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2 Industry-Sponsored Initiatives Fail, Despite Millions Spent On Advertising

June 9th, 2010

By Timm Herdt, THE VENTURA COUNTY STAR

Joe Mathews, a New America Foundation senior fellow who studies and writes about direct democracy around the globe, believes this has been a history-making week in the world of ballot propositions.

“Proposition 16,” he said Wednesday, “belongs in the Hall of Fame Of all-time bad initiatives.”

Despite a $46.5 million campaign in support of an initiative written, sponsored by and almost entirely funded by Pacific Gas & Electric Co., California voters rejected Proposition 16 on Tuesday, 52.5 percent to 47.5 percent. It was turned down in 33 of the state’s 58 counties, most strongly in the heart of the Northern California utility company’s service area.

All this despite the fact that PG&E outspent the opposition by a ratio of 465-to-1.

It was one of two single-company-sponsored initiatives to go down. Proposition 17, sponsored by Mercury General Insurance Co. to the tune of $16 million, was defeated 52.1 percent to 47.9 percent.

Mathews said the results could have been foretold. “There’s not a long history of voters carving out specific protections for specific industries,” he said.

The most recent previous example, he noted, was voters’ rejection in 2008 of a T. Boone Pickens-sponsored initiative that would have authorized California to sell $5 billion in bonds to buy specific clean-fuel vehicles that would have been powered by a fuel sold chiefly by Pickens’ company.

Opponents of the measures celebrated Wednesday and praised California voters for their ability to evaluate the initiatives independently and not be swayed by the one-sided barrage of advertising funded by PG&E and Mercury.

“Voters are a lot smarter than self-serving corporations think or hope, or the political consultants who sell their services to these corporations claim,” said Doug Heller of Consumer Watchdog, the group that led the campaign to defeat Proposition 17.

Proposition 16 was sold to voters in relentless television and radio advertisements as the “Taxpayers Right to Vote Act,” and would have required local governments to first get approval from two-thirds of their voters before spending any public money to form a public power authority or create an electricity-buying cooperative for local residents.

But in remarks to investors this spring, CEO Peter Darbee said the objective was to dissuade local governments from even considering the idea. By diminishing the number of elections on such questions, he said, PG&E would save money over time by not having to wage repeated local campaigns to defeat such proposals.

The company could not persuade the two other in-state utility companies to go along with the campaign. Southern California Edison and San Diego Gas & Electric did not support Proposition 16.

PG&E officials laid out the costs of what they intended to spend on Proposition 16, and explained to shareholders that it would be a good investment of their money.

Richard Stapler, spokesman for the campaign to defeat Proposition 16, said it’s likely that Darbee spent much of Wednesday “reading and re-reading the golden parachute clause in his contract.”

For its $46.5 million, Stapler said, “PG&E bought half a generation of bad corporate image for itself.”

In a terse statement issued early Wednesday, the Proposition 16 campaign acknowledged defeat. “Though we believe people should still have a voice in their communities about whether local governments should spend taxpayer dollars to go into the retail electricity business, it’s clear that these issues will need to be addressed community by community,” the statement said.

Critics said one of the primary motivations of Proposition 16 was to prevent communities from taking advantage of a 2001 law that permits local governments to take advantage of a process called “community choice aggregation,” allowing them to form electricity-buying cooperatives to provide residents a choice in selecting electricity providers.

Marin County and seven of its cities have formed the first such entity in the state, San Francisco is poised to follow suit, and other jurisdictions are studying the idea.

Environmental groups say these cooperatives will stimulate green-energy production. Bill Magavern, director of Sierra Club California, hailed the defeat of Proposition 16 “because it would have thrown a huge obstacle into the path of affordable clean energy.”

Stapler, whose No on 16 group raised less than $100,000, said the only advertising it was able to afford was an e-mail blast to 300,000 high-propensity voters last week. It provided links to editorials from some of California’s major newspapers, all except two of which editorialized against the measure.

