Mercury Insurance Drops $10 Million on Prop. 17 Shell Game


Posted on 18 May 2010

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By Scott Martelle
Protect Consumer Justice

One of the oddities of California politics is the way different factions use the initiative process to try to sneak into law programs and policies that, given full attention and airing, would die an inglorious death. Add Proposition 17, the bizarrely named “Allows Auto Insurance Companies to Base Their Prices in Part on a Driver’s History of Insurance Coverage,” to the list of propositions-as-shell games.

Prop. 17 has, in effect, one serious backer: Mercury Insurance, which has kicked in $10 million to get it on the ballot and finance the campaign to get it passed. No surprise why: The measure would let Mercury and other insurance companies charge customers a premium if there’s a lapse in coverage. While sounding stultifyingly boring, that means consumers who go uninsured for any amount of time will get whalloped.

In essence, Mercury is trying to buy a law that would let it do an end run around Proposition 103, passed in 1988 to try to corral excessive insurance rates.
Incidentally, Mercury isn’t exactly a poster child for Good Corporate Citizenship. The San Francisco Chronicle has been reporting on some of its shenanigans, citing a state report that indicated Mercury may have violated Prop. 103 (if you can’t beat it, change it?):

A high-profile California insurance company that is backing a controversial insurance measure on the June ballot has engaged in practices that may be illegal, including deceptive pricing and discrimination against consumers such as active members of the military and drivers of emergency vehicles, according to a state report obtained by The Chronicle.

The report, obtained through the state Public Records Act, alleges that Mercury Insurance Group may have violated Proposition 103, the landmark consumer protection law approved by voters in 1988.

So far, the only significant newspaper editorial board to think Prop. 17 is a good idea is the Orange County Register, which also thinks government should be limited to a Hobbesian minimum. So we’ll discount that voice. The rest are unanimous. As the San Jose Mercury News put it:

“It’s a smoke screen for allowing insurance companies to substantially increase rates for drivers who, for whatever reason, allowed their insurance to lapse for more than 90 days. That could include a wide range of people, such as drivers hospitalized for a long period of time, military personnel or unemployed Californians who couldn’t keep up their premium payments.”

Incidentally, the $10.6 million raised from all sources for the the measure dwarfs the $535,000 opponents have been able to muster. So if the the measure passes, it will stand as sterling proof that the initiative process is a mechanism for corporations to buy the laws they want.

And it’s not the only corporate-serving initiative in the June ballot. Pacific Gas&Electric is pushing Proposition 16 — fittingly enough right next to Prop. 17 on the ballot — to require a two-thirds vote before a municipality can create a local utility. PG&E has spent $35 million to try to preserve its monopoly.

And people wonder why voters are so cynical.

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Scott Martelle is a veteran journalist, including 12 years at the Los Angeles Times. He currently writes for Protect Consumer Justice, a project of Civil Justice Research&Education Project. The site’s goal is to honestly report on consumer, legal and political issues important to the American civil justice system.

One of the oddities of California politics is the way different factions use the initiative process to try to sneak into law programs and policies that, given full attention and airing, would die an inglorious death. Add Proposition 17, the bizarrely named “Allows Auto Insurance Companies to Base Their Prices in Part on a Driver’s History of Insurance Coverage,” to the list of propositions-as-shell link wheel games.

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