Posts Tagged ‘surcharge’

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

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.

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

Press-Enterprise: No on 17

May 28th, 2010

Any initiative driven primarily by one wealthy special interest should invite voter suspicions. And rightly so: Prop. 17 on the June 8 ballot purports to benefit consumers, but would do so by setting dubious public policy. Voters should avoid that pitfall, and reject Prop. 17.

The measure would amend state law so that insurers could give discounts on policies to drivers for maintaining auto insurance coverage. The rate reduction would apply regardless of which company provided the policy. And the measure would let insurers charge higher rates to people who have let insurance coverage lapse for more than 90 days. Just how much those discounts or surcharges might change individual premiums is unclear.

Current law, set by Prop. 103 in 1988, bans insurers from setting premiums based on whether a driver has previously had insurance. Insurers can give discounts to drivers who have been long-term customers with one company. But the law bars insurers from providing such an incentive when customers switch from one insurance company to another.

Prop. 17 backers — mainly Mercury Insurance — say the measure would reward drivers by increasing competition for their business. And they say that the 80 percent or so of Californians who maintain insurance coverage should not lose discounts just for switching carriers.

The idea has a superficial appeal, if voters ignore the likely consequences of that policy. Insurers would have to pay for such discounts somehow. The California Department of Insurance analysis notes that each insurance rate reduction generally requires an offsetting increase somewhere else. Insurers still need to have enough money to cover claims and earn profits.

The obvious way to recoup the discounts is to charge higher premiums to drivers who have not had continuous insurance coverage. But that approach would make buying insurance more expensive for the people who do not have it now, creating a perverse policy incentive. The goal should be to encourage all drivers to purchase insurance, which would provide a financial safeguard against accident or injury — and end the extra cost everyone else pays in collisions with uninsured motorists.

But there are other reasons to be skeptical of Prop. 17. One company, Mercury Insurance, is responsible for the measure being on the ballot. The company has spent more than $13.5 million so far in support of the initiative.

The idea that an insurer would spend millions of dollars because it wants to save drivers money defies credibility. Mercury’s more likely goal is to poach lucrative customers from other insurers while discouraging customers it considers less desirable.

Nor does Mercury’s record reassure voters. In April, the Department of Insurance said the company had violated state law in setting premiums, driving up customers’ costs. And Mercury had still not corrected violations stretching back to 1998, the department said.

Voters should say no to Prop. 17. Enacting a special-interest measure that creates unwise public policy would be a reckless choice.