SOME INSURANCE EXECUTIVES have short memories. Otherwise, why would George Joseph, head of Los Angeles-based Mercury Insurance, be pursuing a campaign to overturn important parts of Proposition 103? Almost two decades ago, the proposition spawned one of the most expensive and disingenuous campaigns ever waged over a ballot initiative in California -- which is saying something. No one in his right mind wants to relive that, least of all the millions of drivers who have benefited from Proposition 103.
Since its passage in 1988, Proposition 103 has reduced auto policy rates and the power of insurance companies. Insurers have fought its provisions pretty much since the day it passed, in the Legislature and the courts, but without much success.
Joseph is now proposing a voter initiative that would, among other things, prevent the state from finally and fully carrying out Proposition 103's mandate to greatly reduce insurers' use of ZIP Codes in setting their rates. Safe drivers with identical driving histories are still charged wildly different rates because of their addresses.
The initiative also would reinstate higher rates for drivers who let their insurance lapse or did not have continuous auto insurance -- even if they did so because they didn't have a car. The proposed measure also could greatly weaken the insurance commissioner's oversight of rate hikes.
The current system is largely credited for the steady decline in average auto insurance rates in California since Proposition 103, while they have risen nationwide. And auto insurance remains a healthy and profitable line of business in California.
It is no coincidence that this battle is being joined again at the same time that Insurance Commissioner John Garamendi is proposing to stiffen the slack Zip Code regulations that were put into effect by his predecessor.
Garamendi's revision would prevent insurers from, for instance, charging one driver hundreds of dollars more than an identical driver in a neighboring ZIP Code. The first public meeting on the proposed regulation is scheduled for Thursday. Garamendi will no doubt be inundated by insurance industry objections; consumers wishing to weigh in can e-mail his regulatory representative, Bryant Henley, at henleybinsurance.ca.gov.
The chief backer of Proposition 103, consumer activist Harvey Rosenfield, says he's ready to knock heads again. His group spent less than $3 million in 1988, against scores of millions from the insurance industry, and still won because the industry had so few friends among its customers.
It's safe to say that the industry is not much better loved today than it was in 1988. Other large insurers have not yet stated whether they will join Joseph and Mercury's attempt to roll back Proposition 103. They should remember once and think twice.