“It’s a huge testament to the fact that people were reading the newspaper and they were paying attention,” Stapler said.

therdt@VCStar.com

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Election: Some Good, Some Bad, Some Ugly

June 9th, 2010

Editorial, THE SAN JOSE MERCURY NEWS

While one of Santa Clara County’s most important races, district attorney, remains too close to call, there were some stunningly clear winners in Tuesday’s state and local primaries, and some squeakers that were nonetheless heartening. Here’s our take so far:

California

With few surprises in the nominees for statewide office, the most exciting results were from the propositions, particularly the defeat of two entirely self-interested, dishonest, corporate-backed initiatives: PG&E’s Proposition 16, a bid to prevent competition, and Mercury Insurance’s Proposition 17, an auto insurance rate scam. Despite multimillion-dollar campaigns, a slim majority of voters saw through them both — a triumph of common sense. What a relief.

We’re also celebrating the strong support for Proposition 14. A significant government reform, it establishes an open primary, which will allow voters to pick a candidate from any party and send the top two vote-getters to a fall runoff. This should lead to more moderates winning office and, we hope, more willingness to compromise.

Unfortunately, in the U.S. Senate primary, Tom Campbell — our favorite GOP pragmatist — lost in a rout to Carly Fiorina, who will challenge Democrat Barbara Boxer in the fall. Campbell, a fiscal conservative but social moderate, has a history of bipartisanship that might find more supporters in an open primary. Polls show he’d have given Boxer a better race in the fall.

Meg Whitman’s decisive victory over Steve Poizner for the Republican gubernatorial nomination was no surprise, given the $71 million of her own money she spent on the campaign, but she also was the better candidate. Having honed her attack strategies on the politically hapless Poizner, she will present a lively challenge to Democrat Jerry Brown   himself a formidable campaigner. We just hope the issues don’t get lost in the crossfire.

Schools

Speaking of big winners, the overwhelming support for bond and tax measures in local school districts was stunning in this economy, great news for kids and a shot across the bow for lawmakers working on the state budget: Voters do care about education.

Santa Clara kickoff

The big victory in the South Bay was Santa Clara’s overwhelming approval of a football stadium deal with the 49ers, a game changer for the region, much like the Sharks were when they brought the first major league team to San Jose in the early 1990s. While the 49ers still have financial hurdles to clear before groundbreaking, the public vote was a big one, and the strength of that support will make it easier to overcome remaining challenges.

San Jose

Pressure for greater fiscal responsibility in San Jose’s budgeting went up a few notches Tuesday, with distinctly conservative candidates making the runoff in two districts. And in the third seriously contested race, District 5, the promising moderate Magdalena Carrasco got nearly as many votes as labor-supported Xavier Campos   once thought to be a shoo-in to succeed his sister, Nora Campos, who is now bound for the state Assembly. We’re happy to see Carrasco in excellent position for the runoff.

Incumbent Madison Nguyen finished first in District 7 as did former council aide Don Rocha in District 9. But each faces a serious conservative in the fall, Minh Duong and Larry Pegram, respectively. Rocha and Nguyen would both be wise to better clarify their positions on city spending and stake out the moderate ground.

Santa Clara County

We’re disappointed that Teresa Alvarado didn’t make the runoff for the District 1 supervisor seat. She has tremendous leadership potential. The front-runner, Los Gatos Councilman Mike Wasserman, will face labor-backed Forrest Williams in the fall. Wasserman’s business background could be beneficial, but he has a huge learning curve on county issues, which are substantially different from Los Gatos’.

As to that lingering district attorney’s race, we’ve got our fingers crossed for Jeff Rosen, who is leading incumbent Dolores Carr. We’re confident he’ll be an excellent and ethical DA.

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The Lesson of June 2010: Corporate Power Can Be Beaten

June 9th, 2010

By Robert Cruickshank

In looking at the disparate results of the June 2010 election, there are two themes that stand out to me:

1. Republicans will do what they are told by their corporate masters. Meg Whitman and Carly Fiorina won their primaries because they spent an enormous amount of money to tell Republicans that they should vote for CEOs because they’re smarter than everyone else and more likely to beat the Democrat this fall. That’s it.

Joe Mathews has a good take on Whitman’s victory, but it really does come down to her money. Same for Fiorina. Both dominated the messaging and TV airwaves with their ads, and did so early and often.

