Prop 103: California Insurance Reform

Consumer Watchdog's founder led the 1988 voter revolt against insurance companies that passed Proposition 103 and saved Californians billions.

27 years ago Consumer Watchdog's advocates led the successful effort to reform auto, home, and other property-casualty insurance companies. That 1988 ballot initative, Prop 103, has saved California drivers more than $102 billion. Consumer Watchdog continues to guarantee the public savings from the reform through our ongoing efforts to lower home and auto insurance rates. 

California’s property-casualty insurers succumbed to the strongest regulations in the nation after Consumer Watchdog’s founder Harvey Rosenfield led a ballot measure revolt in 1988.

Harvey authored Proposition 103, has which saved California motorists more than $102 billion on their premiums according to a 2013 Consumer Federation of America report.

Prop 103 savings

The main provisions of Proposition 103 made the office of California’s insurance commissioner elected, allowed regulators to stop excessive premiums and forced auto insurance companies to charge people based on their driving history, not their zip code.

Proposition 103, like most successful ballot measures, was a rare confluence of forces that created a perfect storm. California had enacted mandatory auto insurance two years earlier without requiring premiums be affordable. Rates were rising 11 percent per year when voters were presented with a ballot measure to lower their premiums in November 1988.

Prop 103

Harvey Rosenfield and Ralph Nader spent virtually no money and won against a $63.8 million insurance-industry opposition campaign because they spoke through the free media. They boarded a bus that crisscrossed the state to campaign armed with the fairness doctrine, which at the time required television and radio stations to present balanced and equitable coverage of controversial issues of public importance.

The insurance companies spent so much on advertising against the proposition that Harvey and Ralph received free air time to balance them out. One of the reasons Prop 103 prevailed is the insurers spent too much money railing against it, and the public intuitively knew that anything the insurers were backing was the wrong fix. Nader’s simple “103 is the one for me” slogan cut through the phalanx of television advertising.


For two decades California politicians’ allegiance to insurance regulation has defined their success in state politics. We taught the insurance companies and others in the Fortune 100, as well as the politicians who work for them, a lesson through practical steps that muster and focus public opinion to turn the tables on injustice. Our political allies profited more from standing with the public than from pandering to an industry’s checkbooks.

The campaign for California Proposition 103 in 1988 has particular relevance for America now. The “voter revolt” of 1988 was sparked by mandatory auto insurance laws imposed by California’s legislature without any requirement that insurance be affordable for those who had to buy it. The populist ballot measure required insurance companies to seek approval for premium hikes from the state insurance commissioner, a post Proposition 103 made an elected position, before raising premiums. It also rolled back excessive rates and delivered $1.43 billion in refund checks to consumers, ended zip-code-based auto insurance, and subjected the industry to antitrust restrictions.

The two dozen states with ballot-measure processes offer Americans a similar opportunity to rein in private health insurers now that a national discussion of their vices has been aired, and mandatory.

The ballot initiative stands as the shining example of how the initiative process can afford average people the opportunity to take on powerful special interests and prevail.

Consumer Watchdog's ongoing work to hold property-casualty insurers accountable and keep rates low saves Californians hundreds of millions of dollars every year. Visit our rate challenge page for updates about recent and current interventions on behalf of California consumers.

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).

Read Proposition 103

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The Provisions of Prop 103
It pays to know your rights! Read up on each provision of the proposition.

Legal Status of Prop 103 Provisions
Information on the legal status of each provision. 

Insurance Reform in California: The 1988 Battle for Proposition 103
Read a history of the $80 million "David vs. Goliath" battle to reform California's insurance industry at the ballot box.

Auto Insurance Crisis & Reform
Except from Harvey Rosenfield's University of Memphis Law Review article on Prop 103. Explains the purpose and impact of the proposition's main reforms.

Proposition 103's Impact on Auto Insurance Premiums in California
This 2008 study by J. Robert Hunter of the Consumer Federation of America shows that Proposition 103 has saved Californians $62 billion on our auto insurance premiums and is a model for other states faced with insurance industry price-gouging and abuse. Download the report.

Consumer Watchdog's 2007 Report
Showing the impact of Prop. 103 with 15 years of Prop 103 data.

The Insurance Industry's Idea of Reform: Eliminating Consumer Rights
Insurance companies oppose regulation and other reforms that limit their conduct. Instead, they lobby for legislation that restricts, rather than expands, the rights of consumers -- "tort reform." There are big differences between consumer-backed reforms and the insurance industry campaign, backed by other industries, to restrict the right to go to court. Read the fact sheet we've put together to outline the differences.