California Proposition 17, Car Insurance Rates Based on Coverage History Initiative (June 2010)

California Proposition 17
Election date June 8, 2010
Topic Insurance policy
Status Defeated
Type Initiated state statute	Origin Citizens

California Proposition 17 was on the ballot as an initiated state statute in California on June 8, 2010. It was defeated.

A "yes" vote supported allowing car insurance companies to decrease or increase rates based on a driver's history of continuous car insurance coverage.

A "no" vote opposed allowing car insurance companies to decrease or increase rates based on a driver's history of continuous car insurance coverage.

Election results

California Proposition 17
Result		Votes	Percentage
Yes		2,575,659	48.10%
No		2,778,599	51.90%

Results are officially certified.

Source

Measure design

If Proposition 17 had passed, it would have allowed car insurance companies to decrease or increase rates based on a driver's history of continuous car insurance coverage.

As of 2010 in California, a car insurance company could set premium rates based on (1) the insured individual's driving safety record, (2) the number of miles driven annually, and (3) the number of years the person has been driving, according to Proposition 103 of 1988. The California Insurance Commissioner could also adopt other rating factors when considering car insurance rates. As of 2010, 16 optional rating factors were able to be used by car insurance companies. Proposition 17 would have amended Proposition 103 to allow a car insurance company to offer a continuous coverage discount based on how long the driver continuously had bodily injury liability coverage. Drivers could have received the discount if their coverage had not lapsed for more than 90 days in the last five years.

Text of measure

Ballot title

The ballot title for Proposition 17 was as follows:

“

Allows Auto Insurance Companies to Base Their Prices in Part on a Driver's History of Insurance Coverage. Initiative Statute.

”

Ballot summary

The ballot summary for this measure was:

“

Changes current law to permit insurance companies to offer a discount to drivers who have continuously maintained their auto insurance coverage, even if they change their insurance company, and notwithstanding the ban on using the absence of prior insurance for purposes of pricing. Will allow insurance companies to increase cost of insurance to drivers who do not have a history of continuous insurance coverage. Establishes that lapses in coverage due to nonpayment of premiums may prevent a driver from qualifying for the discount.

”

Full Text

The full text of this measure is available here.

Rewriting of ballot title

The ballot title was re-written in October 2009 after its supporters provided a revised version of their initiative. The October revision of the ballot title did not mention that insurance premiums would have gone go up for some drivers if the initiative was approved, whereas the first version of the ballot title did include a statement of that provision.

The final ballot title included in the official voter guide included a sentence stating the measure "will allow insurance companies to increase cost of insurance to drivers who do not have a history of continuous insurance coverage." Harvey Rosenfield lauded the new ballot title, saying, "The (new) ballot pamphlet, which is provided to all California voters, is going to be very important in an election where Mercury Insurance will spend millions of dollars to deceive the voters about its Proposition 17. Thanks to a diligent review by the attorney general, voters will know that many Californians will be subject to huge surcharges if Proposition 17 passes."

Support

Californians for Fair Auto Insurance Rates(Cal-FAIR) led the Yes on Proposition 17 campaign. A full list of coalition members published by the group is available here.

Supporters

The following individuals signed the official arguments presented in support of the measure in the official primary voter guide:

• Jim Conran, Former Director California Department of Consumer Affairs
• Allan Zaremberg, President California Chamber of Commerce
• Joel Fox, President Small Business Action Committee

Yes on Proposition 17 provided a list of coalition members, which included the following:

• Mercury Insurance
• Consumers Coalition of California
• Small Business Action Committee
• California Alliance for Consumer Protection
• 60 Plus Association
• California Senior Advocates League
• American GI Forum of California
• California Chamber of Commerce
• Small Business Action Committee
• California Black Chamber of Commerce
• California Hispanic Chambers of Commerce
• California Taxpayer Protection Committee
• League of United Latin American Citizens

Arguments

• Californians for Fair Auto Insurance Rates (Yes on 17) said, "The 80% of responsible drivers who maintain automobile insurance should not be penalized and lose their discount just because they change insurance companies. Just as drivers are able to keep their good driver discount if they change insurance companies, they should be able to keep their continuous coverage discount. Prop. 17 rewards responsible drivers by allowing them to shop for the lowest rate while maintaining their continuous coverage discount. The measure will increase competition in the auto insurance market, providing drivers with more choices and lower auto insurance rates."