But it’s not only the money – it’s who they are. The Republican Party is the party of big corporations, with a voter base that believes big business can do no wrong. Look at the maps: Props 16 and 17 did very well in the Republican-friendly counties of Southern California. Prop 16 went down in the Central Valley partly because of voter anger at PG&E over the smart meters, but in SoCal where PG&E is unknown, Republicans said “sure, let’s give corporations whatever they ask.”

2. Corporations can be beaten. For the rest of California, however, unlimited corporate power is not seen as a positive thing. Letting them dominate and distort our elections with their money is rightly seen as a huge problem, whereas to Republicans it’s business as usual.

The defeat of both Propositions 16 and 17 is a major victory for progressives whose importance cannot possibly be underestimated. PG&E spent $40 million to pass it. The opposition? They spent $100,000. But with groups like the Courage Campaign (where I work as Public Policy Director) pitching in to help educate and organize voters, we were able to mobilize progressive activists to get the word out about this bad proposition, turn out to the polls, and make sure Prop 16 went down. Prop 17’s story was very similar, with opponents being outspent 10 to 1.

We weren’t able to beat Prop 14 or pass Prop 15. The voters really do want major political change, and don’t yet understand the benefits of public funding. But Prop 15 did much better than Prop 89, which suggests victory for clean money is near.

As we go into the fall campaign season, the arc of this election is now clear: it is a battle between corporate wealth and populist democracy. Our victory in Prop 16 and Prop 17 show how we can win that battle. Time to build and organize to win again in November.

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Robert Cruickshank is a historian, activist, and teacher living in Monterey. He is a contributing editor at Calitics.com and works for the Courage Campaign, in addition to teaching political science at Monterey Peninsula College. Currently he is completing his Ph.D. dissertation in US history, on progressive politics in San Francisco in the 1960s and 1970s.

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Our View: They’re Off To The Races

June 9th, 2010

Editorial, THE SAN GABRIEL VALLEY TRIBUNE

Credit California’s voters with at least one thing – creating the prospect of a wild ride from here to November with the dueling Brown-Whitman drag race.

Well, credit them with two things: On the five propositions voters offered for voters’ consideration this week, they came out spot on.

Californians voted for Proposition 13, allowing seismic upgrades to our homes to be exempt from new property taxes. They voted for more ballot choices by approving the open-primary rules of Proposition 14, though smaller parties will challenge that in court, and the bigger parties don’t like it, either. They took a look at the interesting experiment in public financing offered by Proposition 15, but rejected the odd social-studies class project version presented to us that would have just incorporated secretary of state elections instead of all races. They made a mockery of the selfish $46 million in expenditures – paid for by the ratepayers – doled out by PG&E in the giant private utility’s effort to lock in monopolies rather than allowing municipalities to vote for their own public utilities. They properly rejected another private company, Mercury Insurance, in its efforts to improve its business model to the detriment of those of us who have to buy auto insurance. So maybe California’s proposition system is not broken after all – not when the electorate can make such good choices even when presented with a confusing ballot and big-bucks propaganda campaigns.

But with Republican nominee Meg Whitman, a political novice, and former Governor Jerry Brown, trying to make a comeback 36 years after first being elected governor, California is presented with an incredibly clear choice. There is nothing similar whatsoever about their backgrounds, and is likely to be nothing similar about the way they will campaign to turn around the troubled Golden State.

In their acceptance speeches Tuesday night, they got their engines roaring at the starting line.

“Jerry Brown has spent a lifetime in politics and the results have not been good,” Whitman said. “Failure seems to follow Jerry Brown everywhere.” Well – he has been elected to governor, to secretary of state, to mayor of Oakland, to attorney general. True, he failed miserably in his quixotic efforts to become president. But since then, he’s been sticking to his crafty California knitting.

“It’s not enough for someone rich and restless to look in the mirror one morning and decide, `Hey, it’s time to be governor of California,”‘ Brown said, clearly referring not only to billionaire Whitman but to Gov. Arnold Schwarzenegger. “We tried that. It didn’t work. Puffery, platitudes and promises won’t balance our budget, won’t fix our schools and won’t create any new jobs.” True. But Brown, son of another governor, has worked in the public sector for almost his entire life, and Whitman, the former boss of hugely successful Internet site eBay, has created quite a few jobs in her time.

