Proposition 100: GOOD DRIVER INSURANCE : Prop. 100 Forces Demand Media Pull Opposing Ads

Campaigners for Proposition 100, the insurance initiative supported by the California Trial Lawyers Assn., have demanded that television and radio stations stop running an insurance industry commercial that contends the measure would result in auto insurance rate increases in 54 of the state’s 58 counties.

A letter sent this week to the stations charges the commercial contains “unsubstantiated claims which are so egregiously and indisputably false as to constitute a fraud on the public and a clear misuse of public airways . . . .

“There is no justification for the insurance companies’ claim that rates will rise at all” in any county, the letter written by initiative attorney Barry Fadem declares.

However, a spokesman for the insurance industry responded Friday that the claims of higher rates in most counties is based on rate studies by a national insurance rating organization and an agents’ association.

The commercial in question is being run only outside of the Los Angeles-Orange county metropolitan area. Los Angeles and Orange are two of the counties, by implication, where the insurers acknowledge rates would go down if Proposition 100 is passed.

The commercial makes identical claims about Proposition 103, an insurance initiative supported by consumer advocate Ralph Nader.

Both Propositions 100 and 103 call for rate rollbacks amounting to 20% or more.

But the insurers contend that other provisions in them would lead to abolition of the territorial rating system under which insurance prices vary by neighborhood, thus resulting in higher rates in most of the state and lower rates only in heavily urbanized areas. The Proposition 100 and 103 sponsors deny this.

Insurance industry campaign representatives have frequently stated in recent weeks that they will make their arguments about de facto higher rates in every county but Los Angeles, Orange, San Francisco and Fresno the center of their attempt to defeat Propositions 100 and 103, both of which would cut into the insurers’ profits.

The television commercial now in question shows a California state map with certain counties highlighted while the announcer intones that rates would rise, if the propositions are passed, “in San Diego, 23%; desert counties, 12%; San Joaquin, 14%; Central Coast, 30%; Bay Area, 14%; Sierra counties, 37%; Sacramento Valley, 24%; North Coast, 43%, and northeast counties 50%.”

Fadem’s letter states that such claims are “simply false.”

“Now the insurance companies have gone far beyond their previous false claims and have invented alleged ‘statistics’ to support (them),” he wrote.

Meanwhile, Harvey Rosenfield, a coordinator of the Proposition 103 drive, said his campaign also is drafting a letter to the stations, demanding not only that they drop the insurers’ commercial but provide free time to rebut allegations already aired.

“Obviously if the insurance industry succeeds in dumping $43 million worth of lies into the living rooms of California voters, the integrity of the initiative process will be threatened and the results could be extremely harmful both to us and the democratic process,” Rosenfield said.

The $43-million figure refers to industry projections of total spending in their campaign, not only to defeat Propositions 100 and 103, but also to support Propositions 104 and 106, initiatives to install a no-fault auto insurance system and slash lawyers’ contingency fees.

Industry spokesman Scott Carpenter said Friday that the studies indicating rate increases in all but the four counties were prepared by the Insurance Services Organization and the National Assn. of Independent Insurers, an agents’ group. He said they have been “verified” by a committee of insurance actuaries.

But Steven Miller, a coordinator of the Proposition 100 campaign, questioned whether such studies exist. He demanded that the insurers produce them and said, “They’re probably creating them right now.”