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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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Proposition 17 Won’t ‘Fix’ Anything

June 5th, 2010

Editorial by THE LOS ANGELES TIMES

It claims to address a problem in California’s auto insurance laws. But the problem doesn’t exist.

Give proponents of Proposition 17 credit for chutzpah. Their TV commercials tell voters that there’s “only one place to get the facts about Prop. 17: the official voters guide.” But then they quote from the opinions the Yes on 17 campaign inserted into the guide’s arguments and rebuttals section. No matter what the campaign commercials claim, the measure would not let drivers “take their continuous coverage discounts with them.” Instead, it would create a new type of discount whose magnitude and effect are, at this point, unpredictable.

There is no “continuous coverage” discount today, at least not the way it’s defined in Proposition 17. Instead, there is what amounts to a loyalty discount that most insurers offer to drivers who’ve been their customers for some time. The amount of the discount varies from company to company, as do the requirements to qualify. As per the requirements of Proposition 103, which voters approved in 1988, insurers have to justify the terms of the discount by showing a substantial correlation between customer loyalty and a lower risk of loss. They also have to offset the cost of the discount by imposing surcharges on new customers.

Proposition 17 would allow insurers to offer a new discount to drivers based on the length of time they’d been insured by any company, with corresponding surcharges on those who didn’t qualify — in short, those who’d recently allowed their coverage to lapse. But nothing in the measure would compel insurers to match their rivals’ loyalty discounts, so there’s no guarantee that drivers could “take their discounts with them” when they switched insurers. Instead, the amount of the discount would be up to each insurer. If drivers wanted the same terms, they’d have to find an insurer whose discount matched the one offered by their current company.

Nor is it clear whether the continuous coverage discounts would be as large as the loyalty discounts insurers offer today. That’s because the universe of drivers eligible for the new discount wouldn’t just be “responsible drivers,” as the Yes on 17 mailers claim; it would also include people who’ve bounced from one insurer to another as they’ve racked up collisions, claims and tickets. Meanwhile, the new discount would have to be offset through surcharges on any number of “responsible” people who stopped carrying insurance temporarily when they took a break from commuting.

The most misleading thing about the commercials is the suggestion that the proposed discount would exist if not for a “flaw” in the law. As part of Proposition 103, voters banned insurers from charging drivers more if they’d been previously uninsured. The point was to shift premium calculations from a system based on potentially discriminatory factors, such as where drivers lived, to one based on how they performed behind the wheel. Proposition 17 is just the latest attempt by some companies, most notably Mercury Insurance, to unravel that policy. Voters shouldn’t be confused by the Yes on 17 campaign’s skewed version of reality.

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Mercury: Kind and Generous

June 4th, 2010

By Jennifer Evans Gardner, THE HUFFINGTON POST

Mercury Insurance is so generous.

On Tuesday, California voters will get the chance to vote on Prop 17, which Mercury, out of the goodness of their hearts, has spent some $10 million on. Those crazy kids. All to save us money.

Unless you live under a rock, you’ve heard about this initiative, which if passed, will allow insurance companies to raise premiums on drivers who, for any reason, didn’t have insurance coverage at some point in the past five years. They’re calling it a “loyalty discount.”

Well, duh, you say. Mercury doesn’t want to save us money.

But it’s not just Prop 17… Mercury doesn’t appear to like paying legitimate claims either. I would know. I’m a Mercury insured.

Two years ago, I was rear-ended by another Mercury insured while sitting at a stop sign, an accident that resulted in a neck injury. No problem, I thought. Two civilized individuals, both insured by the same company – why would there be a problem? I got my car repaired, then contacted Mercury to let them know they needed only to reimburse my out-of-pocket medical expenses – nothing else.

Know what they said?

The generous folks at Mercury offered me about half of what I had paid out of pocket. In other words, I would only have to pay a few thousand dollars for being rear-ended. Lucky me!

Wait a minute… isn’t that what insurance is for, I asked? Why do I make those monthly payments, if not to keep from going into debt in case of an accident? Apparently not. Even though I had gone to my doctor of 25 years, a reputable physician in Beverly Hills, in their eyes, I had “over-treated,” so I was out of luck.

