Will Prop 33 Raise or Lower Car Insurance Rates?

Proposition 33, a ballot measure designed to allow consumers who have been with a car insurance company for five years to switch insurance companies while keeping their “loyalty discounts,” is the subject of much debate leading up to election day.

Supporters are adamant about the measure being beneficial to all Californians drivers. Opponents are not convinced and say the proposition is heavily funded by insurance company interests.

Proponents contend consumers will benefit

“We believe it will save consumers money every month on car insurance,” said Rachel Hooper, spokeswoman for the Yes On Prop 33 campaign.

Hooper said Proposition 33 would allow consumers more freedom than they currently have.

“Now they can shop around but not as competitively as we believe they should be allowed,” Hooper said. “It is drafted to have consumer protections that go above and beyond consumer law.”

If passed, those who are unemployed or have been furloughed and young, teenage drivers stand to benefit, according to Hooper. Military families would as well since they are prone to cancel their current coverage when they are deployed.

“They’re in and out of coverage,” Hooper said. “Under Prop 33, they would keep the loyalty discount.”

She points out that organizations statewide have endorsed the proposition, including Veterans of Foreign Wars of California, the American Legion, the American GI Forum and the Peace Officers Research Association of California or PORAC, a law enforcement organization with more than 64,000 members, according to Hooper.

“It’s all about trying to get people under the umbrella of insurance,” Hooper said. “It goes back to competition and lowering prices.”

Opponents point to proposition funding

Carmen Balber, spokesperson for “No on Prop 33,” said it all boils down to benefiting Mercury Insurance since its chairman, George Joseph, has personally invested more than $16 million in an effort to pass Prop 33.

“This is about one insurance industry billionaire trying to boost his company’s bottom line at the expense of good drivers,” Balber said.

She contended that Joseph has run “deceptive TV advertising” and also emphasized the measure would have a “disproportionate impact on lower-income and minority communities” by reversing consumer and civil rights protections put in place 24 years ago that have protected them.

Her argument is that before 1988, insurance companies would “cherry pick” the drivers they wanted to cover, often raising rates, making them too high for many people to afford or refusing to sell to those who had no prior insurance.

“What we saw was a lack of insurance in low-income and minority communities especially because the rate of the uninsured was higher in those communities,” Balber said.

She said a similar measure, Proposition 17, was already defeated two years ago.

“It is a replay of the same measure voters have already said no to, to raise rates on good drivers,” Balber said.

Civil rights organizations, among them Public Advocates, Incorporated, the Alliance of Californians for Community Empowerment and the Black Economic Council, have also spoken out against Prop 33, including in a letter to the Senate Standing Committee on Insurance.

While the opposing sides of the issue may never meet, one thing they can agree on is that when election day comes, it is California voters who will be in the driver’s seat.

Need help sorting out California's propositions? Here are some resources that provide explanations of the ballot measures, pro and con arguments, endorsements by newspapers, groups that support and oppose, and campaign funding sources:

• California Choices - nonpartisan collaboration by Next 10, Institute of Governmental Studies at University of California at Berkeley, the University of California at San Diego Political Science Department, the Bill Lane Center for the American West at Stanford, and the Center for California Studies at Sacramento State. 

• MapLight - a nonpartisan organization that researches the influence of money on politics.

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