Official arguments

The following supporting arguments were presented in the official voter guide:

“ PROPOSITION 17 CAN SAVE YOU MONEY ON CAR INSURANCE California’s economy has taken a toll on all of us—lost jobs, businesses closing and our savings getting smaller. Families need to save money wherever they can. Prop. 17 can help. Under current law, drivers who have maintained auto insurance with the same company are eligible for a continuous coverage discount. However, a flaw in existing law prohibits drivers from taking this continuous coverage discount with them if they switch insurance companies to get lower rates. The 80% of responsible drivers who maintain automobile insurance should not be penalized and lose their discount just because they change insurance companies. Proposition 17 is simple and straightforward: You are eligible for the continuous coverage discount even if you change insurers. Yes on 17 means: Your family could save HUNDREDS OF DOLLARS PER YEAR Increased COMPETITION More CHOICES AND OPTIONS for consumers “If you have auto insurance, Proposition 17 can save your family as much as $250 a year. It rewards responsible drivers by allowing them to shop for the lowest rate while keeping their continuous coverage discount.” —Harvey Larsen, Secretary-Treasurer, Consumers Coalition of California CONSUMERS AND SMALL BUSINESSES SAY YES ON PROP. 17 California Alliance for Consumer Protection California Chamber of Commerce California Senior Advocates League Small Business Action Committee California Hispanic Chambers of Commerce Consumers First, among others. Many businesses and organizations support this measure, including Mercury Insurance, because it means increased competition in the insurance marketplace and new customers. Providing additional discounts is one way an insurance company can compete. More competition means lower rates for consumers! PROPOSITION 17: MORE COMPETITION, LOWER RATES Drivers don’t lose their good driver discount when they change insurers. They shouldn’t lose their continuous coverage discount just because they change insurers. “Just like some stores honor their competitors’ coupons, Prop. 17 allows drivers to shop around for the best price and keep their continuous coverage discount, resulting in more choices, more competition and more savings.” —Tom Hudson, Executive Director, California Taxpayer Protection Committee DON’T FALL FOR OPPONENTS’ SCARE TACTICS Opponents are fighting a discount that will benefit the 80% of drivers who follow the law and maintain insurance. Current law (Section 1861.02) requires that insurance rates be based primarily on your driving safety record, miles driven annually and years of driving experience. This measure does not change that! Section 1861.024 (b) of the measure specifically protects drivers who must cancel coverage for economic hardship, illness, job-loss or any reason other than non-payment for a minimum of 90 days. They are still eligible for the discount. And lower income consumers will still be eligible for California’s Low Cost Auto insurance program. “Prop. 17 protects the continuous coverage discount for soldiers that cancel insurance when they are sent overseas to serve our country.” —Willie Galvan, State Commander, American GI Forum of California READ IT FOR YOURSELF. THEN VOTE YES ON 17: LOWER INSURANCE RATES, MORE COMPETITION AND CHOICE. www.yesprop17.org ”

Opposition

Stop the Surcharge led the campaign in opposition to Proposition 17.

Opponents

• Elisa Odabashian, Director of the West Coast Office and State Campaigns Consumers Union
• Jon Soltz, Chairman of VoteVets.org
• Harvey Rosenfield, Founder of Consumer Watchdog
• Consumer Watchdog
• California Labor Federation
• The California Democratic Party

Arguments

• Michael Hiltzik, a Los Angeles Times columnist, said the measure is "essentially the latest attempt by Mercury to eviscerate Proposition 103. That's the 1988 ballot measure that dramatically reshaped insurance regulation in this state by giving an elected insurance commissioner the authority to approve property and casualty rates before they go into effect."

• Harvey Rosenfield, Founder of Consumer Watchdog, said, "This shows that Mercury has been lying to the public, telling its customers, reporters and the attorney general’s office that this is not going to raise anybody’s rates, and that’s a lie. The last thing we need now in an economy in which people are struggling to pay their bills is an insurance company swindling a few hundred dollars a year out of our own pockets."

