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A California-Style Fix for Obamacare’s Runaway Premiums

12:28 pm in Uncategorized by Consumer Watchdog

 photo Harvey_3_zps8d2a495e.jpgRegulation of insurance companies, introduced by Proposition 103, could repair a loophole in the Affordable Care Act.

“We didn’t do a good enough job in terms of how we crafted the law,” an apologetic President Obama said this month, shortly after millions of Americans got notices from their health insurance companies that their current policies were going to be canceled because the policies didn’t comply with the minimum standards of the Affordable Care Act. Worse, the federal website where people were supposed to be able to buy replacement coverage was still barely functional.

Last week, confronting a perfect storm of policy snafus and public indignation, the president announced that he would allow health insurers to renew current policies for an additional year. But he left the final decision to the companies or state authorities, who promptly warned that the result would be higher premiums.

That, not the cancellations or the website, is the fundamental problem with the Affordable Care Act: The law places no limits on the price insurance companies can charge for the coverage we are required to buy. This was no drafting error. In 2010, neither Congress nor the White House wanted to risk the opposition of the powerful insurance industry.

Thus it’s no surprise that the insurers are now jacking up premiums and copays while limiting prescription drug benefits and dumping doctors and hospitals from their networks.

California lawmakers made a similar egregious error in 1984 when they passed a law requiring residents to buy automobile insurance but failed to regulate prices. So, of course, the insurance companies took advantage, imposing double- or triple-digit premium increases. A voter revolt ensued.

And therein lies the solution to the current healthcare law debacle.

Twenty-five years ago this month, angry California voters passed a ballot measure to stringently control automobile, as well as home and business, insurance premiums. An unprecedented $63-million campaign by the insurance industry could not stop the grass-roots rebellion. In a historic upset, Proposition 103 swept away decades of deregulation, discriminatory practices and barriers to competition in the insurance marketplace.

Insurance companies were required to open their books and publicly justify rate increases before they took effect. To guarantee that industry lawyers and lobbyists would not derail the new law, the measure made the insurance commissioner an elected post and further empowered consumers to hold insurance companies directly accountable if they violated the law.

The voters also enacted critical protections against any last-minute chicanery by insurance companies before implementation of their reforms. For example, to prevent opportunistic price-gouging before Proposition 103 went into effect, the law imposed a one-year postelection freeze on rate increases, plus a 20% across-the-board premium rollback. It also barred insurance companies from arbitrarily canceling or refusing to renew auto policies. These safeguards, missing from the Affordable Care Act, made the transition from deregulation to price protections a smooth one. And it netted Californians $1.2 billion in refunds for unjustified price increases.

A study issued last week by the Washington-based Consumer Federation of America quantifies Proposition 103′s pocketbook impact. It found that California is the only state in the nation where the average auto insurance premium is lower today than it was in 1989. Once the second-most expensive state for auto insurance in the nation, California now ranks 30th, according to the report. The federation also found that California motorists have saved more than $100 billion since 1989, an average annual savings of more than $8,000 for every household in the state. The report concludes that under Proposition 103, “California has provided auto insurance consumers the most effective and protective regulatory system” in the United States.

Equally important is the initiative’s democratic impact. Proposition 103′s mandate for fairness in insurance pricing practices has become ingrained in California’s public policy. The measure built a strong political base by giving both middle-class and low-income voters an equal stake in its reforms. And its success has enhanced public confidence in state government and in regulation.

That’s a stark contrast to Obamacare, at least so far. The Affordable Care Act offers subsidies to low-income consumers — a valuable investment by taxpayers in America’s human infrastructure — but the absence of price protections has deeply disturbed a middle class abandoned by Washington after the 2008 economic collapse and still struggling to pay the bills.

Proposition 103 did not originally apply to health insurance, unfortunately. To remedy that, Consumer Watchdog has qualified an initiative for the November 2014 ballot that would place health insurance companies doing business in California under Proposition 103′s regulatory controls. The nation will be watching as California voters once again lead the way in insurance reform, this time with a state-based strategy to close the loophole in the Affordable Care Act.

Harvey Rosenfield, founder of Consumer Watchdog, is the author of Proposition 103. Originally published in the Los Angeles Times on Tuesday, November 19, 2013. Online version can be viewed here.

$100 Billion Win

2:26 pm in Uncategorized by Consumer Watchdog

Prop 103 100 Billion SavedI’m truly humbled.

It was a big deal when, 25 years ago this month, you and other California voters joined with me to pass Proposition 103, the toughest auto insurance regulation in the nation. But I had no idea exactly how big.

