Proposition 33 Legalizes Insurance Discrimination

Proposition 33 would return us to an era when discrimination in insurance was commonplace. If billionaire George Joseph gets his way, millions of Californians would pay higher auto insurance premiums. Mr. Joseph owns Mercury Insurance. He has donated $16.4 million to Prop 33.

Back when insurance discrimination was legal in California, the industry redlined lower income minority communities. Auto insurance was mandatory, but good drivers in inner city neighborhoods who wanted coverage were priced out of the market. The excuse was that these drivers were not previously insured, and therefore they needed to pay more to get insured.

In 1988, voters enacted Proposition 103. This stopped insurers from charging higher rates to customers simply because they lacked coverage in the past. Everyone benefitted, because making insurance more affordable reduced the number of uninsured drivers on the road.

Prop 103 gives the Insurance Commissioner the authority to reject insurance rate increases if they are not justified.  A company that wants to charge a particular class of motorists more must provide evidence that the class of motorists is more likely to cause an accident.

Proposition 33 changes this. A loophole hidden in the measure's fine print allows insurers to raise rates on most drivers who lack prior coverage or who had a break in coverage for 90 days within the past five years. Prop 33 eliminates the Insurance Commissioner's power to stop these surcharges, even when an insurance company has absolutely no evidence that a break in coverage increases the driver's accident risk.

The urban poor are not the only targets for Proposition 33's rate hikes.

Senior citizens who suspend their policies to economize when they are temporarily disabled and not driving will pay a surcharge when they recuperate and resume driving. People who commute by mass transit, but start driving if they move, or their job moves, will pay more. Graduating college students who biked to campus, and long term unemployed workers who suspend coverage while they aren't driving to work, will pay much more for insurance when they find a new job and get behind the wheel.

But it's not just these consumers who will pay more. We all will. That's because Prop 33's big premium rate increases will squeeze many low income motorists out of the insurance market entirely. The Department of Insurance stated, a Prop 33-style surcharge

discourages [people] from buying insurance, which may add to the number of uninsured motorists and ultimately drives up the cost of the uninsured motorist coverage for every insured.

We should be wary when a billionaire funds a self-enrichment ballot scheme. We will all pay if insurance discrimination against the poor and communities of color is brought back.  Please join me in voting NO on Prop 33.

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