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Consumer Watchdog Campaign: Insurance Billionaire Admits Prop 33 Aims To Raise Rates on Drivers

Los Angeles Times Admission Contradicts 33 Campaign, Consumer Advocates Warn Voters
Contact Info
Name:

Jamie Court & Carmen Balber

Phone Number:
Jamie, (310) 392-0075; or Carmen, (310) 526-0746

Santa Monica, CA – The insurance billionaire who has spent $16.5 million on Prop 33 finally admitted in a Sunday Los Angeles Times column by Mike Hiltzik that he is financing the initiative so he can raise car insurance rates on newly insured customers.

Consumer groups have long warned voters that Prop 33 is designed to allow Mercury Insurance, whose Chairman George Joseph is the 99% funder of Prop 33, to raise rates on good drivers who have legitimate reasons for lapses in auto insurance coverage, like they stopped driving. The Prop 33 campaign has vehemently denied that rates will go up on drivers, not only in widespread advertising but also in debates over the weekend on KNBC’s Sunday show News Conference and KGO radio.

The billionaire Joseph however acknowledged to the Los Angeles Times that Prop 33 is a vital marketing strategy for his insurance company that will allow him to cherry pick his customers “if I could charge new people the proper rate.” As Hiltzik reports, “He made no bones about the fact that the ‘proper rate’ for customers coming to Mercury as newly insured policyholders is much higher than what he can charge them now.”

By increasing the price of insurance for new drivers, Proposition 33 will make it harder for Californians to obtain insurance – exposing as false another claim of the Prop 33 campaign, that it would insure more drivers.

Read the admission here:  http://www.latimes.com/business/la-fi-hiltzik-20121021,0,507978.column

“When the billionaire writing the $16 million check for Prop 33 speaks about his initiative raising auto insurance rates, the voters should listen,” said Jamie Court, president of Consumer Watchdog.  “Poll-driven advertising for Prop 33 blasted across the state deceptively claims Prop 33 is about rewarding responsible drivers, but the billionaire writing the check acknowledged this is about raising rates on responsible drivers too when they are on the wrong side of his insurance company’s marketing strategy.”

Voters banned the power of insurance companies to raise rates on first time drivers and others who did not previously have auto insurance in 1988 because insurance companies were using that power to refuse to insure drivers, often in low-income and minority communities, they didn’t think would be good customers.  Since the reform, California has become the 4th most competitive auto insurance market in America.

When Mercury Insurance was illegally using Prop 33’s “continuous coverage” rating factor in the late 1990s, its web site quoted customers rates that were 41% higher because they did not drive a car previously.  View those online quotes here: http://www.consumerwatchdog.org/resources/mercuryillegalsurcharge2003.pdf.

Consumer Watchdog called on Joseph and the Prop 33 campaign to change their misleading advertising to appropriately characterize Prop 33’s impact on drivers.

Joseph’s Mercury Insurance company spent $16 million on a nearly identical ballot measure in 2010, Proposition 17, that was rejected by the voters.

For more information about Proposition 33 visit: http://stopthesurcharge.consumerwatchdogcampaign.org

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