The auto brawl has resurfaced gain, but Harvey Rosenfield and George Joseph insist that it is not personal. The rivalry dates back to 2009, when a billboard in Wilshire Boulevard in LA, declared that Mercury Insurance, founded by George Joseph – cannot be trusted. Harvey Rosenfield had written the 1988 initiative, which regulated auto insurance. The two of them have been at loggerheads for more than a quarter century. However, they always insist that the rivalry is not personal.
Consumer Watchdog is an advocacy group based in Santa Monica, and was founded by Rosenfield. Last week, attorneys from Consumer Watchdog had appeared for a hearing on behalf of the Department of Insurance. They were seeking to block the request for a rate increase by Mercury.
Just last week, the secretary of state had made an announcement that the latest initiative by Joseph would make its appearanceon the ballot. A staggering $8.2 million had been poured into this measure and if it gets the nod, the proposition will aid Mercury’s bottom line, but will mess up things with Proposition 103 (the auto insurance regulation), which is Rosenfield’s life work.
The existing law permits auto insurance companies to give away discounts to its long-term consumers. These are better known as ‘persistency discounts’. Offering discounts to consumers belonging to other companies is known as ‘portable persistency.’ This is what Joseph wants to do – to attract customers from other companies by offering thosepeople the discounts. While, Joseph is of the opinion that this will boost competition and bring down insurance costs, there is also a flip side to the whole proposal.
Auto insurance companies that offer discounts to one set of customers will eventually balance it out by increasing the rates for the others. In this case, it would be those who allow their insurance to lapse due to a number of reasons. Consumer watchdog states that this change would impact low-income motorists as they will find it difficult to purchase auto insurance.
Rosenfield feels that they are trying to fight greed and law breaking by Mercury. He also stated that they were the superheroes as far as consumers were concerned. Now, Consumer Watchdog has responded with a counter-initiative, which will regulate health insurance. It also has a clause that is aimed at blocking all of Joseph’s business plans. However, it is not yet clear if this measure will be able to qualify for the November ballot.
