Been Propositioned Lately? 5 Times?
Psssst! Hey, pal. Wanna do something about the auto insurance mess? Have I got a proposition for you.
Five of them, to be exact. And they’re all on Tuesday’s ballot: Propositions 100, 101, 103, 104 and 106. Some of them also go by catchier names, such as “The Good Driver Initiative” (Proposition 100), “Voter Revolt” (Proposition 103) and “The No-Fault Initiative” (Proposition 104).
The only point on which backers of all five agree is that something needs to be done about California’s auto insurance problem. Drivers paid about $12 billion in premiums statewide last year, according to the state’s legislative analyst. In the past two years, those rates have gone up 40%, according to supporters of Proposition 100. And in the past five years, the number of auto accident-related lawsuits filed in California has gone up 81%, according to opponents of 100.
Most of the initiatives mandate some sort of rate reductions--temporary or permanent--anywhere from 7% overall to 50% for specific types of insurance, such as bodily injury. Or they require rollbacks to the rate levels of previous years. Some would allow further reductions for “good drivers,” and each of those defines that term differently.
All of them would make changes in the insurance system--such as how rates are set, how insurance companies are regulated. Some also would make sweeping changes in the legal system through which accident claims are settled.
It’s no wonder, then, that the words “Don’t be confused” and “Don’t be fooled” show up so often--with CAPITAL LETTERS and exclamation points!!!--in the official arguments in favor and against published in Secretary of State March Fong Eu’s hefty California Ballot Pamphlet.
And it’s hardly a surprise that the winner in some straw polls is “none of the above.”
Let’s not worry, for the moment, about what all this has to do with what happened in New Jersey or what the significance of the word “tort” might be in your everyday life. With only 5 days left before the election, we don’t have time for that. Instead, Life on Wheels offers this ultra-condensed guide to the auto insurance initiatives.
PROPOSITION 100
Official name: Insurance Rates, Regulation. Initiative Statute.
AKA: The Good Driver Initiative.
Supported by: State Atty. Gen. John K. Van De Kamp, California Mothers Against Drunk Driving (although the Orange County MADD chapter is remaining neutral on all the initiatives), League of California Cities, banks, California Trial Lawyers Assn., various consumer organizations.
Opposed by: The insurance industry.
Effect on rates: Provides minimum 20% reduction in certain rates for good drivers from Jan. 1, 1988, levels, and requires ongoing minimum 20% good-driver differential.
Effect on legal system: No change.
Other effects: Requires companies to insure any good driver in counties where companies sell auto insurance. Requires comparative rate information for consumers. Requires insurance companies to release information to justify rates. Establishes procedure for public hearings. Beefs up insurance fraud investigations. Prohibits unfair insurance practices. Cancels Propositions 101, 104, 106.
Fine print: Allows banks to sell insurance.
PROPOSITION 101
Official name: Automobile Accident Claims and Insurance Rates. Initiative Statute.
Supported by: The insurance industry.
Opposed by: Atty. Gen. Van De Kamp, Consumers Union.
Effect on rates: Reduces rates for bodily injury and uninsured motorists--not overall rates--about 50%, “adjusted for medical inflation.”
Effect on legal system: Retains “at-fault” system but limits claims for non-economic losses such as pain and suffering, except in cases of “serious and permanent” injury. Limits plaintiff’s attorney contingency fees to 25%.
Other effects: Requires auto accident victims to use up all other insurance they may have before collecting from “at-fault” driver’s company.
Fine print: Strict definition of “serious and permanent” injuries. Even some injuries that require years of rehabilitation and treatment would not qualify.
PROPOSITION 103
Official name: Insurance Rates, Regulation, Commissioner. Initiative Statute.
AKA: The Voter Revolt Initiative.
Supported by: Ralph Nader, consumer groups.
Opposed by: Insurance industry.
Effect on rates: Rolls back rates a minimum of 20% from Nov. 8, 1987, levels, freezes rates through November, 1989, “unless insurance company is threatened with insolvency.” Good-driver discount of 20% thereafter. Requires review and approval of rate increases by the state insurance commissioner.
Effect on legal system: No change.
Other effects: Requires that the state insurance commissioner be elected rather than appointed. Requires release of comparative pricing information. Prohibits unfair insurance practices. Establishes procedures for public hearings.
Fine print: Allows banks to sell insurance.
PROPOSITION 104
Official name: Automobile and Other Insurance. Initiative Statute.
AKA: The No-Fault Initiative.
Supported by: The insurance industry.
Opposed by: Ralph Nader, consumer groups.
Effect on rates: Reduces rates for bodily injury and uninsured motorists’ coverages--not overall insurance rates--for 2 years. No regulation of insurance rates or methods used to set them.
Effect on legal system: Completely revamps current “at-fault” system, requiring victims to collect from their own insurance companies. Permits lawsuits only for victims whose damages exceed established limits. Limits plaintiff’s attorney contingency fees.
Other effects: Cancels Propositions 100, 101, 103.
Fine print: Severely limits future regulation of insurance industry. Limits non-economic losses such as “pain and suffering” and “physical impairment.”
PROPOSITION 106
Official name: Attorney Fees Limit for Tort Claims. Initiative Statute.
Supported by: The insurance industry.
Opposed by: Attorneys, Ralph Nader, various victim advocates.
Effect on rates: Not known.
Effect on legal system: Limits fees for attorneys representing injured persons to 25% of the first $50,000, 15% of the next $50,000, and 10% on amounts above $100,000. (Currently such fees are not regulated and range from 33% to 40%.)
Fine print: No limit on fees paid to attorneys representing insurance companies or at-fault drivers.
