The Consumer Federation of America released a new report today assessing consumer views on the factors insurance companies use to set premiums around the country.  Not surprisingly, Americans think that insurance rates should be based primarily on motorists' driving safety record (87% and 85% of respondents believe rates should reflect a driver's number of accidents and tickets, respectively).

More than a majority of Americans think it's unfair to consider the ZIP-code in which you live or your occupation.  More than two-thirds (68%) call it unfair to charge drivers more if they did not have insurance because they did not previously have a car.  This data point should interest Californians, because there's an initiative on the November ballot  – Proposition 33 – that would allow insurance companies to penalize people based on this precise factor that 68% of Americans consider unfair.  

Proposition 33 was put on the ballot by Mercury Insurance's billionaire Chairman, and his $8 million campaign conveniently ignores the fact that the initiative allows insurance companies to raise prices on drivers who didn't previously have insurance because they didn't have a car. No doubt, his pollsters are telling him the same thing that the national survey reports: Americans don't think his scheme is fair.  (So if people think your initaitive is unfair, your only option is to run a deceptive ad campaign filled with disingenuous patriotism and hope people can't see the trick you've hidden behind that flag.)

But back to today's report for a moment. Another interesting thing Consumer Federation did was look at rates around the country and show the effect of a variety of rating factors, including prior insurance coverage.  Two things stand out:

1. Where most companies in most states dramatically jack up the rates on customers who do not have prior insurance when they want to buy a policy, Californians' premiums are unaffected by that factor because it is illegal to apply it in California.  The whole point of Prop 33 is to make California more like these other states in a bad way.
2. Generally speaking, rates in Los Angeles, California are both lower than the other big cities tested and more stable after testing for factors considered unfair, such as ZIP Code, occupation, prior insurance and credit scoring.  In other words, the insurance reforms Californians installed through Proposition 103 in 1988 not only apply standards of fairness to the marketplace, they have created a competitive and lower priced market as well.