Official arguments

The following opposing arguments were presented in the official voter guide:

“ Consumer advocates agree: Vote NO ON PROPOSITION 17—It’s a deceptive insurance company initiative to raise auto insurance premiums for millions of California’s struggling middle class families. Proposition 17 changes our laws to favor big insurance companies like Mercury Insurance, the initiative’s sponsor, while hurting responsible drivers who have done nothing wrong. The insurance backers of Prop 17 won’t tell you the whole story, but the California Department of Insurance does. It says Prop 17 “will result in a surcharge” for California drivers. That’s why Consumers Union, nonprofit publisher of Consumer Reports, opposes Prop 17. Prop 17 requires Californians who cancel auto insurance to pay a financial penalty to restart their coverage. -> No on 17: It penalizes responsible drivers. Prop 17 allows insurance companies to raise rates on customers with perfect driving records, just because they canceled insurance for as little as ninety-one days over the past five years. Drivers must pay this unfair penalty even if they did not own a car or need insurance in the past. -> No on 17: It punishes our troops, among others. This initiative raises rates on Californians who stop their insurance, including military serving stateside. PENALIZING THESE DRIVERS BY FORCING THEM TO PAY MORE when they restart their insurance is wrong. -> No on 17: It hurts California’s middle class families. In these tough times, many Californians are being forced to choose between driving and other necessities. If someone with a perfect driving record is late on just one payment, Prop 17 allows insurance companies to CHARGE DRIVERS HUNDREDS OF DOLLARS MORE when they restart coverage. -> No on 17: Californians will pay more for car insurance. Proposition 17’s penalties are currently illegal in California, but in states where insurance companies are allowed to surcharge drivers, the result is HIGHER PREMIUMS: Nevadans can pay 73% more. Texans, 84% more. Floridians, 227% more. -> No on 17: It leads to more uninsured motorists, costing us all more. Because of the recession, insurance experts predict almost 20% more uninsured motorists on the road. According to the California Department of Insurance, Prop 17’s financial penalty: “discourages [people] from buying insurance, which may add to the number of uninsured motorists and ultimately drives up the cost of the uninsured motorist coverage for every insured.” MORE UNINSURED DRIVERS hurts the bottom line for taxpayers and the state. -> No on Prop 17: It’s an insurance company bailout. The San Francisco Chronicle reports that Mercury’s Prop 17 is “a controversial insurance measure” from a company that “engaged in practices that may be illegal, including deceptive pricing and discrimination against consumers such as active members of the military.” State courts stopped Mercury from overcharging motorists in 2005. But Prop. 17 would legalize those surcharges. That’s why Mercury has already spent $3.5 million on 17—so it can increase profits at the expense of California’s middle class. We shouldn’t give insurance companies more power to raise our rates, especially during a recession. VOTE NO on PROP 17 Learn more at http://www.StopTheSurcharge.org ”

Media editorials

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Proposition 13
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Donations • Vendors
Endorsements
Local measures

Support

• The Orange County Register: “competition would benefit motorists,” and Proposition 17 takes insurance pricing “in the right direction.”

• The Marysville Appeal-Democrat: "When phone users stood to lose their longtime telephone numbers if they switched providers, phone companies held them captive. When the law changed to permit consumers to take their numbers with them to a new provider, competition flourished, and prices dropped."

• The Redding-Record Searchlight: Proposition 17 will "increase competition in the auto-insurance market and reward responsible consumers.”

Opposition

• The San Francisco Chronicle: "The Proposition 17 formula is likely to produce, at best, a marginal benefit to Californians shopping for a new company - and a daunting additional cost for those who are desperate to get coverage."

• The Los Angeles Times': "Another problem with Proposition 17 that proponents can't explain away is that insurers will have to offset the expected revenue loss from the new discount by raising rates on the people who don't qualify for it. By proponents' estimates, 80% of California drivers qualify for the loyalty discount, which means that the 20% who don't qualify pay a surcharge. But more than 80% of drivers have been continuously covered by various insurers, so more people will be eligible for the discount — and the fewer people who remain will have to pay for it."

• The Sacramento Bee: "Stand by the 1988 law that protects consumers, and turn back this self-serving measure sponsored by one firm."

• The Los Angeles Daily News: "...the analysis by the Legislative Analyst that will appear on the ballot makes it clear that Mercury, or any other insurer, could indeed impose surcharges under Proposition 17."

