The issue regarding Proposition 17, or more popularly known as the insurance provider’s initiative, is heating up as California’s June ballot draws near. Supported by Mercury General Corp., the Proposition is set to allow insurance companies to attract new customers by offering big discounts, as long as drivers have been loyal auto policy holders for at least five years.
Many say that for Mercury General Chairman George Joseph, one of the backers of Proposition 17, the victory of the initiative in the June ballot can be considered as his personal victory. Joseph is known to have been battling it out with consumer advocate Harvey Rosenfield, the man behind California’s existing auto insurance law, Proposition 103. If approved, the insurer’s initiative will rewrite the existing state and will certainly affect billions of dollars worth of premiums paid by California’s more than 23.7 million licensed motorists.
Proposition 103, the current legislation which Rosenfield wrote, only allows insurance companies to offer discounts only to their own customers. The law bans companies from luring drivers who are already customers of other insurance firms. This ban was imposed to encourage companies to target the uninsured motorists and offer them affordable terms, instead of attracting drivers who are already insured by a competing company. On the other hand, Proposition 17 will change this as it will allow companies to offer lower premiums to all drivers, even if they already have auto policies from other insurers, provided that they have been insured for a minimum of 5 years.
The battle between the two initiatives has been fought in local media and in courtrooms. However, the issue escalated last week when the California Insurance Department released papers that contains accusations against Mercury General Corp. The said documents contain allegations against Mercury General saying that the company has been imposing discriminatory rates to drivers and has been unfairly denying policy coverage. According to the State Insurance Department, Mercury has a history of having disapproving attitude against customers and practicing serious misconduct.
Meanwhile, Californians for Fair Auto Insurance Rates spokesperson Kathy Fairbanks said that the campaign team created by Mercury to promote Proposition 17 criticized the Department’s accusations as an attempt to create a muddy image of the insurer’s initiative. If passed, Prop 17 can make more than 70% of California’s drivers qualified for major policy discounts.
Rosenfield rebutted that Mercury is one of many insurance companies that has been overcharging drivers to back up a ballot measure that will make overcharging legal for insurance providers. According to Rosenfield, the public needs to be aware that passing Proposition 17 is a way of rewarding Mercury for the company’s previous misconduct.