I had a choice. I could accept their offer and eat the difference, or I could sue them. However, with some research, I discovered countless similar complaints… it seemed that this was actually a pattern with Mercury; and that if I did venture to sue them, I would likely spend years in depositions and a trial, not something I had the time or the patience for.

In a phone interview, Naomi Seligman, Director of Public Affairs for Consumer Watchdog, a non-partisan consumer advocate organization, said, “there are hundreds of complaints lodged against Mercury for everything from discrimination to trying to weasel customers out of claims money.” I was hardly unique.

I decided to sue them in small claims court.

I know what you’re thinking. You can’t sue an insurance company in small claims court! True. But if you sue their insured, Mercury will send a representative. Not for you, silly — for the other guy.

Of course, small claims court is for quick, no-frills citizen vs. citizen hearings; however, Mercury found a loophole. In fact, the Mercury representative in my case seemed to know a lot of folks at the courthouse, and admitted to the defendant that he was “a regular.”

My “Mr. Smith Goes to Washington” (or “Ms. Evans-Gardner Goes to Van Nuys”) moment was a proud one. I showed up in court with a thick file of color-coded exhibits, my witnesses, and a kick-ass closing argument, if I do say so myself. I greeted the defendant, apologizing for having to drag him into court. He was cordial, but embarrassed. An insured driver, he would have also hoped to avoid such a situation.

A Mercury rep, holding an official-looking briefcase, stuck out his hand with a big smile. “Good morning, I am Mr. S, here from Mercury Insurance on behalf of Mr. X.” “Oh, good morning,” I replied. “Are you here for me, too?”

He looked puzzled. “You?” he smirked.

“Well, I’m your insured, too.” I looked around the room. “Is there a Mercury guy for me?” He looked flustered. “Gosh,” I said. “Could there be a conflict of interest?”

He proceeded to advise me, kindly, mind you, that I had little chance of winning and suggested I accept their settlement. “No, thank you,” I answered politely.

“I see you have your husband and son here,” said Mercury Man. Well, yes, I explained. Not only were they witnesses, but this was also a teaching moment for my 12 year-old. I looked him straight in the eye, adding, “I want my son to see that when someone tries to take advantage of you, you stand up for yourself.” He sputtered something about how, as a parent, he appreciated that. I wondered how his parental ethics figured into bullying a victim into paying for her injuries.

To make a long story short, my Perry Mason moment never happened. The commissioner simply looked at the evidence and awarded me the maximum amount, plus court fees.

In other words, I beat Mercury’s scrawny ass.

All I had to do was sit back and wait for my check, right? Wrong. It didn’t come. I couldn’t believe it. Could Mercury really be so bold as to violate a Superior Court order?

I called Darrel Ng, Press Secretary for the California State Department of Insurance, who said, “Mercury has been fined $500,000 in the past five years for claims handling practices, among other things.” Guess they don’t mind breaking a few rules.

Meanwhile, $500,000 over five years? That’s just $100,000 per year, a downright bargain for Mercury, whose profits were reported at over $400 million last year.

Turns out, Mercury isn’t all that generous after all. Spending millions to save us money? That’s a good one. The question is: how many voters will they fool with their misleading ads and ballot language?

I finally received my check the other day, exactly two years after the accident, and though my neck still hurts, that’s a load off my mind. By the way, I’m shopping for a new auto insurance company… any suggestions?

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Consumer Group Warns of Mail Fraud from Insurance Industry Campaign for Prop 17

June 4th, 2010

NEWS RELEASE

Contact: Doug Heller, 310-392-0522, ext. 309; or Naomi Seligman, 310-392-0522, ext. 318

Desperate Mercury Insurance Dumps Another Million into $16 Million Campaign and Distributes Last Minute Mailer from Phony “Consumer Coalition”

Santa Monica, CA — Facing a surge of voter opposition in the last few days of its campaign for Proposition 17, sponsor Mercury Insurance injected another $1 million dollars into its campaign to fund last-minute mailings and advertising that conceal the insurer’s support and feature a fraudulent “Consumer Coalition of California.”

