Last year, voters had turned down the auto insurance initiative, which was bankrolled by Mercury. However, Mercury wants to give it another try.
This week, the California attorney general’s office released a summary of the proposed initiative that was submitted by Mike D’Arelli, who is the executive director of American Agents Alliance, which is an insurance trade group.
This is an initiative that is somewhat similar to the Proposition 17 that was defeated during the June 2010 elections despite the fact that Mercury spent around $16 million on a media campaign that was carried out throughout the state.
The new proposal is quite similar to the earlier one that was defeated. This proposal will also allow insurance carriers to give discounts to drivers who have maintained continuous coverage over the years, regardless of whether or not they purchased the coverage from the same insurance carrier.
D’Arelli also stated that the law was written in such a way that it rewarded insurance companies. He believes that there will be an increase in competition between insurance providers if consumers have a control over the discounts they get. It will help in lowering costs and insuring more people as well.
However, consumer groups have stated that this proposed initiative will only raise the cost of insurance for those who can ill afford it – such as the working poor, uninsured drivers, as well as new drivers. According to the Consumer Watchdog group, Santa Monica, this initiative will authorize the surcharge (that is currently prohibited) on millions of California drivers who may not have bought insurance at some point during the last five years. This surcharge will be applicable even if they have not driven in the last five years and even if they did not own a car during that period.
Mercury’s chairman, George Joseph, has tried hard for many years to overturn some parts of the Proposition 103, which is an automobile insurance reform initiative that was approved by voters during 1998, where continuously insured drivers were eligible for a persistency discount. The change in law could have easily put Mercury at an advantageous position as it has very competitive rates, and it would have helped in attracting all the low-risk customers from the other major insurers.
This latest initiative, however, is not backed by Mercury directly, stated spokesman Shane Smith. The initiative has received support from Mercury’s chairman along with the other representatives from the industry as well.