Today, in downtown Los Angeles, the Consumer Federation of America released the findings of a new report: Prop 103 has saved California drivers over $100 billion dollars since 1988. That’s about $8,125 per California household. In fact, California is the only state in the country where auto insurance rates actually went down over the last 25 years.

Back in 1984, the California Legislature passed a law requiring drivers to have auto insurance…but didn’t limit how much insurers could charge. Predictably, insurers hiked prices by double digits. Voters revolted against the price gouging by passing Prop 103, and the result was billions in savings.

Now, the federal health reform law is requiring everyone to buy health insurance. But Obamacare doesn’t limit what insurers can charge. It’s déjà vu all over again. Not surprisingly, insurance companies are hiking prices by double digits.

We Californians have been through this before, and with your help we’ll revolt again next year. Consumer Watchdog has put an initiative on the November 2014 ballot that will apply Prop 103′s money saving reforms to health insurance companies. Health insurers will have to open their books and justify any rate increase before it takes effect.

Harvey Rosenfield

This will be another David v Goliath battle like the one we won together twenty-five years ago.

Auto insurance in California is a $20 billion a year industry. Health insurance is more than a trillion. Imagine the savings we’ll be celebrating 26 years from now once voters regulate the health insurance industry at the ballot next year.

Thanks for all of your support.

Posted by Harvey Rosenfield – Founder of Consumer Watchdog and author of Proposition 103. For more on Consumer Watchdog and Prop 103 visit our website.

Our New Years Resolution

3:37 pm in Uncategorized by Consumer Watchdog

Carmen Balber

What an inspiring 2012! Together, we exposed and stopped false MPG claims by automakers, shamed health insurance companies into lowering outrageous rate hikes and moved closer to the day when technology companies can’t collect and sell our private information online and on our phones without consent. This year we’ll continue these fights, and more.

Big things are going to happen in 2013, and we’re glad you’re here with us to see them through. We’ll be asking in the coming days your thoughts on what Consumer Watchdog’s priorities should be in 2013.

For now, here are some of our pledges for this year. We will:

What do you think of our resolutions? At Consumer Watchdog we know that when public opinion is on our side, we can make big things happen. So be on the lookout for our survey next week, and let us know your opinion on what our priorities should be in 2013.

Your ideas, actions and complaints were behind some of our biggest consumer protection victories. We need your input again to make this year as big as the last.

Happy New Year!
Posted by Carmen Balber, Executive Director of Consumer Watchdog.

Insurer Caught Red-Handed Lying In Prop 33 TV Ad – Warn Your Friends

11:43 am in Uncategorized by Consumer Watchdog

You won’t believe this!

The insurance billionaire behind Prop 33 isn’t just lying about his phony proposal in the television ads airing this week. He is actually using paid employees to impersonate “real drivers” and not disclosing it to voters. We have the proof in this short video.

Please watch the short video exposing the Prop 33 campaign’s big lies and share it with all the California voters you know to warn them.

Campaign finance law requires that campaigns disclose if they are using paid spokespeople in their television ads, but the insurer-funded Prop 33 campaign didn’t disclose to viewers that it used two employees of its paid PR firm in advertisements to pose as average drivers.

You can help spread the word. Watch the short video and post it to your Facebook, Twitter and other accounts.

California voters shouldn’t be deceived by one insurance billionaire, Mercury Insurance’s George Joseph, who has spent $8.4 million to pass Prop 33. Our friends, family and co-workers deserve to know the truth.

When was the last time an insurance billionaire spent $8.4 million on a ballot measure to save consumers money?

Please join us in warning California voters.

Posted by Jamie Court, President of Consumer Watchdog Campaign and leader of For more information about the campaign visit us on Facebook and on Twitter.

New survey: Americans don’t want insurance rates tied to prior insurance coverage

4:16 pm in Uncategorized by Consumer Watchdog

Doug Heller

The Consumer Federation of America released a new report earlier this week assessing consumer views on the factors insurance companies use to set premiums around the country. Not surprisingly, Americans think that insurance rates should be based primarily on motorists’ driving safety record (87% and 85% of respondents believe rates should reflect a driver’s number of accidents and tickets, respectively).

More than a majority of Americans think it’s unfair to consider the ZIP-code in which you live or your occupation. More than two-thirds (68%) call it unfair to charge drivers more if they did not have insurance because they did not previously have a car. This data point should interest Californians, because there’s an initiative on the November ballot – Proposition 33 – that would allow insurance companies to penalize people based on this precise factor that 68% of Americans consider unfair.