Click here to view the mailer.  To date, Mercury has donated $16 million to fund the Prop 17 campaign.

The so-called “Consumer Coalition of California” whose name appears on the Prop 17 mailer is run by a Texas woman, Virginia Jarrow, who has repeatedly sided with industry. All legitimate consumer groups in California, including, Consumers Union, Consumer Watchdog and Consumer Federation of California oppose Propositon 17.  The Mercury funded mailers also fail to identify Mercury as an insurance company in state mandated disclosures. The disclosure on the mailers state: “Paid for by Yes On 17-Californians For Fair Auto Insurance Rates And Mercury General Corporation And Affiliates.”  Mercury Insurance’s corporate parent, Mercury General Corporation, doesn’t have “insurance” in its name.

“This is a consumer fraud,” said Harvey Rosenfield, founder of Consumer Watchdog. “Mercury Insurance Company is trying to put one over on the voters by sending out mailings in the name of a consumer coalition that does not exist. All legitimate consumer groups in California oppose 17 because it will allow insurance companies to raise auto insurance premiums.”

Mercury Insurance has been paying other front groups for their “support.”

Californians for Fair Auto Insurance Rates (Cal-FAIR)

Mercury Insurance has paid hundreds of thousands of dollars to Bicker, Castillo & Fairbanks, a public relations firm, to create a front group called Californians for Fair Auto Insurance Rates or CAL-FAIR.  The chief spokesperson for CAL-FAIR, Kathy Fairbanks, is a communications consultant and partner in the firm that runs campaigns for several different corporations and interest groups.

Consumers First, Inc.

Jim Conran is listed as the co-chair for Californians for Fair Auto Insurance Rates (Cal-FAIR)/Yes on 17 campaign. As head of something he calls Consumers First, Inc. (which doesn’t appear to be incorporated or have a website), Conran has been paid tens of thousands of dollars by the Prop 17 campaign to help Mercury Insurance try to deceive voters on the measure.  Prop 17 is not his only deception. Mr. Conran is a pay-for-play PR professional who is paid by industry executives to run several front group projects.

Kirk West

Kirk West, a co-chair of CAL-FAIR, has already made over $30,000 as a paid spokesman for Mercury Insurance’s campaign on Prop 17. He was formerly the President of the Chamber of Commerce and is now a gun-for-hire for industry executives.

Prop 17 would penalize Californians who opt to stop driving for a time, for virtually any reason. Voters would be required to pay up to a $1,000 more dollars a year for auto insurance when they sought to restart coverage.

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Campaign for Consumer Rights is the campaign affiliate of the nonprofit Consumer Watchdog and the sponsor of Stop Prop 17  - http://www.StopProp17.org

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Corporate Funded Senior Group – ­Used by Insurers In Prop 17 Campaign – Now Laundering Insurance, Industry Money in Candidate Elections

June 3rd, 2010

NEWS RELEASE

Contact: Doug Heller, 310-480-4170, or Naomi Seligman, 310-392-0522, ext. 318

FPPC Complaint Filed Against “California Senior Advocates League PAC” For Failing to Disclose Its Sole Funders – Big Corporate Political Action Committees

Santa Monica, CA – The Campaign for Consumer Rights (CCR) has filed a complaint with the Fair Political Practices Commission (FPPC) about the nearly $320,000 that the California Senior Advocates League PAC appears to have laundered for big insurance companies and other corporations. The corporate groups are using the purported senior group to avoid disclosing the true funding behind the tv ads and attack mailers that have become pervasive in San Diego in the final weeks before the election.

CCR’s complaint against the Senior Advocates PAC shows that the front group created a political action committee just last month to funnel money from insurance and other industry funded groups to elect Juan Vargas and defeat Assemblywoman Mary Salas, candidates in the Democratic primary for Senate District 40 in San Diego.

The so-called senior group has also been prominently listed in mass campaign mailings as a supporter of Prop 17, to hide the $15 million Mercury Insurance has spent to promote the initiative to raise car insurance rates.  Mercury Insurance is the largest individual corporate donor to one of the two political action committees funding the Senior Advocates PAC.  A timeline of the Senior Advocates PAC’s contributions and expenditures is below.

