With the June 2010 ballot drawing near there is one proposition we need to really take a closer look at, Proposition 17.
Proposition 17 is titled “Allows Auto Insurance Companies to Base Their Prices in Part on a Driver’s History of Insurance Coverage.”
This all sounds good when you read the title, but like most bills that reach the ballot, there’s miles of information we need to be aware of before we cast our votes.
If Proposition 17 passes it will allow insurance companies in the state to give what are known as “persistence discounts” to new customers.
Drivers who qualify for these discounts are those who have had continuous or nearly continuous coverage for the past five years.
Nearly continuous means you can’t have a lapse in coverage for more than 90 days otherwise you don’t qualify for the discount.
Proposition 17 is a bad idea and could have disastrous effects for people who don’t qualify.
In our struggling economy the word “discount” appeals to everyone, but that’s just what the supporters of the proposition want it to do.
While they have us reeling over the opportunity for a discount, we don’t see what’s really going on, the fact that this will cost many of us our dollars, and plenty of them.
At present there are 23.7 million licensed drivers in California, about 20 percent of those drivers fall into the category of those who have had lapses in their insurance coverage, and they won’t qualify.
Under Proposition 17 the drivers who do not qualify for the discount will be subject to increased costs of insurance at the insurance companies' discretion.
Mercury Insurance, who is the state’s sixth-largest insurer, sponsors Proposition 17. So far they have paid over $3.5 million in donations towards getting this bill passed.
According to the Department of Insurance, Mercury has a “lengthy history of serious misconduct and has an attitude of contempt and/or abuse of its customers.”
It’s strange that a company with such a bad reputation would spend so much money on a bill to give us discounts. If this is supposed to save us money, how is it going to help an insurance company?
They are all about making money, not saving us any. However, this most recent ploy is devious in its appearance; it's more than just a grab at our wallets. The proposition's true goal is far deeper.
What we don’t see is that this is just a first step in the process for insurance companies to break away from the state’s ability to regulate how much they charge for insurance.
Michael Hiltzik of the LA Times described the bill as, “Essentially the latest attempt by Mercury to eviscerate Proposition 103.”
Proposition 103, which was passed in 1988, gave insurance companies the right to give these same discounts to their own policyholders. The initiative was aimed at lowering insurance rates and giving state oversight for future rate hikes.
If Proposition 17 passes it will give insurance companies the right to charge whatever they want to the 20 percent of driver’s who don’t qualify for the new discounts. I seriously doubt that insurance companies would just hand us a discount like that, digging into their profit margin, without being able to make up the difference somehow, at the expense of those who probably can least afford it.
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