• Contra Costa Times: "Californians should have no trouble figuring out how to vote on Proposition 17, the auto insurance measure. All they have to do is ask themselves if Mercury Insurance Co., which spent $3.5 million to qualify and support the initiative, has consumers' welfare or its own financial interests in mind."

• San Jose Mercury News: "Proposition 17, like PG&E's anti-competitive Proposition 16, is the opposite: a special interest scam that would increase corporate profits and potentially harm consumers. The only way to discourage this abuse of initiatives is for voters to say an emphatic no when the worst ones come along."

• Press Democrat: "The state should be doing more to help uninsured drivers obtain coverage, not laying more traps to ensure they stay away."

• Santa Cruz Sentinel: "The measure, if passed, would offer negligible benefits to Californians shopping for a new carrier, while adding significant costs to people who can hardly afford insurance."

• Bakersfield Californian: "Proposition 17 isn't about lowering the cost of insurance; it's about raising the cost for those who can least afford it."

• San Gabriel Valley Tribune: "These are just some of the surcharge opportunities made possible by Proposition 17, which throws out the rules of the true voter-approved insurance reform measure, 1988's Proposition 103, and inserts caveats that will nickel and dime future policy holders."

• The Marin Independent-Journal: "The proposition would open the door for insurance companies to attract customers from competitors by offering a discount for having continuous coverage for the past five years. Current law prevents insurers from offering that discount until after six months. This is one of those changes that deserves airing in legislative hearings and public debate."

• The Lompoc Record: "The real outcome of passing Proposition 17 is that rates would skyrocket for many drivers, essentially forcing a high percentage of them to forego insurance coverage, thus putting even more uninsured drivers on our roads. Not a good idea."

Path to the ballot

See also: California signature requirements

On December 14, 2009, proponents announced that they had collected 720,000 signatures to qualify the measure for the 2010 ballot. To qualify for the ballot, 433,971 valid signatures were required. On January 20, 2010, the California Secretary of State announced that the measure had qualified for the June 8, 2010 ballot.

National Petition Management was hired to collect the signatures to qualify the measure for the ballot. Campaign finance reports filed by the measure's sponsors showed the petition drive management company as having been paid $2,273,745 for their signature-gathering efforts through February 9, 2010.

Official arguments lawsuits

On February 25, 2010, the Yes on 17 campaign filed a lawsuit seeking a court order to have opponents re-write the official arguments presented in the official voter guide, alleging that the arguments included false and misleading statements.

On March 4, 2010, Harvey Rosenfield of the No on 17 campaign filed a lawsuit in Sacramento County Superior Court seeking a court order to have supporters re-write the official arguments presented in the official voter guide, alleging that the arguments included false and misleading statements.

Jerry Brown's office filed a brief in the lawsuits stating that the "Yes on 17" side's argument "is without legal merit."

Sacramento Superior Court judge Allen H. Sumner gave a ruled on March 12, 2010, in favor of Yes on 17 and found No on 17's claim that Proposition 17 punishes military personnel to be false and misleading and ordered it omitted from the ballot pamphlet. which kept the ballot summary as it wasSumner declined to honor most of the ardently expressed desires of both the "Yes on 17" side and the "No on 17" side for a variety of changes in Proposition 17's ballot language and ballot arguments.

See also

2010 Measures

• 2010 Measures
• Insurance policy on the ballot
• 2010 legislative sessions

California

• California ballot measures
• California ballot measure laws

News and analysis

• Ballot measure lawsuits
• Ballot measure readability
• Ballot measure polls

External links

Suggest a link

• June 8, 2010, Primary Election Voter Guide
• Official Voter Guide to Proposition 17

Support

• Californians for Fair Auto Insurance Rates
• Campaign finance reports of "Yes on 17-Californians for Fair Auto Insurance Rates and Mercury General Corporation and Affiliates"

Opposition

• Stop the Surcharge
• Stop Prop 17
• Campaign finance reports of "Stop Prop 17: Sponsored by Campaign for Consumer Rights, a Coalition of Consumer Advocates, Nurses and Consumer Attorneys"
• Campaign finance reports of "Californians for Progress, No on 23, a Coalition of Consumers and Dennis Herrera" (This campaign committee, although its name makes an explicit reference to Proposition 23, is listed on the official state government website for campaign finance as an opposition committee to Proposition 17.)