“Insurance companies and other big corporations are secretly trying to influence the results of the election in San Diego by funneling money through a group that sounds a lot more trustworthy to voters than big insurance, big tobacco and big oil,” said consumer advocate Doug Heller.  ”Big industry wants to win its agenda in Sacramento, and they’re using illegal money laundering tricks to do it.”

On May 18th, the day it was created, the Senior Advocates PAC began receiving funds from two corporate PACS and immediately spent the money on independent expenditures against Assemblywoman Mary Salas and in favor of Juan Vargas.  The two corporate PACs funneling money through the so-called “Senior Advocates” are “JobsPAC, A Bi-Partisan Coalition of California Employers” and “Put California Back To Work Sponsored By The Civil Justice Association Of California.” JobsPAC is this largest overall funder of Put California Back and Mercury Insurance’s $50,000 contribution is the largest from an individual corporation to Put California Back.

In the letter to the FPPC, Heller wrote: “Unless the committee is ordered to cease and desist and immediately comply with the Political Reform Act, it will continue to provide false information to the voters for the purpose of hiding the actual sources of funds in connection with expenditures in Senate District 40.”

The complaint details how the Senior PAC and others involved in this scheme appear to be violating Government Code sections 84301 and 84302, related to disclosing the true source of funds, and possibly section 84506, related to disclosures in advertisements.  The complaint can be downloaded at http://bit.ly/cSuxUU

In addition to laundering money on behalf of the two corporate PACs, Senior Advocates, incorrectly describes JobsPAC as a “coalition of employEES” rather than “employERS” in its campaign filings, which only adds to the deception about the source of these funds.   On May 28, the Senior Advocates PAC also made a $103,000 independent expenditure against John Laird who is running to fill the Senate seat vacated by Lieutenant Governor Abel Maldonado.

Timeline of the Contributions Received and Expenditures Made by California Senior Advocates League PAC (CSAL PAC)

CSAL PAC Formed as a committee: 5/18/10

CSAL PAC Received from JobsPAC $5,000            5/18/10

CSAL PAC Received from Put California Back to Work $15,000          5/19/10

CSAL PAC Mailer opposing  Mary Salas                                $9,517.62       5/19/10

CSAL PAC IE to Oppose Mary Salas                                    $28,353.80     5/20/10

CSAL PAC Received from JobsPAC:                                    $94,000           5/21/10

CSAL PAC Made to Working Families for Vargas  $100,000         5/24/10

CSAL PAC IE to Oppose Mary Salas                                    $ 1,250.00       5/24/10

CSAL PAC Received from Put California Back to Work $100,000         5/27/10

CSAL PAC Received from JobsPAC                                    $100,000        5/28/10

CSAL PAC Made to Working Families  for Vargas   $100,000         5/28/10

CSAL PAC IE to Oppose John Laird                                    $103,000         5/28/10

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Campaign for Consumer Rights is the campaign affiliate of the nonprofit Consumer Watchdog and the sponsor of Stop Prop 17  - http://www.StopProp17.org.

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Propositions 16 and 17: Welcome to the Corpocracy

May 30th, 2010

By Paul Tullis, TRUE/SLANT BLOG

On June 8, Californians will vote on a couple of exceptional propositions that are the first attempts in decades by corporations to use the ballot initiative process to change the law in their favor.

California’s ballot initiative system was implemented during the Progressive era to enable citizens to amend the state constitution without going through the legislature (though the legislature can also put initiatives on the ballot). The idea was to provide the citizens with a method of protecting themselves from well-funded special interests lobbying the legislature by providing them with their own direct avenue to lawmaking.

Its ironic, therefore, that the system should become a means by which well-funded special interests circumvent the legislature because they know that a well-informed professional lawmaker would never buy the line of bullshit now being propagated by an ad campaign paid for by the states largest private utility, PG&E.

Prop 16, the Taxpayers Right to Vote Act, would require a 2/3 majority in a voter referendum to create or expand any municipally-owned utility, which in most of the state would mean competing with Pacific Gas & Electric or shutting it out of a potential market. PG&E is the measure’s sole sponsor, and has spent $35 million pressing for passage. (The company told shareholders to expect a short-term decline in share price as a result of the expenditure.)