It’s going to be quite a race, as is the all-woman – rare in American politics – duel for the Senate seat that another former Silicon Valley executive, GOP nominee Carly Fiorina, will battle incumbent, establishment Democrat Barbara Boxer for.

We can only hope against hope that the tone set in these races will not be the same as in the primaries. No matter what their campaign advisors say, Californians are looking for a contest of real ideas to fix our state’s economy, not for a summer and fall of duking it out over who is more against illegal immigration than the other candidate. We know where you stand on immigration, folks. That’s not the issue here. The issue is restoring California’s once-robust economic climate so that we can continue to thrive in one of the greatest places on Earth in which to live and to work. That’s what we came here for. That’s what has kept us strong. With moderate, sensible, jobs-oriented, environmentally sensitive leadership from a governor and a senator for all of California, that’s what will keep us strong in the future.

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Prop. 17: Auto Insurance Measure Appears To Fail

June 9th, 2010

By Justin Berton, THE SAN FRANCISCO CHRONICLE

UPDATE 6:54 a.m. Proposition 17, auto insurance measure, appeared to be headed for defeat. With 99. 1 percent of the precincts reporting, it was losing by 158,000 votes, or 52-48 percent.

***

California voters were divided closely on a measure Tuesday that would change state law to allow insurance companies to raise rates on drivers who let their coverage lapse while allowing insurers to award discounts to those who maintain continuous coverage.

Supporters of Proposition 17 said the ballot initiative, sponsored mainly by Mercury Insurance, would lead to more competition and better rates for consumers who take advantage of “continuous coverage” discounts by sticking with insurers.

But opponents said the proposition would unfairly raise fees for drivers who drop their coverage and would erode consumer rights guaranteed under Prop. 103, the landmark insurance reform measure that voters approved in 1988.

Tuesday’s low voter turnout could help the measure pass, opponents said. Early returns showed the measure gaining support in Southern California counties, while Bay Area counties showed opposition.

“We’re still hoping the votes will come in,” said Doug Heller, a spokesman for Stop Prop. 17. “We were outspent $16 million to $1 million, so we moved away from expectations, and just hoped voters received our message.”

The change in the law would allow insurers to penalize drivers who let their insurance lapse, according to opponents. Under Prop. 103, insurance companies are barred from considering motorists’ coverage history when they apply for insurance.

“It’s a positive sign tonight that voters took a careful look at Prop. 17,” said Kathy Fairbanks, a spokeswoman for the Yes on Prop. 17 campaign. “Voters recognized it fixed a flaw in the system and improved the insurance market.”

The controversial proposition was heavily financed by the Mercury Insurance Group, the state’s third-largest insurer, which contributed more than $16 million to the campaign for the measure.

For months, Prop. 17 has been the target of complaints by Consumer Watchdog, the Santa Monica advocacy group that was founded by Harvey Rosenfield, the author of Prop. 103.

Rosenfield has argued that the measure would allow Mercury and other companies to impose surcharges as high as $1,000 on drivers who have not had continuous coverage.

Drivers who are students, low-income and members of the military on duty in other states would be unfairly punished by the new measure, Rosenfield said.

In February, a state report obtained by The Chronicle through California’s Public Records Act, alleged that Mercury may have engaged for years in illegal practices, including deceptive pricing and discrimination against consumers.

In April, The Chronicle reported that Mercury faced hefty fines after another state report alleged it violated state laws “despite agreements with the state to terminate illegal behavior.”

Last month, Consumer Watchdog filed a complaint with the federal Securities and Exchange Commission, charging that Mercury founder and Chairman George Joseph hired his nephew as an actuary for the firm without disclosing the family relationship to investors.

The company has denied any wrongdoing.

E-mail Justin Berton at jberton@sfchronicle.com.

