SAN JOSE MERCURY NEWS EDITORIAL
The competition is on this year to see which company — Mercury Insurance or PG&E — is responsible for the worst abuse of California’s initiative process. PG&E’s $28 million assault on potential competition through Proposition 16 will be tough to top, but Mercury Insurance is doing its best. It’s pumping $3.5 million into the campaign to convince voters that Proposition 17’s change in insurance regulation is in their best interests.
Don’t believe it. This is yet another in a long line of direct attacks on Proposition 103, which California voters passed in 1988 to rein in abuses of the insurance industry. It professes to be in consumers’ interest, but it is anything but. Vote no in the June 8 election.
The basic premise of Proposition 17 is that it would allow auto insurance companies to offer a “continuous coverage” discount to new customers who switched from one insurer to another. Proposition 103 prohibits that practice.
But that’s not the provision that has riled consumer advocates. It’s a smoke screen for allowing insurance companies to substantially increase rates for drivers who, for whatever reason, allowed their insurance to lapse for more than 90 days. That could include a wide range of people, such as drivers hospitalized for a long period of time, military personnel or unemployed Californians who couldn’t keep up their premium payments.
Mercury says this would not happen because of competition.
But anyone who was around California before the passage of Proposition 103 knows the risk is not worth taking. Until that proposition passed, insurance companies often imposed high rates on drivers who had lapses in coverage, regardless of the reason. And drivers were trapped because insurance is mandatory for drivers in this state.
Mercury Insurance sells Proposition 17 as benefiting consumers, but it’s easy to see through the claim. Look at who’s opposing the proposition and who’s backing it.
Serious consumer protection groups such as Consumers Union and Consumer Watchdog are absolutely against Proposition 17. So is U.S. Rep. John Garamendi, the former insurance commissioner, who is a longtime advocate of insurance customers’ rights.
So who are the supporters? Mercury lists three so-called consumer groups, and the San Diego Union-Tribune tracked them down. Two, the Consumers Coalition of California and the California Alliance for Consumer Protection, are “basically one-person operations that have often taken pro-industry stances,” the Union-Tribune concluded. The third, Consumers First, Inc., is “being paid $5,000 a month for its work on Proposition 17. ”
Some business groups are for the proposition, but not one legitimate consumer protection organization.
Californians like to romanticize the initiative process as direct democracy by the people. Proposition 17, like PG&E’s anti-competitive Proposition 16, is the opposite: a special interest scam that would increase corporate profits and potentially harm consumers. The only way to discourage this abuse of initiatives is for voters to say an emphatic no when the worst ones come along. Don’t miss the chance in this spring’s primary.