised.
Daniel Groff October 25, 2012 at 08:35 PM
Marcus you are correct it is "Portable Persistency" not a Loyalty Discount!
James West October 25, 2012 at 09:16 PM
John is correct the BIG auto insurers have a 'Collasus' type computed that spits out what a case if worth, & that's it, if you dont take the offer sue them, & they will proceed with a scortched Earth defense.....billions for defense not a penny for tribute........but it is nice to see an insurance Co. with our best interest @ heart...[pardon me I have to barf.........}
nonoise October 25, 2012 at 09:50 PM
John is right about asking your favorite auto body shop which insurance company is the best. That is the best way to find out.
Stephanie October 25, 2012 at 10:03 PM
Sorry, military people do not cancel their coverage when "they are deployed". Who writes this garbage? Who is "they"? One spouse gets deployed, one spouse stays back home. If the whole family gets "deployed" they call that moving. Most, and I dare say nearly all, military families have USAA as their car insurance provider. Nobody beats their rates. You are correct Libi, no one cancels their car insurance when they get deployed. One spouse gets deployed, one spouse stays home. Try running a family on your own without a car. USAA is nationwide and there is no reason for a military person to cancel their coverage, even if they move, stateside or overseas. I have USAA for all my banking needs and I deposit checks on my phone. It doesn't matter where you live, USAA is there. Idiots like Rachael Hooper don't know jack about military families. What a lousy spokesperson.
Balance October 27, 2012 at 11:19 PM
I think there was a typo in the title of this article. I think it was supposed to be: Insurance Industry-BAKED Proposition on California Ballot.
Balance October 31, 2012 at 05:22 AM
Vote NO.
Stephanie November 05, 2012 at 08:11 PM
Here is the link to the Courage Campaign's Progressive Guide to the Propositions: http://courage.3cdn.net/61fe2b1f07358f45a8_nxm6bhfgq.pdf
Stephanie November 05, 2012 at 08:12 PM
Here is the link to the Courage Campaign's Progressive Guide to the Propositions: http://courage.3cdn.net/61fe2b1f07358f45a8_nxm6bhfgq.pdf
Sean McCarthy November 05, 2012 at 11:57 PM
The Woodland Hills Tarzana Chamber of Commerce Supports Prop 33. See the rest of our recommendation here: http://woodlandhills.patch.com/blog_posts/woodland-hills-tarzana-chamber-of-commerce-2012-voter-guide
Hans Laetz November 06, 2012 at 12:54 AM
If the Chamber of Commerce is for it, run.

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