Proposition 33 was put on the ballot by Mercury Insurance’s billionaire Chairman, and his $8 million campaign conveniently ignores the fact that the initiative allows insurance companies to raise prices on drivers who didn’t previously have insurance because they didn’t have a car. No doubt, his pollsters are telling him the same thing that the national survey reports: Americans don’t think his scheme is fair. (So if people think your initiative is unfair, your only option is to run a deceptive ad campaign filled with disingenuous patriotism and hope people can’t see the trick you’ve hidden behind that flag.)

But back to today’s report for a moment. Another interesting thing Consumer Federation did was look at rates around the country and show the effect of a variety of rating factors, including prior insurance coverage. Two things stand out:

  1. Where most companies in most states dramatically jack up the rates on customers who do not have prior insurance when they want to buy a policy, Californians’ premiums are unaffected by that factor because it is illegal to apply it in California. The whole point of Prop 33 is to make California more like these other states in a bad way.
  2. Generally speaking, rates in Los Angeles, California are both lower than the other big cities tested and more stable after testing for factors considered unfair, such as ZIP Code, occupation, prior insurance and credit scoring. In other words, the insurance reforms Californians installed through Proposition 103 in 1988 not only apply standards of fairness to the marketplace, they have created a competitive and lower priced market as well.

Posted by Doug Heller, Executive Director of Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

Consumer Group Calls On Insurance Billionaire To Withdraw Deceptive Prop 33 Advertisements

7:03 pm in Uncategorized by Consumer Watchdog


Consumer advocates today called on the insurance company executive behind Proposition 33 to immediately withdraw new radio advertisements that mischaracterize the impact of the initiative on foreign service and military personnel in the wake of attacks on US embassies abroad.

In statewide radio advertisements paid for by Mercury insurance executive George Joseph, the Proposition 33 campaign erroneously claims soldiers will be able to keep auto insurance discounts they now lose, and that Prop 33 is about “supporting our heroes.” In fact, foreign service officers would be surcharged under the proposal for not driving while working oversees when they restart their auto insurance in California. Moreover, Prop 33 will not protect any current discount for soldiers.

In a letter sent to Mercury Chairman Joseph today, Consumer Watchdog wrote: “Out of respect for military officers and foreign service employees, who face life-threatening circumstances at our embassies abroad, we call upon you to immediately withdraw your deceptive and disrespectful radio advertising campaign in favor of Proposition 33.”

Download Consumer Watchdog’s letter here, or read text below

Listen to the Prop 33 radio ad here

A Los Angeles Times opinion staff blog published yesterday took the campaign to task for the deceptive ad: “The 30-second spot declares: ‘Proposition 33 protects our veterans and military families, and allows them to keep their discount on car insurance, saving them money.’ It would do nothing of the kind.”

Read the Times blog here:

Consumer Watchdog’s letter continued: “Your radio advertisement claims Prop 33 is about “supporting our heroes.” But under Prop 33, good drivers who have stopped driving for legitimate reasons – like serving abroad in our foreign service – would be hit with large surcharges if they decided to drive again and buy insurance in California. For political reasons, you exempted from Prop 33’s large rate increases a small segment of those who stop driving for legitimate reasons, active duty military officers. That certainly does not mean you are helping soldiers keep a discount. Moreover, foreign service officers, families of military officers, disabled veterans and others who stop driving for good reason, but cannot prove active duty military service is the reason for their coverage lapse, would get slammed under Prop 33 with big rate hikes.”

This month, Joseph also gave $195,000 to a nonprofit organization for its support of Proposition 33 in another attempt to mislead voters about the impact of Prop 33 and camouflage its insurance industry backing. Joseph gave 99%, $8.4 million, of the funds in support of Prop 33.

The measure would overturn a 24-year-old law banning discriminatory practices by auto insurance companies that were brought to light in a 1987 California civil rights case, King v. Meese. Proposition 103, passed by the voters in 1988, banned auto insurers from charging more, or refusing to sell insurance, to people who were not previously insured.

Read more about Proposition 33 at

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September 13, 2012

Mr. Joseph,

Out of respect for military officers and foreign service employees, who face life-threatening circumstances at our embassies abroad, we call upon you to immediately withdraw your deceptive and disrespectful radio advertising campaign in favor of Proposition 33.

You began your disingenuous “Heroes” radio advertising campaign for Proposition 33, the California ballot measure for which you have given 99% of the funding, the day after September 11th with the hope of fanning patriotic sentiments for your insurance company’s cause. You could not have known that those cynical advertisements – which misrepresent your measure’s impact on our nation’s military, their families and foreign service officers – would air when American military and foreign service members are under grave threat worldwide.

Nonetheless, you now have an obligation not to betray the seriousness of the current circumstances our heroes face abroad with radio advertisements that lie about what Prop 33 does in their name.

