Mercury Insurance’s Prop 17 Would Hit California Workers Hard

When was the last time an insurance company spent millions to save you money? The answer? Never.

Mercury Insurance, the sole sponsor of Proposition 17, on the June ballot, has already spent over $7 million in its effort to give insurance companies the power to raise rates on millions of responsible Californians.

This deceptively written initiative allows insurance companies to surcharge people who have not been previously insured – even if they are perfect drivers but weren't insured because they weren't driving or didn’t own a car. Prop 17 also penalizes anyone who had to drop coverage for more than 90 days over the last five years, or missed a single insurance payment.

These surcharges are illegal in California today: the voters banned them in 1988 because the higher rates led to more uninsured motorists on the road.

In states that have laws similar to Prop 17, the surcharges can raise the price of car insurance by 200% or more – adding thousands of dollars to the annual cost of insurance.

As Michael Hiltzik of the LA Times explains:

The proposal is essentially the latest attempt by Mercury to eviscerate Proposition 103. That’s the 1988 ballot measure that dramatically reshaped insurance regulation in this state by giving an elected insurance commissioner the authority to approve property and casualty rates before they go into effect.

Auto insurance carriers were a particular target of Proposition 103, because the industry was viewed as especially discriminatory and arbitrary, and because the state’s mandatory insurance law gave motorists little choice but to buy coverage.

To bar the redlining of underprivileged neighborhoods, the measure strongly discouraged the use of ZIP Codes in setting rates. Henceforth, the primary factors were to be the driver’s safety record, the number of miles driven annually and the driver’s years of experience.

Proposition 103 specifically barred insurers from using the absence of a prior policy as a factor in rate-setting for any driver. The concern was that higher premiums based on that factor would discourage uninsured motorists from getting legal.

Prop 17 would repel a piece of Prop 103. We must stop Prop 17 because if it passes, it will allow insurance companies to punish law-abiding citizens who have done nothing wrong, Californians who are working hard just to keep their families afloat.

Alarmingly, those who need a car to get to and from work at all hours of the night may be unable to pay thousands more dollars a year just to keep up with his or her insurance costs. Consider someone who works the late shift, clocks out at 12:30 AM, and can no longer drive home because of the Prop 17 surcharge and a bus is just not available. Options become very limited.

We are in hard times and Prop 17 places additional, punitive barriers to making ends meet. It is simply un-American to keep hard-working families from putting food on their dinner tables.

And newspapers across the state agree. From the LA Times to the San Francisco Chronicle to La Opinion, editorial boards are urging their readers to vote no on Prop 17.

Californians are rightly suspicious when big corporations try to manipulate the initiative process for their own self-interest. In the case of Proposition 17, its sponsor, Mercury Insurance, has proved it cannot be trusted.

Just last month, the Insurance Commissioner brought an administrative lawsuit against Mercury alleging that it engaged in more than 50 practices that are illegal under California law, victimizing thousands of Californians. Investigators discovered that Mercury failed to give customers the discounts they were entitled to and overcharged people just because they are self-employed, work out of their homes, or had health problems. The company even broke its own previous pledges to regulators that it would stop violating California laws. The company faces tens of millions of dollars in fines.

Mercury Insurance’s sponsorship of Proposition 17 is like Bernie Madoff backing a ballot proposition claiming to protect investors.

The last thing California families can afford right now is an initiative that makes insurance companies less accountable for their actions, leads to more uninsured motorists and skyrocketing auto insurance premiums. That’s why unions, veterans groups, seniors and Consumers Union, the non-profit publisher of Consumer Reports magazine, all agree: Vote no on Proposition 17.