Nearly every city, town, county, consumer group, environmental group, and newspaper in the state opposes the measure, along with AARP, the League of Women Voters and even another large private utility, San Diego’s Metropolitan Water District.

“This is a for-profit corporation trying to kill off its not-for-profit rivals,” said San Francisco Supervisor Ross Mirkarimi told the SF Chronicle. Prop. 16 is a colossal fraud perpetrated on the people of California.

PG&E wants to hike rates because it spent a lot of money on dirty-energy infrastructure just before California passed its Renewable Portfolio Standard, requiring the state to get 20% of its energy from fossil-fuel-free sources by the end of this year. Its ad dollars have shouted down proposals to create public utilities in the past”and those only needed a bare majority to pass. Experts say the 2/3 requirement, which is a major factor in the annual disaster in California known as the state budget, would effectively doom any future proposal”and with it efforts to accelerate the transition to green energy.

Prop. 17 got on the June 8 ballot through a $3.5 million signature-gathering campaign by Mercury Insurance Co. The company has been accused of illegally discriminating against some applicants, but Prop. 17 would make such behavior OK, and roll back many other consumer protections. California’s Insurance Commissioner (yes, since 1991 California has had a statewide elected official with this title), a Republican, has written of Mercury’s lengthy history of serious misconduct [and] contempt toward and/or abuse of its customers.

Nothing like these initiatives has been tried since 1988, when the law which Prop 17 is attempting to overturn was enacted. That November, there were 4 competing insurance-related initiatives on the ballot, one of which was backed by an insurance company that spent over 90% of the money in support of it. Because there were 4 competing initiatives, and it was a November Congressional election with high turnout, the initiatives got a ton of press coverage and a consumer-friendly one that Ralph Nader supported won the day.

Ever since, I was told by Eric McGhee, an expert on voter initiatives at the Public Policy Institute of California, companies have been discouraged by the experience from using the ballot-initiative process and have instead mainly spent their political-influence money on lobbying and campaign contributions. McGhee says they largely prefer lobbying because its more likely to get them the specific break in the law that they’re seeking. (Of course, Props 16 & 17 will get them a specific break in the law, too.)

This isn’t to say corporations have stayed out of initiative campaigns, but its usually been on the No side, to stop a proposition that goes against their interests. With 16 & 17, the companies are pro-actively seeking to change the law in their favor in a way that’s exceptional.

Bruce Cain, a poly-sci prof at Berkeley who’s on the California Fair Practices Commission, which interprets federal law as it applies to elections in California, told me the measures will fail only if voters are paying attention [and] there is enough money on the no side.

So far the latter question is a definite no: PG&E is outspending the No’s by more than 1000:1 (yes, one thousand to one.) As for the former, well just have to wait and see on June 8; the fact that a proposal to write an article similar to the one you are now reading was turned down by The New Republic, The Nation, Mother Jones and The Nation may not bode well for a well-informed electorate.

The failure in ‘88 discouraged companies from using ballot initiatives to push their agendas for a generation. But someone at one of the groups opposing the measures told me that the PG&E attempt is the most brazen attempt he’s ever seen.

If PG&E &/or Mercury are successful, it could have as strong an influence as ‘88 did, but in the opposite direction, unleashing corporate money into the initiative arena like never before.

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Props 16 and 17 Are Deceptive Perversions of California’s Initiative Process

May 28th, 2010

By Byron Williams, CONTRA COSTA TIMES

One of the worst infractions that a columnist can commit is to write the same column twice. That alone is worthy of unrelenting flogging, but to do it in consecutive weeks is unfathomable.

If you read last week’s column where I offered a dissenting view of Proposition 17, today’s column might have a deja vu feeling about it.

If you accepted the arguments against Prop. 17, you then, by default, are most likely opposed to Prop. 16. In the macro, they are the same ballot measure presenting the same problematic concerns. We need only to ask a few fundamental questions to see just how similar Prop. 16 is to Prop. 17.

What would Prop. 16 do if passed?