As the Los Angeles Times editorial staff blog noted Wednesday:

“Proposition 33, an initiative to let auto insurers offer discounts to competitors’ customers, isn’t quite the same as Proposition 17, a similar proposal that voters rejected in 2010. But the campaign in favor of the measure seems to be following the same truth-distorting playbook.

“The Yes on Proposition 33 campaign has bought airtime on 19 radio stations in five cities for what appears to be its first commercial, which is due to begin broadcasting Wednesday. The 30-second spot declares: ‘Proposition 33 protects our veterans and military families, and allows them to keep their discount on car insurance, saving them money.’

“It would do nothing of the kind.”

As you well know, Prop 33 has nothing to do with military officers keeping any discount under current law. All your initiative does is legalize a now-illegal rating factor: Whether a driver has had auto insurance continuously or not.

Your radio advertisement claims Prop 33 is about “supporting our heroes.” But under Prop 33, good drivers who have stopped driving for legitimate reasons – like serving abroad in our foreign service – would be hit with large surcharges if they decided to drive again and buy insurance in California. For political reasons, you exempted from Prop 33’s large rate increases a small segment of those who stop driving for legitimate reasons, active duty military officers. That certainly does not mean you are helping soldiers keep a discount. Moreover, foreign service officers, families of military officers, disabled veterans and others who stop driving for good reason, but cannot prove active duty military service is the reason for their coverage lapse, would get slammed under Prop 33 with big rate hikes.

Mr. Joseph, you have repeatedly cited your experience as a veteran to justify why one insurance company billionaire should be allowed to change the insurance laws through Proposition 33. We urge you to take a moment of silence to think like a veteran now and withdraw these advertisements.

Jamie Court

Mercury Insurance Gave $25K to Greenlining Institute for Flip-Flop Prop 33 Endorsement

3:26 pm in Uncategorized by Consumer Watchdog


Consumer Advocates Call On Group To Withdraw Support For Measure That Would Raise Car Insurance Rates on Good Drivers

The nonprofit Greenlining Institute acknowledged in a San Francisco Bay Guardian story published today that it received a $25,000 donation from Mercury insurance company, and expects more for its work in support of Mercury-backed Proposition 33. Prop 33 is funded by Mercury insurance’s billionaire chairman George Joseph and would raise car insurance rates on good drivers who have a break in insurance coverage, even if they’re not driving.

In a letter, Consumer Watchdog urged Greenlining to reverse its decision to support Proposition 33. Greenlining opposed a nearly identical ballot measure proposed by Mercury insurance company in 2010, Prop 17.

Download the letter here

Read the San Francisco Bay Guardian story

“We are writing to urge you to reconsider your shocking support for Proposition 33 and the auto insurance redlining it seeks to legalize,” wrote Consumer Watchdog founder Harvey Rosenfield and Washington DC director Carmen Balber. “Greenlining purports to represent the very low-income drivers who will be hurt the most if Proposition 33 is approved next November, allowing insurance companies to surcharge Californians who stop driving for legitimate reasons and then choose to get back on the road.”

Prop 33 would overturn a 24-year-old law banning discriminatory practices by auto insurance companies that were brought to light in the 1987 California civil rights case, King v. Meese.

“The rampant practice of surcharging, or refusing to sell insurance to, people who were not previously insured was one of the most pernicious of the discriminatory techniques employed by the insurance industry,” said the letter. “In signing the ballot argument for Proposition 33, you have aligned yourself with George Joseph and Mercury Insurance, the most persistent partisans for the legalization of the old redlining tricks that made auto insurance inaccessible to low-income families and communities of color for decades.”

The letter notes that Proposition 33 targets Californians who stop driving for legitimate reasons:

  • When low-wage workers who commute by bus need to get a car in order to maintain their job, they will be surcharged by about 40% for auto insurance;
  • When immigrant drivers are finally able to obtain a California driver’s license and try to buy insurance, they will be forced to pay hundreds and possibly thousand of dollars more than the drivers who purchased insurance in the past, even though they are equally good drivers;
  • When drivers who have found it financially impossible to maintain uninterrupted insurance coverage turn to the auto insurance market in hopes of complying with the mandatory insurance law, they will face a financial penalty for being poor;
  • Those who cannot afford these massive surcharges will be exposed to penalties and seizure of their vehicles for failure to comply with the Financial Responsibility Law.

