(Click here to view the broadcast of this news segment.)

LOS ANGELES, CA — Proposition 17, the auto insurance measure on the June 8 ballot, is designed to lower auto insurance rates and increase competition, but opponents say it could actually raise rates.

If you drive in California, you have to have auto insurance, and who doesn’t want to pay less for that?

Supporters of Prop 17 say the measure will save you money.

“With this additional discount, it will be a great thing because competition will be even better. The consumer will benefit,” said Joe Jimenez, who owns an independent insurance agency in Orange County.

He says Prop 17 will allow companies to consider a driver’s history of insurance coverage. If you’ve been with your company for a while, you’re probably getting a discount for continuous coverage or what is known as a persistency discount. Prop 17 would allow you to carry this discount over.

“Under current law, if you have insurance with a particular company and you go to another company, you lose the discount, and basically you get penalized,” said Jimenez.

“I think this is a proposition that has no place on the ballot,” said Harvey Rosenfield, founder of Consumer Watchdog.

Rosenfield wrote Proposition 103 back in 1988, which tied insurance rates to your driving record. He says while some drivers will get discounts with Prop 17, others are going to pay more. Those without insurance who want to get it will be hit with surcharges and it will also affect those who stopped their insurance for a while.

“You get the discount now because you’ve been with the same company for a period of years. What Prop 17 wants to do is allow insurance companies to punish you if you haven’t been insured with some other company in the past,” said Rosenfield.

One of the biggest supporters of Prop 17 is Mercury Insurance Group, which has already poured more than $7 million into the campaign. This has many wondering if the law is going to be good for insurance companies or for consumers.

“When was the last time an insurance company spent millions of dollars to save you money?” questioned Rosenfield.

“Let’s be honest… Mercury will benefit along with many other companies. What they really want to do is get more market share. They want to insure more people,” said Jimenez. “The people who are really going to benefit are the consumers, I mean, they’re the ones that are going to benefit from being able to take the discount with them.”

The voters will decide on the measure when they cast their ballots on June 8.

Click here to watch the broadcast of this news segment.

SACRAMENTO, CA (KGO) — The battle over Proposition 17 on the June ballot is heating up. The measure could change auto insurance rates and both sides of the issue say they say they are protecting consumers.

There are two major players. One is Consumer Watchdog, the group that sponsored Prop 103 insurance reform back in 1988, and is now opposing this measure. On the other side, Mercury Insurance Company has contributed $10 million to support Prop 17.

It has been called a classic David and Goliath battle that is now taking place on the airwaves.

“Prop 17 fixes the law so drivers can take their continuous coverage with them,” one ad proclaims.

The ad has been running for weeks and says Proposition 17 will save money for 80 percent of Californians with “continuous auto insurance coverage.”

“Why are car insurance companies spending millions to pass Prop 17?” another ad asks.

The ad, which just began airing on May11, notes that Prop 17 is backed by industry giant Mercury Insurance Company. It claims that Prop 17 will raise insurance rates for millions.

“The thing that people will be asking themselves is since when has an insurance company spent millions of dollars to put a proposition on the ballot that will save you money and the answer of course is never,” says Harvey Rosenfield with Consumer Watchdog.

Rosenfield says Prop 17 weakens consumer protections by allowing rate hikes based on coverage history. Mercury Insurance, however, says Prop 17 is good for consumers. They say drivers will be able to change insurance without losing continuous coverage discounts.

“What this does is this actually benefits the consumer, this proposition does, by making it portable and by making and forcing companies to be a lot more competitive,” says insurance agent John Morton.

Prop 17 lets insurance companies offer discounts to drivers with continued coverage, but it also allows rate increases for drivers without it.

Mercury Insurance has poured $10 million into the campaign to keep ads running. Consumer Watchdog raised about $500,000 to run ads and hopes to raise more.

For decades, respected consumer advocate Harvey Rosenfield has been battling Mercury Insurance and other corporations that have sought to undermine Proposition 103, the landmark car insurance regulatory measure that he wrote and California voters approved in 1988. But he’s never felt the need to advertise on television, until now.

Today in San Francisco, Rosenfield and the organization he founded, Consumer Watchdog, unveiled a 15-second commercial urging voters to reject Proposition 17, an effort by Mercury Insurance to overturn part of Prop. 103 to allow big surcharges on new drivers or those who have let their coverage lapse for even one day.

Mercury has spent more than $10 million and counting to blanket the media with its messaging, while Rosenfield has scraped together just $250,000 for a one-week Bay Area ad buy.