According to its proponents, Prop. 16 “does only one thing “… it ensures that voters will have the final say   by requiring a vote   when local leaders decide to spend public dollars or incur public debt to go into the retail electricity business.”

Like Prop. 17, Prop. 16 uses inclusive language to portray itself as protecting the voters’ interest.

But it is a very elegant way to say Pacific Gas and Electric, which is already fighting efforts by Marin County and San Francisco to start their own utility companies, wishes to pass a ballot measure that would force local governments that want to establish electrical service to do so by winning a two-thirds majority vote. As we’ve seen in the past, winning a two-thirds majority vote is not an easy sell.

Who is the sponsor of Prop. 16?

Like Prop. 17, which is principally sponsored by Mercury Insurance, Prop. 16 also has a primary benefactor   PG&E.

The mere fact that PG&E plans to spend up to $35 million in support of Prop. 16 tells us that for all of the language about voter choice, this is a ballot measure about maintaining PG&E’s monopoly.

It also raises a similar question that I put forth last week: When was the last time PG&E spent $25 million to $35 million on behalf of the voters?

PG&E would argue Prop. 16 is about fairness. Fairness for who? PG&E shareholders?

In the spirit of full disclosure, I was once employed by PG&E in its government relations department. I applauded the company’s public stand in opposition to anti-affirmative action (Proposition 209) and the anti-same-sex marriage initiative (Proposition 8).

But corporations are about their bottom line, ultimately making them amoral in scope. Prop. 16 masquerades as a voter’s choice, but it is about the self-interest of PG&E, which may or may not be congruent with the interest of voters.

Moreover, it hardly seems prudent to have a statewide ballot measure that allows voters of, say, Alameda County to influence the self-determination of voters in Marin County on a local matter.

Perhaps the worst aspect that Props. 16 and 17 share is the profound misuse of the initiative process.

The process began in 1911 as an amendment to the state constitution to establish the California initiative process. It was intended to give voters the right to enact legislation and provide the electorate with a countermeasure against deep-pocket interests, such as Southern Pacific Railroad.

Somehow, we’ve maintained the myth that it is a citizens’ initiative process, but the cottage industry of signature gathers, campaign consultants and legal services have all but dispelled that belief, leaving only the illusion of a grass-roots effort as the remnant of a bygone era.

It’s a shortlist as to who can come up with the resources to place something on the ballot. The combined efforts of PG&E and Mercury Insurance may total more than $45 million   that can hardly be considered a people’s effort.

For as flawed as the initiative process has become, particularly over the past 30 years, PG&E and Mercury Insurance unabashedly mock the system leaving no doubt beyond the sanitized wording on their campaign literature that Props. 16 and 17 are corporate-funded initiatives serving the interest of corporations and their shareholders.

That represents a dangerous precedent that in no way serves the public interest.

Have we reached such a low in our democracy that the self-interest of corporations can be realized through simply placing a few focus-group tested words on a ballot backed by millions of dollars?

If either Prop. 16 or 17 pass on the June 8 ballot, the answer will be an unequivocal yes.

Reach Byron Williams at 510-208-6417 or e-mail him at byron@byronspeaks.com.

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Auto Insurance Debate Drives Prop. 17

May 27th, 2010

By Paul Sisolak, THE VENTURA COUNTY STAR

It’s been said that motorists in Ventura County — and all across car-centric Southern California — can’t part with their automobiles. How much of that can be attributed to auto insurance is yet to be seen, although an upcoming ballot measure could change the way people choose to insure themselves, according to supporters and opponents of Proposition 17.

Prop. 17 is a statewide initiative on primary ballots, asking voters to approve changes in the way auto insurers provide discounts to their clients; namely, between those people who’ve maintained continuous coverage, and those who haven’t.

Backers of the measure say that Prop. 17, the “Continuous Coverage Auto Insurance Discount Act,” is needed because it does just that — provides the opportunity for rate discounts to drivers who’ve allowed their insurance coverage to lapse.

Groups like the Alliance of Insurance Agents and Brokers, and local chambers of commerce, also believe Prop. 17, if it passes, will serve to increase market competition because it will allow Californians to shop around for better insurance rates without being penalized for switching companies.