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Voters Defeat Proposition 17, The Mercury Insurance Initiative

June 9th, 2010

NEWS RELEASE

CONTACT: Doug Heller, 310.392.0522 x309; or Naomi Seligman, 310.392.0522 x318

Stunning Upset in $16 Million Campaign to Scam California Drivers

Santa Monica, CA – Ignoring a deceptive $16 million campaign by Mercury Insurance Company, California voters rejected a ballot measure that would have amended 1988 insurance reform Proposition 103 to allow insurance companies to impose surcharges on motorists who were not previously insured or had a break in coverage for virtually any reason. A majority of Californians voting against Proposition 17, despite ads promising $250 premium reductions.

“Once again, David defeated Goliath,” said Harvey Rosenfield, author of Proposition 103, which mandated stringent rate regulation and was passed by voters in 1988 despite an $80 million campaign against it by the insurance industry.

“Californians asked themselves when was the last time an insurance company spent $16 million to save consumers money, and the answer was clear: never. California voters refused to be duped by corporations using the people’s initiative process to enrich themselves at the expense of consumers.” Proposition 17 would have legalized surcharges banned by Proposition 103.

Campaign for Consumer Rights, which led the campaign against Mercury, was outspent approximately 12 to 1. Campaign for Consumer Rights is the campaign affiliate of the nonpartisan, nonprofit organization Consumer Watchdog.

Voters Reject Corporate Takeover of Initiative Process

Consumer advocates hailed the defeat of the Mercury Insurance initiative as proof that California voters do not intend to allow insurance companies or other big corporations to subvert the initiative process. The campaign in support of Prop 17, which was run by the corporate political consulting and advertising firm of Goddard Claussen, lost despite spending about $15 million more than the Stop Prop 17 campaign.

“Mercury spent millions on advertising, PR hacks, and paid spokespeople posing as consumer advocates, senior and business leaders, but the voters saw through the scam,” said Rosenfield. “Like PG&E’s measure, Prop 17 is the initiative that money could not buy.”

The campaign against Prop 17 produced and aired a 15 second television ad and one radio ad, that it developed with its small team of experts, including Chris Lehane, Ace Smith of SCN Strategies and Lisa Grove of Grove Insight.

“The consumer advocates’ vanquishing of the Mercury Insurance initiative scam is a powerful win for consumers and puts a horse’s head into the collective beds of the insurance industry,” said Chris Lehane, an advisor to the Stop Prop 17 campaign.

The consumer advocates opposing Prop 17 worked with a limited budget and a broad coalition. The California Nurses Association, Consumer Attorneys of California, Consumer Federation of California, Brave New Films, VoteVets.org, Consumers Union, California Alliance of Retired Americans, USAA, California Labor Federation, California Democratic Party and hundreds of organizations, groups and individuals joined in active opposition to the well-funded insurance company campaign.

“We are extremely grateful to all the voters, organizations, editorial boards, campaign experts, activists and online friends who took this battle seriously and sent a strong message to companies that want to buy laws through our initiative process,” said Doug Heller on behalf of the Stop Prop 17 campaign.

Group Sees Legal Actions Against Mercury

Consumer advocates noted that over the last five months, state regulators have released documents showing that over the last fifteen years, Mercury Insurance Company repeatedly violated state law, overcharging and discriminating against members of the military, the self-employed, people who worked out of their homes, and consumers who had health problems. Legal documents showed that Mercury also discriminated against those whose last names were difficult to pronounce.

“Mercury should not be allowed to do business in California, much less sponsor a ballot initiative,” said Rosenfield. “We will take all necessary action to make sure this renegade company complies with state and federal laws.”

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Stop Prop 17 sponsored by Campaign for Consumer Rights  - a coalition of consumer advocates, nurses and consumer attorneys.

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Voters Approve California Open Primary

June 9th, 2010

By Patrick McGreevy, THE LOS ANGELES TIMES

Proposition 14 victory changes future elections for congressional, legislative and statewide offices. An experiment in state-financed political campaigns and two propositions put on the ballot by major corporations are all rejected.

Reporting from Sacramento — California voters went to the polls Tuesday and recast future elections in the state by passing a ballot measure that creates open primaries, one of five propositions on the ballot.