“We’ve never done this before, but given that Mercury Insurance is carpet bombing the airwaves with 30-second lies all over the state, we thought we’d do the equivalent of David’s slingshot,” Rosenfield told the Guardian.

Most newspapers, consumer groups, and other public interest entities have come out strongly against both Prop. 17 and Prop. 16, an effort by Pacific Gas & Electric to consolidate its monopoly and stop local governments from doing clean energy projects. But these two corporations are expected to spend about $35 million to fool Californians into voting against their interests and to increase corporate profits.

For more, read “Buying Power,” our recent investigation into these companies and their deceptive tactics.

Contact: Doug Heller, 310.392.0522, ext. 309; or Naomi Seligman, 310.392.0522, ext. 318

Consumer Advocates Seek Citizen Support To Keep Ads On Air Longer

Santa Monica, CA –In the David v. Goliath battle over Prop 17, Mercury Insurance is spending millions on ads in its bid to raise car insurance premiums and, today, consumer advocates are launching a one-week television ad campaign just as voters receive absentee ballots this week.  The Stop Prop 17 ad can be viewed at http://www.StopProp17.org.

Prop 17 sponsor Mercury Insurance has now spent over $10 million trying to deceive voters about the initiative.  After weeks of radio ads, Mercury unveiled its first TV commercial last week to target absentee voters.  Experts denounced the ads as false and misleading, and it is expected to spend several million dollars blanketing the television airwaves with advertisements.

Long-time insurance reformer Harvey Rosenfield says the campaign to Stop Prop 17 needs to raise money in order to keep the ads on the air for more than this week.  The Stop Prop 17 campaign is running the ad this week in hopes of reaching voters who decide and vote early.  Rosenfield is calling for citizens to join the effort to expose the insurance company campaign by donating at StopProp17.org.

“The insurance company behind Prop 17 has begun to carpet bomb the California airwaves with its lies, and we’re fighting back with a slingshot,” said Harvey Rosenfield, the founder of Consumer Watchdog and author of Prop 103.  ”Mercury Insurance has more than enough money to advertise day and night through election day, so we’re asking citizens who don’t want to pay higher insurance rates to pitch in so we can keep our ad running and stop Prop 17.”

Stop Prop 17 Ad Text

VOICE: This is a consumer alert.
ON-SCREEN: “Prop 17 Warning”
VOICE: Why are car insurance companies spending millions to pass Prop 17?
ON-SCREEN: “’…a special interest scam, pure and simple.’ -LA Daily News”

VOICE: The California Attorney General says Prop 17 will raise your rates.
ON-SCREEN: “‘Will allow insurance companies to increase cost of insurance to drivers…’ – California Attorney General”
ON-SCREEN: “99% funded by insurance companies”
VOICE: Stop the hidden rate increases, Vote No on 17
ON-SCREEN TEXT: “No on Higher Rates…No on 17”

Insurance company ads deceive voters about Prop 17

While the consumer groups’ ad against Prop 17 quotes from the actual summary of Prop 17 by the Attorney General, the multimillion ad campaign from Mercury falsely implies that it is providing voters with official information.

Mercury’s ad begins with the following words spoken and shown on the screen: “There is only one place to get the facts about Prop 17: The official Voter Guide.”  The ad then goes on to quote only from the Yes on 17 ballot arguments provided to the Secretary of State by the insurance company sponsor of Prop 17.  No actual facts are included in the ad and not a single piece of independent, unbiased information about the initiative is provided despite the implication that the advertisement is providing “official facts” about Prop 17.

Actual facts about the initiative include the following official statements about Prop 17:

• “Will allow insurance companies to increase cost of insurance to drivers who do not have a history of continuous insurance coverage.” [From the Attorney General's Title and Summary for Prop 17]

• “That is, if an insurer offers a continuous coverage discount for some drivers it will result in a surcharge for other drivers.” [From the Department of Insurance analysis of Prop 17]

• Prop 17 would allow new car insurance surcharges; opposed by consumer groups and virtually every editorial board in California

• Prop 17 is opposed by all of California’s consumer protection organizations and virtually ever newspaper editorial board in the state.

• If enacted, Prop 17 would allow car insurance companies to increase premiums for drivers based on their history of purchasing auto insurance. This surcharge has been illegal in California for more than 20 years, and last month Mercury Insurance was sued by the California Department of Insurance for illegal surcharges and refusing to give customers the discounts they were due.