Prop. 17, in effect, is proposed to alter standards set by 1988’s Proposition 103, which disallowed the practice of offering discounts to new clients even if they’ve consistently carried insurance coverage with another carrier.

This lack of “portable persistency,” as it’s called by Prop. 17 supporters, damns motorists both ways: they might like to switch insurers for cheaper rates, but if they do, they’re penalized.

“A lot of people stick with the same company or they lose that discount. It’s a penalty on drivers,” says Kathy Fairbanks of the Yes on Prop. 17 campaign.

“We’re supporting it because we feel it’ll bring insurance rates down and increase competition. That’s good for our business climate and good for consumers, too,” says Brendan Huffman, director of the Chambers of Commerce Alliance for Ventura and Santa Barbara counties.

He cites statistics from the Department of Insurance that show that 80 percent of Californians maintain auto insurance and qualify for such a persistency discount, which could save someone an average of $250 per year.

Supporters are also calling the opposing side’s stance an insidious “shell game” meant to unfairly attack Mercury Insurance, the big-name company with a near-$14 million investment behind the measure.

“I think the opponents would like to characterize it as special interest,” says Mike D’Arelli, executive director of the Alliance of Insurance Agents and Brokers. “Truth be told, all insurers in California would like to take advantage of the initiative.”

But Mercury is the culprit, according to No on Prop. 17 campaigners, led by the Santa Monica-based Consumer Watchdog. Its director, Doug Heller, says that it’s rarely mentioned that Prop. 17 would give Mercury and other insurers free will to hand down hefty $1,000 surcharges to drivers — four times the savings touted by Prop. 17 supporters.

The “Stop the Surcharge” campaign frames low-income residents and those affected by the bad economy as the victims. Heller noted that Prop. 17 could result in a spike in more people opting out of being insured, despite never having had a poor driving record or a prior lapse in insurance coverage.

“When they’re back on their feet and trying to get insurance, if they face a Prop. 17 surcharge, they may be stuck driving uninsured, and that’s bad for all of us,” Heller said.

Heller’s group points a finger to blemishes on Mercury’s own record. Last month, an investigation into the insurer’s practices, which was led by state insurance commissioner Steve Poizner, concluded that Mercury may have overcharged thousands of state residents on both their auto and homeowners insurance policies.

Added support for Prop. 17 comes from groups like the California Alliance for Consumer Protection, the League of United Latin American Citizens and the 60-Plus Association. Opponents include the California Nurses Association, the California Alliance of Retired Americans and a host of major regional newspapers.

For more information, visit www.yesprop17.org or www.stopprop17.org.

paul@vcreporter.com

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No On Prop. 17: Deceptive Initiative Will Hurt Drivers

May 25th, 2010

By Harvey Rosenfield, Op-Ed Commentary, THE BAKERSFIELD CALIFORNIAN

The California Department of Insurance recently cracked down on an insurance company that has been overcharging motorists, including men and women serving in the military, for 15 years.

That same company, Los Angeles-based Mercury Insurance, is bankrolling Proposition 17 on the June ballot. Mercury wants you to trust it when it says that its measure will save everyone money.

When was the last time an insurance company spent $7 million on a ballot initiative to lower your rates?

In fact, Mercury’s Proposition 17 gives insurance companies the power to raise rates on millions of responsible Californians. Which is why you should vote no.

This deceptively written initiative allows insurance companies to surcharge people who have not been previously insured — even if they are perfect drivers but weren’t insured because they weren’t driving or didn’t own a car.

Proposition 17 also penalizes anyone who had to drop coverage for more than 90 days over the last five years, or missed a single insurance payment.

These surcharges are illegal in California today: The voters banned them in 1988 because the higher rates led to more uninsured motorists on the road.

In states that have laws similar to Proposition 17, the surcharges can raise the price of car insurance by 200 percent or more — adding thousands of dollars to the annual cost of insurance.

We must stop Prop. 17 because if it passes, it will allow insurance companies to punish law-abiding citizens who have done nothing wrong:  seniors who stopped driving for a period of time while recovering from surgery, for example.

Ditto for college students who don’t need a car until the summer.