Gov. Arnold Schwarzenegger, who championed the open-primary measure called its passage a “historic change” that “sends a clear message that Californians are tired of partisan gridlock and dysfunction.”

At the same time, voters rejected an experiment in state-financed political campaigns, while tax breaks for buildings retrofitted for earthquake safety passed by a wide margin.

Two other initiatives put on the ballot by major corporations — Proposition 16 requiring voter approval before cities can get into the electricity business, and Proposition 17 giving auto insurance companies more leeway in setting rates — were rejected by voters.

Jamie Court, president of Consumer Watchdog, said he was heartened that those propositions were so close despite tens of millions spent by companies that would benefit.

“I think it says the electorate isn’t as stupid as the corporations think it is,” Court said.

Under an open primary system, voters will no longer be limited to choosing among candidates from their own parties. Proposition 14 puts the top two vote-getters in primary races for congressional, state legislative and statewide offices, regardless of political party, in a face-off in the general election.

Backers of the measure said the shift would produce more moderate candidates because they would have to appeal to a wider group of voters.

The state Democratic and Republican parties opposed the change, as did minor parties.

“It will lead to a spike in backroom deal making [and] fewer candidates to choose from,” said Ron Nehring, state GOP chairman.

Voters were also asked to decide on another proposed change in elections: Proposition 15 would have established an experiment to test public funding for campaigns. The measure, pushed by Common Cause, would have allowed candidates for secretary of state in the next two elections to receive government funding for their campaigns if they agreed to spending limits.

Secretary of state candidates in the 2014 and 2018 elections who demonstrated viability by receiving $5 donations from 7,500 registered voters would have received at least $1 million in state funds for the primary election.

The proposition also would have barred special interests from writing big campaign checks to participating politicians, in an effort to reduce the influence of those contributors.

The measure would have repealed a ban on the use of public funds for state political campaigns, raising most of the money by increasing a state fee charged to lobbyists and their clients.

The California Chamber of Commerce and the Howard Jarvis Taxpayers Assn. opposed Proposition 15, arguing that it would open the door to tapping other public funding, beyond lobbyist fees, for political campaigns.

“With a $20-billion [state] budget shortfall, it’s a horrible idea,” said Richard Wiebe, a spokesman for the opposition campaign.

Pacific Gas and Electric Co. spent $46 million on its campaign for Proposition 16, which would have required local government agencies to obtain approval of two-thirds of voters before providing electricity service to new customers. The measure also would have called for a two-thirds vote before the expansion of service beyond current coverage areas if public funds or bonds were used.

“We think people should have a right to vote when local governments spend their money to go into the electric utility business,” said Robin Swanson, a spokeswoman for the campaign.

The measure was opposed by groups including Consumer Watchdog, which said that PG&E was just protecting its turf and that electricity customers would suffer.

Proposition 17 would have allowed automobile insurance companies to base their prices in part on a driver’s history of insurance coverage, authorizing discounts for those who have kept their coverage even if they changed insurance companies.

The measure, on which Mercury Insurance spent $16 million, would have allowed insurance companies to increase the cost of insurance for drivers who have not maintained continuous insurance coverage.

The least controversial measure on Tuesday’s ballot was Proposition 13 which provides that certain construction projects to make buildings safer during earthquakes will not trigger reassessments that could increase property taxes on the structures.

patrick.mcgreevy@latimes.com

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Voters Reject Corporate-Backed Ballot Measures

June 9th, 2010

By Mark Glover, THE SACRAMENTO BEE

Voters rejected two business-backed measures that would have changed the electric power and auto insurance industries in California.

With all precincts statewide reporting, PG&E-backed Proposition 16 was failing with 52.5 percent no votes. No votes on Proposition 17, sponsored by Mercury Insurance, accounted for 52.1 percent of the total.

Proponents of the measures were still holding out hope, with thousands of absentee ballots yet to be counted.

Shannan Velayas, a spokeswoman with the secretary of state’s office, said the number of absentee ballots varies from county to county, so the state does not now know how many are out there. She said it’s in the “tens of thousands.” Counties have until July 9 to report final absentee totals.