“Insurance companies are pushing Prop 17 so they can be less accountable and raise car insurance rates.  We’re going to do everything we can to make sure voters can see through the phony insurance company promises and know to vote no on 17,” said Rosenfield.

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For more information, please visit: http://StopProp17.org or find us on twitter at: http://twitter.com/stopmercury and facebook at: http://www.facebook.com/stopprop17

****NEWS CONFERENCE MONDAY AT 10:30 AM****

Consumer Ad Campaign Will Air For One Week As Voters Get Absentee Ballots; Seeking Citizen Support To Keep Ads On Air Longer

Santa Monica, CA -– In the David v. Goliath battle over Prop 17 – the insurance company sponsored measure to raise car insurance premiums – consumer advocates are launching a one-week television ad campaign just as voters receive absentee ballots this week.

Prop 17 sponsor Mercury Insurance has now spent over $7 million trying to deceive voters about the initiative.  Mercury unveiled its first TV commercial last week, which experts denounced as false and misleading, and is expected to spend several million dollars blanketing the television airwaves with advertisements.

Long-time insurance reformer Harvey Rosenfield says the campaign to Stop Prop 17 needs to raise substantial money in order to keep the ads on the air for more than this week.  At a Monday news conference, Rosenfield will unveil the Stop Prop 17 ad and highlight the David v. Goliath nature of this battle.  He will call for citizens to join the effort to expose the insurance company campaign.

Prop 17, which is opposed by all of California’s consumer protection organizations and virtually ever newspaper editorial board in the state, would allow car insurance companies to increase premiums for drivers based on their history of purchasing auto insurance. Such a surcharge is currently illegal in California.

WHO: Harvey Rosenfield, founder of Consumer Watchdog and author of Prop 103

WHAT: News Conference Unveiling New Stop Prop 17 Ad

WHERE: 1750 Ocean Park Blvd, Suite 200 Santa Monica, CA 90405

WHEN: Monday, May 10, 2010 @10:30 AM PST

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For more information, please visit: http://StopProp17.org or find us on twitter at: http://twitter.com/stopmercury and facebook at: http://www.facebook.com/stopprop17

Supporters of Prop 17 are on the air with their first TV spot promoting the June ballot measure.

The initiative, bankrolled by insurance giant Mercury General Corporation, would allow auto insurance companies to offer “continuous coverage” discounts to motorists who switch insurance carriers.  Supporters say the change would lower prices for consumers who want to switch companies. Critics counter that it would allow allow companies to raise rates for new drivers or motorists with a lapse in coverage.

The spot draws on language in the Secretary of State-issued voter guide to highlight the “good driver discounts” that could be extended to new customers under the measure. Click here to watch the ad, which hits the airwaves today.

Prop 17 opponents criticized the campaign for presenting statements from their ballot arguments, which are included in the voter guide, as facts.

“Prop 17’s sponsor, Mercury Insurance, has launched its ad blitz the same way it launched its campaign, with deception aimed at covering up a lie,”  Consumer Watchdog Executive Director Doug Heller said in a statement. “The ad misleads voters into thinking that this biased information is from a trusted source, when, in fact, it just quotes the lies Mercury submitted as its best arguments for Prop 17.”

(This post was updated at 1:56 p.m. with a response from the No on 17 campaign.)

Contact the author at: tvanoot@sacbee.com

The Mercury Insurance Company’s ballot initiative, Proposition 17, officially began its air campaign Tuesday with a statewide 30-second TV spot, and it’s predictably raising hackles from its opponents.

The Consumer Watchdog’s Doug Heller called it another attempt at misleading voters. This time, it has to do with an old tactic: trying to give credibility to a cause by citing a respected organ. In this case, it’s the official voter’s guide.

“There is only one place to get the facts about Proposition 17,” a women’s voice intones. “The official voter’s guide.”

That’s true, in a sense, because that’s where you can read the official title and summary, written by the attorney general, who is considered to be a sober, independent arbiter in parsing out how ballot measures should be presented to voters.

But, the ad isn’t referring to the title and summary, which declares, simply, that Proposition 17:

The title: Allows auto insurance companies to base their prices in part on a driver’s history of insurance coverage.

The summary: Permits companies to reduce or increase cost of insurance depending on whether driver has a history of continuous insurance coverage.

Instead, the ad lifts straight out of the argument for the measure in the voter’s guide, written, of course, by Mercury Insurance. Here’s the ad:

Heller of Consumer Watchdog said the ad “implies this is from an independent, official assessment of the initiative, rather than the garbage Mercury wrote. Not one word comes from any official or independent analysis of Prop. 17.”

