Prop. 33 got overshadowed in all of the frenzy surrounding Propositions 30, 32 and 37 these past few months. However, the magnitude of the victory for California drivers that was the defeat of Prop. 33 on Tuesday cannot be overstated.
Proposition 33 was the brainchild of Mercury Insurance founder George Joseph. It was benignly advertised as a proposition that would allow insurance companies to set prices based on whether a driver had previously carried auto insurance. The benefits, the companies argued, were numerous. Namely, insurance companies would have to compete for new drivers. The proposition would allow the companies to offer proportional discounts for drivers with prior coverage.
In reality, Prop. 33 simply sought to undue the restrictions voters placed on automobile insurance companies in 1988 when they passed Proposition 103. Prop. 103 prevents insurance companies from discriminating against new customers simply because they have not had continuous insurance coverage. It does not prevent companies from offering loyalty discounts to their long-term customers. Prop. 33 isn’t the first time that the insurance companies have tried to loosen the Prop. 103 restrictions. Just two years ago, Prop. 17, also funded by the George Joseph, was on the ballot with an eerily similar purpose. Mr. Joseph “has seemingly made it his mission in life to end [the restrictions placed on automobile insurance companies by Prop. 103], spending millions from his personal fortune to bankroll [the unsuccessful propositions].”
According to the State Department of Insurance, if Propositions 17 or 33 had passed insurers would be able to offer drivers switching from one insurance company to another a new discount. In order to offset this discount, however, they would have to charge higher rates to customers who were seeking insurance for the first time, or after they had let their insurance lapse for a period longer than 90 days. This isn’t just speculation. It is fact. Insurance companies offering the new discount would have to “collect enough revenue to cover the risk of loss posed by the entire group of new customers.”
As a consequence of this need to hike prices for the newly insured, uninsured Californians would face higher premiums when they tried to get insured. Higher premiums for those least likely to be able to afford them, means less insured drivers on the road. Less insured drivers means higher premiums for those with insurance. It is a dangerous spiral and one which Californians have decided again and again and again to avoid completely.
College students across the state, many of whom have drivers licenses and clean driving records from their time spent driving in high school, would be one group who would be effected by the passage of Prop. 33 and other propositions like it. College students often let their car insurance lapse when they are living on or near campus for four years. If Prop. 103 was gutted, as Props. 17 and 33 attempted to do, these new graduates would face higher premiums because they had let their insurance lapse during a period when they were not driving.
In spite of the absurd amounts of money poured into the fight for this proposition (mostly by one man), California voters saw through the facade much like they did in 2010. This is a huge victory for drivers throughout the state. Those with insurance will continue to be eligible for loyalty discounts, and those without insurance can be confident that when they do seek coverage they will not be paying extra to support discounts for those few switching insurance companies.
So much for the good news. The bad news: it is almost a guarantee that a similar proposition will find its way onto a ballot in the next few years. Whether its Prop 17, 33, 70 or 54, we can only hope that Californians will continue to see past the deceitful rehotric paid for by the insurance companies, and will continue to do what is best for California Drivers.
Sources:
http://stopprop33.consumerwatchdogcampaign.org/story/prop-33-likely-produce-more-not-fewer-uninsured-drivers
http://www.prnewswire.com/news-releases/college-students-speak-out-no-on-prop-33-177090111.html That is why college newspapers across the state urged students to vote no on Prop 33.
http://www.sfgate.com/opinion/editorials/article/Prop-33-a-bad-idea-that-won-t-go-away-3866761.php
http://stopprop33.consumerwatchdogcampaign.org/story/no-proposition-33-auto-insurance-initiative-was-bad-idea-two-years-ago-its-still-bad-idea
