By Carol J. Williams, THE LOS ANGELES TIMES

A $16-million effort by auto insurers to ease regulations may not be over despite state voters’ decision to reject Proposition 17, which would have allowed drivers to take their continuous-coverage discount with them if they switched carriers.

By the time all votes were counted early Wednesday, voters defeated the initiative 52% to 48%, despite lopsided campaign funding that allowed insurance industry supporters to outspend opponents 12 to 1.

The hard-fought battle was waged between consumer advocates, who said the measure would increase premiums, and insurers, led by Mercury Group, which contended in an advertising blitz that the proposition would cut rates.

Consumer Watchdog of Santa Monica hailed the measure’s defeat as a sign that voters are wary of letting big business intrude into the citizen initiative process that allowed the proponents to get the issue on the ballot.

But spokesmen for Californians for Fair Auto Insurance Rates, the Yes on 17 campaign, said they were disappointed and signaled that they might carry on the fight for regulation revisions they expect to bring more business their way.

Mercury Chairman George Joseph, who for years has been struggling to get the changes through the Legislature and survive court challenges, says he’s not sure what his next step might be.

“We have to convince people … that this is a good thing for consumers. I don’t think we made this clear enough,” Joseph said, repeating the campaign’s message that more than 80% of insured motorists would benefit from being allowed to take their loyalty discounts with them to a new insurer.

Mercury provided the vast majority of the Yes on 17 funding, used to bombard drivers with the message that passage would correct “a flaw in the law” and spur more competition among insurers.

Proponents failed in their attempt “to scam California drivers by authorizing surcharges that voters made illegal in 1988 when they passed Proposition 103,” said Harvey Rosenfield, founder of Consumer Watchdog and author of the ballot measure that has regulated car insurance rates for 22 years.

“This is a victory not just for motorists in California, but a broader victory for California voters, who have made it clear they don’t intend to let insurance companies or utility companies or other big corporations subvert the people’s initiative process,” Rosenfield said.

The Campaign for Consumer Rights spent about $1.3 million to urge voters to reject the Mercury-backed measure.

The campaign warned voters that passage would eventually raise rates for new drivers, military personnel serving out of state and anyone who quit driving for a while to save money or take public transpiration.

Opponents also contended the threat of higher rates for those already paying top dollar for car insurance could lead to more uninsured drivers on the state’s roads.

Coupled with defeat of Proposition 16, a measure backed by Pacific Gas & Electric Co., which would have required voter approval before cities could get into the electricity business, voters sent a strong message that their voice in the political process cannot be bought, Rosenfield said.

The insurance industry backers stood their ground despite Proposition 17’s failure.

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

“There is no doubt that extending the continuous coverage discount would have improved current auto law for consumers,” he said.

Kathy Fairbanks of the Yes on 17 campaign described its defeat as “a Pyrrhic victory” for opponents because they are being investigated by the Fair Political Practices Commission for what she said was an attempt to hide the source of $590,000 in contributions to the StopProp17 campaign.

Rosenfield dismissed the failed sponsors’ report of campaign finance irregularities as sour grapes and said his campaign would welcome the commission’s review because they have scrupulously complied with campaign laws.

carol.williams@latimes.com

Marc Lifsher in Sacramento contributed to this report.

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