The ad, he said, is “meant to mislead voters into thinking Prop. 17 does one thing when it actually does another, which is to allow insurance companies to increase premiums, which is how the attorney general describes it with the actual official title and summary.”

Heller called the ad a “perfect metaphor” for the entire campaign. “Even when claiming to be giving facts, they’re just spouting their own poll-tested promises that voters can’t trust.”

The campaign for Proposition 17, Californians for Fair Auto Insurance Rates (FAIR), argues that the vast majority of drivers — the 82 percent who are insured — will be able to get a discount for having been covered continuously even if they change insurance companies. Currently, drivers are charged up to $250 for changing companies, even if they have had continuous coverage.

Opponents, led by Consumer Watchdog, said the ballot measure would allow insurance companies to levy new surcharges to those drivers who haven’t had continuous coverage. That would lead to more people, unable to afford the surcharges, driving uninsured, which in turn would lead to higher premiums for everyone, Heller said.

Kathy Fairbanks, for Prop. 17, said the Yes on 17 ad “urges people to look at the voter pamphlet, which contains our arguments, opponents’ arguments, the LAO (Legislative Analysts Office) analysis and the Title & Summary. Aside from the opponents’ arguments, all make it clear that drivers are not able to take their continuous coverage discount with them and, that, if passed, Prop. 17 will allow insurers to extend the discount to drivers no matter which company they choose.”

She continued: “I’m perplexed by opponents’ reaction to our ad. The Yes on 17 ad highlights what’s wrong with the current law and how Prop. 17 will make drivers better off by allowing them to take their continuous coverage discount with them if they change insurers. Our ad is simple and straightforward to explain a simple and straightforward measure.”

On Fairbanks’ point that the ad urges people to look at the voters’ guide: it doesn’t, unless she means that by merely mentioning the voters’ guide, the ad is urging voters to look it up. Ads are meant to be a shortcut for voters. You don’t have to do the work. We’ll do it for ya. Trust us. Besides, why would the ad urge people to go to the voters’ guide if it would just expose people to the opposition’s argument?

I have to admit, I’m in awe of the Yes on 17 campaign. Its new TV ad is so brazenly misleading, I found it breathtaking. In a bad way, admittedly, but breathtaking nonetheless.

The ad begins by stating, “There is only one place to get the facts about Prop. 17: the official voter guide.” Then, as it displays the guide in the background, it proceeds to quote not from the impartial, fact-checked title, summary and analysis section but from the spin that the Yes on 17 campaign inserted in the arguments and rebuttals section. As the fine print on the bottom of that section’s pages states, “Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency.”

Not checked for accuracy, indeed. The ad wastes no time in veering from facts into fiction. “A flaw in current law penalizes responsible drivers by forcing them to give up their continuous coverage discount if they want to switch insurance companies,” the narrator intones. Umm, no. It’s not a “flaw” in the law, unless you consider the insurance overhaul that voters adopted in 1988 (a.k.a. Proposition 103) or the regulations that implemented it to be inherently flawed. Proposition 103 expressly barred insurers from considering “the absence of prior automobile insurance coverage” as a factor in setting premiums. And in 2002, the insurance commissioner declared it a violation of this provision to give a “continuous coverage discount” to new customers simply because they’d been insured by a rival carrier.

More important, the discount offered today is based on actuarial studies that show that drivers cost an insurer less (in terms of claims) the longer they stay with the company. Confusing correlation with causation, the Yes on 17 campaign argues that the practice of renewing one’s insurance year after year shows responsibility, and that translates into more careful driving. But this argument overlooks the data showing that riskier drivers are more likely than safe drivers to change insurance companies, and to do so multiple times. Why? Because insurers encourage them not to renew by jacking up their rates after their driving record sours.

In other words, drivers who stay with one insurer are a less risky subset of the group of drivers who remain continuously insured year after year. So why would insurers offer the same discount to both groups? Under state law, any discount or rating factor must have “a substantial relationship to the risk of loss.” I’m not a lawyer, but my reading of Proposition 17 suggests that the same would be true for the new continuous coverage discount. If so, insurers would have to make an independent actuarial showing for the current loyalty discount and the new one for continuous coverage. And given the different risks posed by the two groups, wouldn’t that result in a different discount?

The Yes on 17 campaign, for its part, maintains that the discount would be the same. According to its new ad, the proposition “allows drivers to keep their continuous coverage discount even if they change insurers.” But just to be clear, that’s the Yes on 17 campaign’s opinion. Not fact.