Opponents of Propositions 16 and 17 said they were confident, given the numbers. Out of about 3.85 million votes cast, Proposition 16 trailed today by about 185,000 votes. Proposition 17 was failing by about 156,000 votes.

Proposition 16 – formally known as the Taxpayers Right to Vote Act – was put on the California ballot as a constitutional amendment requiring a two-thirds vote before a public utility could extend service to new customers or new territories.

From the beginning, it was spearheaded virtually single-handedly by San Francisco-based PG&E, which spent more than $45 million to persuade voters to approve it.

Proposition 17 was put on the ballot by Mercury Insurance. It would have overturned state law prohibiting insurance companies from considering a driver’s insurance history to set rates, plus allow “loyalty discounts” to customers even if they switched insurance providers.

Mercury poured nearly $16 million into the effort, according to Electiontrack.com.

The company wasn’t immediately available for comment. But Mike D’Arelli, executive director with an insurance lobbying group that supported Proposition 17, called the results disappointing.

“Voters missed an opportunity to extend an auto insurance discount that could have lowered auto insurance rates for millions of drivers,” said D’Arelli, executive director of the Alliance of Insurance Agents & Brokers.

Harvey Rosenfield, the noted consumer advocate who led the fight against the proposition, was scheduled to make a statement later.

Existing law lets insurers offer loyalty (or “persistency”) discounts to long-term customers. Mercury has been fighting for years for the right to extend the discounts to other insurers’ long-term customers in an effort to lure them away. Rosenfield says that because of the “zero sum” regulations governing insurance premiums in California, companies that give discounts to one group have to raise premiums on others. He said newly insured motorists, or those who’d let their insurance expire temporarily, would pay big surcharges as a result.

Proposition 17 proponents said they would continue to pursue a complaint with the Fair Political Practices Commission over the financing of the opposition to the initiative.

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California Voters Reject Mercury General-Funded Ballot Question

June 9th, 2010

By Sean P. Carr, BESTWIRE

SACRAMENTO, CA — California voters rejected a Mercury General-sponsored proposition to allow insurers to extend automobile insurance discounts to more drivers despite the company having 15-to-one spending advantage.

Proposition 17 lost by a 52.1% to 47.9% margin, 2,004,410 to 1,848,768, according to unofficial results from the California Secretary of State’s office.

The outcome was a victory for consumer groups that argued the referendum would effectively legalize surcharges outlawed since the passage of Proposition 103 in 1988. Because those with lapses in coverage or payments would be disqualified from discounts, the initiative would allow insurers to charge those customers more, they argued.

While the Yes on 17 – Californians for Fair Auto Insurance Rates campaign touted the support of 100 organizations, Mercury General Corp. funded virtually the entire operation. The insurer gave approximately $16 million toward the effort.

The proposition’s failure to win despite the financing disparity shows that voters don’t trust the insurance industry, said Jamie Court, president and chairman of Consumer Watchdog. Court is also a board member of the Campaign for Consumer Rights, which ran the Stop Prop 17 campaign.

“It tells the insurance industry it shouldn’t be messing with the voters, because the voters can see through their tricks,” Court said.

Mike D’Arelli, executive director of the Alliance of Insurance Agents and Brokers, said voters missed an opportunity to save themselves money. “There is no doubt that extending the continuous coverage discount would have improved current auto law,” he said in a statement from the Yes on 17 campaign.

Mercury Insurance Co. (NYSE: MCY), a member of Mercury General Group, currently has a Best’s Financial Strength Rating of A+ (Superior).

The top five writers of private passenger automobile insurance in California in 2009 were Farmers Insurance Group, with a 15.1% market share; State Farm Group, 13.1%; Allstate Insurance Group, 8.8%; Auto Club Enterprises Insurance Group, 8.8%; and Mercury General Group, 8.7%; according to BestLink, which provides online access to A.M. Best’s Global Insurance & Banking Database.