You Really Can’t Trust Mercury

2:13 pm in Uncategorized by Consumer Watchdog

The Mercury Insurance initiative’s lawsuit to stop the Attorney General and us opponents from telling the truth about Proposition 33 – how it will raise auto insurance rates – got tossed out of Sacramento Superior Court last Thursday. The Mercury campaign asked the court to rewrite the Official Ballot Pamphlet, which is sent to every voter’s home, so it would contain only Mercury’s false claim that everyone will get “discounts” if Proposition 33 passes. After an hour-long argument, the judge said no.

But the ink was hardly dry on Thursday’s court order when Mercury told yet another lie – this time about what we said in court.

In a press release issued Friday morning, Mercury said: “CONSUMER WATCHDOG ARGUES IN COURT THAT THE TRUTH IS ELASTIC.”

We never said that, of course. (The release also called us “corporate lawyers,” which the corporations we take on would no doubt find bewildering.)

I guess we shouldn’t be surprised that George Joseph, the multi-billionaire Chairman of Mercury Insurance who has contributed 99.1% of the $8.29 million received by Proposition 33, can’t stop lying about his proposition and the consumer, citizen, senior and patient’s organizations who vehemently oppose it. After all, according to the California Department of Insurance:

“Mercury [has a] lengthy history of serious misconduct, and its attitude – contempt towards and/or abuse of its customers, the Commissioner, its competition, and the Superior Court….Among Department staff, consumer attorneys, and consumer victims of its bad faith, Mercury has a deserved reputation for abusing its customers and intentionally violating the law with arrogance and indifference….”

Mercury’s dirty propaganda campaign didn’t work back in 2010, when the company mounted a nearly identical proposition to deregulate auto insurance, also sued the Attorney General and us, spent $16 million, and still lost. Joseph and the pigs at the Mercury trough (an assortment of PR hacks, phony non-profit groups, insurance agents and bought-and-paid-for politicians) think the voters are stupid. But they are wrong. California voters can smell a dirty, self-serving initiative a mile away.

The Mercury Insurance campaign might have gotten away with its Friday fabrication, except we were able to catch them red-handed.

Hours before Thursday’s hearing, I found out that Joseph’s lawyers had not requested a court reporter be there to take down everything that was said in court. (Thanks to severe budget cuts, state courts can no longer afford to pay for court reporters – the parties in a lawsuit have to pay.) It seemed odd that this mega-billionaire would not spring for someone to record the truth… and then I realized that the Mercury campaign might not want a transcript of what happened in court, so they could lie about it later.

So I pulled out my checkbook, went to a special window at the Sacramento Superior Court, and paid the $30 for the court reporter myself.

Good thing, as it turns out.

The court reporter’s transcript confirms that our lawyer, the highly respected James Harrison of Remcho, Johansen & Purcell, never uttered what Mercury quoted him as saying. Rather, citing the First Amendment and many legal decisions, he urged the court to reject Mercury’s attack on our conclusion that Proposition 33 will “deregulate” auto insurance premiums. Here are his words:

“Your Honor, as the Court noted, deregulation is an elastic and ideological concept. In the Huntington Beach case, for example, the Court refused to make a change to the argument that the measure requires AES, the electricity company, to pay its fair share. And the reason that the Court refused to intervene was that the term ‘fair share’ is a very elastic and ideological concept. What you understand to be a fair share might not be what I understand. The same is true of deregulation, your Honor. What I understand to be deregulation may have a very different meaning to someone else. It’s a very elastic concept.”

Mercury’s legal shenanigans wasted a lot of taxpayer money at a time when California courts are struggling to deliver justice fairly and efficiently despite a gaping hole that the Legislature has inflicted on the judicial branch budget. (Late Friday, Joseph’s lawyers filed an appeal, hoping to overturn the Superior Court’s decision. It was summarily denied.)

Forcing the Attorney General to defend in court her summary of Proposition 33, which she is required by law to prepare for the ballot, was also an unnecessary drain on that law enforcement agency’s scarce resources. (Joseph was also furthering a strategy recently adopted by Wall Street and other corporate interests: Attacking Attorney General Kamala Harris in an attempt to intimidate and undermine her.)

The Mercury campaign’s public relations minions don’t care about the cost to taxpayers. To them, filing a lawsuit in court is just another gambit in their greed-driven, deceptive campaign to get the voters to pass a law allowing companies like Mercury Insurance to raise your auto insurance rates and make more money.
Posted by Harvey Rosenfield, Founder of Consumer Watchdog and Author of California Proposition 103, California’s landmark Auto Insurance Regulation law.

Insurance Billionaire-Sponsored Prop 33 Will Raise Premiums On Millions of Responsible Drivers

3:54 pm in Uncategorized by Consumer Watchdog

Mercury Insurance Warning

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

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:

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