Proposition 17 would even punish Californians who serve in the military stateside and must interrupt their coverage while in boot camp. Jon Soltz, the chair of VoteVets.org, strongly opposes Prop. 17 as does USAA, the national auto insurance company formed to insure members of the military. USAA says it cannot support Prop. 17 because it will penalize active-duty servicemembers defending our country.

We’ll all pay more than we should under 17, because when insurance company boost rates, more drivers will go uninsured. When they get into accidents, premiums go up for everyone else.

Californians are rightly suspicious when big corporations try to manipulate the initiative process for their own self-interest. In the case of Proposition 17, its sponsor, Mercury Insurance, has proved it cannot be trusted.

Arguments about Prop. 17 made by Mercury and its paid spokespeople have been repeatedly reviewed and rejected as false by the courts and state regulators.

And just last month, the Insurance Commissioner brought an administrative lawsuit against Mercury alleging that it engaged in more than 50 practices that are illegal under California law, victimizing thousands of Californians. Investigators discovered that Mercury failed to give customers the discounts they were entitled to and overcharged people just because they are self-employed, work out of their homes or had health problems. The company even broke its own previous pledges to regulators that it would stop violating California laws. The company faces tens of millions of dollars in fines.

Mercury Insurance’s sponsorship of Proposition 17 is like Bernie Madoff backing a ballot proposition claiming to protect investors.

The last thing California families can afford right now is an initiative that makes insurance companies less accountable for their actions, leads to more uninsured motorists and skyrocketing auto insurance premiums. That’s why veterans groups, seniors and Consumers Union, the non-profit publisher of Consumer Reports magazine, all agree: Vote no on Proposition 17.
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Harvey Rosenfield, who established Consumer Watchdog in 1985, has worked for the Federal Trade Commission, Congress, in private practice, as a staff attorney for Ralph Nader’s Public Citizen Congress Watch and as the program director for the California Public Interest Research Group (CalPIRG).

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Will Prop. 17 Save Or Cost Californians Money?

May 24th, 2010

By Staff Reporters, KGTV-10 (San Diego, CA)

Prop. 17 Among Propositions On June 8 Ballot

SAN DIEGO, CA — A proposition on the June 8 ballot could have a significant effect on how much Californians will pay for auto insurance, but there is a disagreement over whether the proposition will save or cost money.

While everyone would like to save money on car insurance, the question before voters on June 8 is whether Proposition 17 will do that.

Right now, drivers who have kept auto insurance with the same company can qualify for a continuous coverage discount. However, they can’t take that discount with them if they switch to another insurance company. Prop. 17 would allow drivers to keep the continuous coverage discount even if they go with another insurer.

“It’s going to save the average consumer about $250,” said Ken May, an independent insurance agent in Oceanside. He sells policies from a number of companies, including Mercury Insurance, which has largely financed Prop 17.

Harvey Rosenfeld, of the group Consumer Watchdog, has been fighting insurance companies, including Mercury, for decades. He sees it differently.

“It’s a fraud on the voters to describe Prop. 17 as saving everybody money,” he said. “It will actually cost people money.”

Rosenfeld said Mercury has spent close to $10 million to get Prop. 17 passed.

“When was the last time an insurance company spent millions of dollars to save you money,” he asked. “Answer — never.”

May said the proposition will increase competition in the insurance industry, which helps drivers.

“Competition means lower rates” he said. “They’re going to have to lower their rates. They’re going to have to offer better service.”

Rosenfeld and other opponents claim drivers who stop their coverage for more than 90 days for any reason will be hit with a surcharge of up to $1,000 when they restart their coverage. A lot of attention has focused on the military in that regard, as military personnel serving overseas will not be hit with higher rates. But what about those serving in the U.S., it may be a different story.

“Let’s say you go away from San Diego to another state for boot camp,” said Rosenfeld. “You drop your coverage for three months. When you come back home, you’re going to get hit with the surcharge.”

May disputed that insurance companies will do that.

“They don’t want the PR nightmare of turning away military personnel,” May said. “It just wouldn’t be good for their public relations.”

Proponents say Prop. 17 will lower the number of uninsured drivers, while opponents say the number of uninsured will go up.

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