Contact the author at: sean.carr@ambest.com

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Decision Time for State’s Voters

June 8th, 2010

By Carla Marinucci, THE SAN FRANCISCO CHRONICLE

Primary to pick nominees, decide crucial local issues

After enduring months of expensive campaigning by corporations and candidates, California voters go to the polls today to decide primaries for governor and U.S. Senate and races for a number of statewide and local offices – as well as ballot measures to allow the San Francisco 49ers to build a new stadium in Santa Clara and to change primary elections in the state.

Just one-third of California’s almost 17 million registered voters – a record-low turnout – are expected to weigh in, according to an analysis by the Field Poll.

The lack of voter interest reflects the lack of drama in two high-profile Democratic races, where Attorney General Jerry Brown, a candidate for governor, and incumbent Sen. Barbara Boxer face no strong competition from their party.

By contrast, GOP voters will decide two of the most-watched political contests in the nation – and whether to nominate women for the first time as Republican candidates for governor and U.S. Senate.

In California’s gold-plated GOP governor’s race, first-time candidate Meg Whitman – the former eBay CEO who has put $71 million of her own money into the race – leads state Insurance Commissioner Steve Poizner, who has dropped $24 million of his money.

Democrat Brown, the former two-term governor and Oakland mayor, cleared the field of any serious contenders months ago.

Seeking challenger to Boxer

In the GOP U.S. Senate race, former Hewlett-Packard CEO Carly Fiorina – who has invested more than $5 million of her own funds in her campaign – is leading in the polls against moderate former South Bay Rep. Tom Campbell and Assemblyman Chuck DeVore of Irvine, a Tea Party favorite.

The winner will challenge Boxer, who has faced a feisty but longshot challenge from former Slate.com blogger Mickey Kaus as she seeks a fourth term.

California voters also will decide who will square off in November for the lieutenant governor’s post. On the Democratic side, San Francisco Mayor Gavin Newsom, with the edge in fundraising, polling and endorsements, is the favorite over Los Angeles City Councilwoman Janice Hahn, who has attacked him for not knowing what the position entailed several months before announcing he was running.

In the GOP primary, recently seated Lt. Gov. Abel Maldonado, a moderate from Santa Barbara County, is facing a challenge on the right from Sen. Sam Aanestad of Grass Valley Nevada County.

Two district attorneys from opposite ends of the state appear to be the favorites to win their party’s nominations for attorney general in crowded fields. San Francisco District Attorney Kamala Harris, a Democrat, has polled well against six challengers but has been hit hard over the city’s drug-lab scandal by her most well-funded opponent, former Facebook privacy officer Chris Kelly, who has put $12 million of his own money into the race.

GOP attorney general’s race

At the same time, Republican Los Angeles District Attorney Steve Cooley has been attacked by his right-of-center opponents, state Sen. Tom Harman and former Chapman Law School Dean John Eastman, for his criticism of the state’s “three strikes” sentencing law.

California voters also will decide two measures that would affect elections and campaigns.

Proposition 14 would place all candidates from all parties in the same primary, with the two candidates with the most votes advancing to the general election even if they’re both from the same party. Proposition 15 would create a pilot program to publicly fund the campaigns for secretary of state.

Two ballot measures with major financial backing from corporations also will be decided.

The campaign for Proposition 16, supported by $46 million in funding from PG&E, would bar communities, including San Francisco and Marin County, from forming public power agencies without the approval or two-thirds of local voters.

At the same time, the campaign for Proposition 17- which would offer discounts to drivers who have maintained continuous coverage while allowing insurers to raise rates for drivers whose coverage has lapsed, has received $17 million from its chief backer, Mercury Insurance.

Santa Clara votes on 49ers

Perhaps the highest-profile measure in the Bay Area is Santa Clara’s Measure J, which would clear the way for the San Francisco 49ers to build a new $937 million stadium next to the Great America amusement park.

The team, which has spent more than $4 million on the campaign, promises that no money from the city’s general fund would be spent on the stadium. Opponents, who have raised about $20,000, argue that the stadium deal is too big a risk for Santa Clara.

Bay Area voters also will decide a dozen tax measures to benefit local school districts.

Chronicle staff writers John Wildermuth, John Coté, Nanette Asimov, Marisa Lagos and Carolyn Jones contributed to this report.

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