Insurance Billionaire-Sponsored Proposition 33 Will Raise Premiums On Millions of Responsible Drivers, Says Consumer Watchdog Campaign

Consumer Advocates Say Prop 33 Means Auto Insurance Rate Hikes of 33% or More

SANTA MONICA, Calif., July 10, 2012 /PRNewswire-USNewswire/ -- The newly numbered Proposition 33, funded by Mercury Insurance's billionaire Chairman George Joseph, is a replay of Mercury's unsuccessful 2010 initiative aimed at raising auto insurance premiums on millions of Californians.

According to the Attorney General's official title of the initiative, Prop 33: "Changes Law to Allow Auto Insurance Companies to Set Prices Based on a Driver's History of Insurance Coverage." The Attorney General's summary explains that Prop 33 "Will allow insurance companies to increase cost of insurance to drivers who have not maintained continuous coverage."

Prop 33 aims to change over 20 years of insurance law by repealing a key anti-discrimination provision from the 1988 voter initiative Proposition 103. In addition to broadly reforming insurance rates in California, Proposition 103 specifically prohibited an insurance industry redlining scheme first brought to public attention by the 1985 California civil rights case King v. Meese. While Prop 103 made that scheme illegal 24 years ago, Prop 33 would rollback that protection and revive this discriminatory practice by insurance companies that particularly targets low-income and other Californians struggling financially.

Consumer advocates opposing Prop 33, including Consumers Union, Consumer Federation of California and Consumer Watchdog, say that Prop 33 is another deceptive insurance company trick to raise auto insurance rates for millions of responsible drivers in California. While the insurance industry backers of Prop 33 promise that it will give people discounts, the measure is actually designed to get around an existing law that prevents unfair surcharges on good drivers.

Prop 33 allows insurance companies to charge dramatically higher rates to customers with perfect driving records, just because they had not purchased auto insurance at some point during the past five years. Drivers must pay this unfair penalty even if they did not own a car or need insurance at the time.

"The insurance companies are at it again with another deceptive initiative that says one thing but does another," said consumer advocate Douglas Heller with Consumer Watchdog Campaign. "When an insurance billionaire spends millions of dollars on a ballot measure, hold onto your wallet. Prop 33 is the newest edition of Mercury's long-running effort to give insurance companies a new way to unfairly raise auto insurance premiums."

Mercury Insurance Chairman George Joseph has already spent eight million dollars on Prop 33 and will likely spend more than the $16 million spent by Mercury for its 2010 initiative, according to consumer advocates. Prior to his serial attacks on consumer rights at the ballot box, Joseph and his company pushed for legislative repeal of the consumer protection laws, but that change was ruled illegal by the California Court of Appeal.

About ten years ago, Mercury was caught illegally surcharging many of its customers using the same so-called "continuous coverage" scheme proposed in Prop 33. At the time, Mercury added a 40% surcharge on drivers with perfect records who did not have prior insurance coverage at some point in the past, even if they did not need coverage. In other states where Mercury is allowed to add the Prop 33 surcharge, rates jump by 50% to 100% and sometimes more.

"Wherever Mercury has imposed the financial penalty that would be allowed under Prop 33, premiums for many drivers skyrocket," said Heller. "When California voters go to the polls in the November, they should ignore the insurance industry's slick ad campaigns and simply remember that Prop 33 will raise auto insurance rates by 33% or more."

Prop 33 would increase premiums for Californians who stopped driving for legitimate reasons, including:

• graduating students entering the workforce;
• people who dropped their coverage while recuperating from a serious illness or injury that kept them off the road;
• Californians who previously used mass-transit; and
• the long-term unemployed.

Californians who had chosen not to drive for a time and did not need insurance would be surcharged when a new job, move or some other circumstance requires them to buy insurance again. Prop 33's unfair penalty would punish drivers with premium surcharges that could reach $1,000 a year or more just because they took a hiatus from driving their automobile.

For more information about Prop 33, Consumer Watchdog Campaign has created www.StopTheSurcharge.org

SOURCE Consumer Watchdog Campaign

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