Prop 17 insurance reform battle heating up in CA

May 13, 2010 6:46:10 PM PDT
The battle over Proposition 17 on the June ballot is heating up. The measure could change auto insurance rates and both sides of the issue say they say they are protecting consumers.

There are two major players. One is Consumer Watchdog, the group that sponsored Prop 103 insurance reform back in 1988, and is now opposing this measure. On the other side, Mercury Insurance Company has contributed $10 million to support Prop 17.

It has been called a classic David and Goliath battle that is now taking place on the airwaves.

"Prop 17 fixes the law so drivers can take their continuous coverage with them," one ad proclaims.

The ad has been running for weeks and says Proposition 17 will save money for 80 percent of Californians with "continuous auto insurance coverage."

"Why are car insurance companies spending millions to pass Prop 17?" another ad asks.

The ad, which just began airing on May11, notes that Prop 17 is backed by industry giant Mercury Insurance Company. It claims that Prop 17 will raise insurance rates for millions.

"The thing that people will be asking themselves is since when has an insurance company spent millions of dollars to put a proposition on the ballot that will save you money and the answer of course is never," says Harvey Rosenfield with Consumer Watchdog.

Rosenfield says Prop 17 weakens consumer protections by allowing rate hikes based on coverage history. Mercury Insurance, however, says Prop 17 is good for consumers. They say drivers will be able to change insurance without losing continuous coverage discounts.

"What this does is this actually benefits the consumer, this proposition does, by making it portable and by making and forcing companies to be a lot more competitive," says insurance agent John Morton.

Prop 17 lets insurance companies offer discounts to drivers with continued coverage, but it also allows rate increases for drivers without it.

Mercury Insurance has poured $10 million into the campaign to keep ads running. Consumer Watchdog raised about $500,000 to run ads and hopes to raise more.


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