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Protecting California’s Ban on Zip-Code Based Auto Insurance

In a populist fight, targeting the right person can change the entire campaign.

That’s how Consumer Watchdog ended one insurance company CEO’s two-decade war against voter-backed insurance regulation and won an end to insurers’ redlining of poor and urban neighborhoods.

George Joseph is one of the four hundred richest men in the United States. He made his wealth from his Los Angeles–based company, Mercury Insurance. No one has more hatred for the insurance-regulating Proposition 103, nor has anyone done more to undo it.

Joseph’s company gave millions in campaign contributions to statehouse politicians to undermine the law. When Democrats bucked him, Joseph gave an even bigger, six-figure contribution to the opposite party. That sent a chilly message to both parties’ leaders.

By the time Joseph turned eighty-four in 2006, California Insurance Commissioner John Garamendi had at long last finalized rules to end auto insurance rates based on motorists’ zip codes. It was the last unfulfilled promise of the 1988 insurance reform initiative.

Mercury did a lot of business in urban areas, and George Joseph apparently didn’t want to be told that he had to charge people based on how they drive, not where they live. So good drivers in the inner city were being required by the state to buy auto insurance, but insurers would not sell them a policy at an affordable price. In the poorest areas, the cheapest, most basic auto policies cost thousands of dollars a year because insurers didn’t want to sell insurance there.

So when the end to zip-code-based insurance was at hand, as final regulations were about to be implemented to make this change real, Joseph gave some top political consultants a big check and a green light to file a ballot measure overturning this long-awaited provision of Prop 103. After almost two decades of resistance, Joseph decided on all-out war.

Our response? We proposed a ballot measure of our own that would strictly curb Mercury’s profits. We started a boycott of Mercury Insurance. But the key to turning George Joseph around was an Internet video we made about him for the “Boycott Mercury” Website.

Robert Greenwald, a friend and the progressive movie director behind Iraq for Sale, Outfoxed, and Wal-Mart Movie, sent a film crew to shadow the octogenarian from his luxurious Hancock Park home to his office. The camera crew confronted Joseph about the initiative in his office garage. They asked why Mercury would want to charge African Americans who lived in low-income communities and poorer zip codes more money. An angry letter from civil rights leaders also appeared on his desk. Within about a week, Mercury had withdrawn the initiative. But not before calling my colleague and Prop 103 author Harvey Rosenfield.

Joseph told Harvey his wife had asked him why there had been a video camera at his home. When he explained, she said she also thought it was wrong for his company to charge customers based on their zip code. A few months later, Joseph resigned as Mercury’s CEO, though he retained his position as chairman of the board.

New rules charging people based on how they drive, not where they live, finally took effect in 2008. California is only the state in the nation that forces insurers to base premiums on motorists’ driving record, how far they drive, and how many years of experience they have, and not on where they live.


Excerpted from The Progressive's Guide to Raising Hell: How To Win Grassroots Campaigns, Pass Ballot Box Laws And Get The Change We Voted For (Chelsea Green).

Photo Credit: Wally Skalij / Los Angeles Times.