Prop. 33 Proponents: Ballot Writers Don’t Understand Insurance Industry

By | August 1, 2012

As proponents of California Proposition 33 await a hearing on a lawsuit they filed to change some wording in voter guide statements for the upcoming November election, they’re hoping to avoid the damage that could be done by language they fear could be used against them by opponents of the measure.

The automobile insurance portable persistency measure is likely to be hotly contested, as was a similar initiative in 2010. Though unlike Proposition 17 in 2010, this measure has bipartisan support and has language that protects consumers more so than they are protected now, supporters say.

However those ideas could be much harder to convey if the language as it is proposed is kept in the official sample ballot, according to those running the campaign. The Prop. 33 campaign is taking issue with both the ballot label describing what the proposition does and the opponent’s language.

And that’s the impetus of the lawsuit filed in the Superior Court of California on Friday, which names Secretary of State Debra Bowen as a respondent, as well as interested parties like California’s Attorney General Kamala D. Harris, and Consumer Watchdog founder Harvey Rosenfield, an outspoken opponent of the proposition and the 2010 measure.

The suit was filed on behalf of Michael D’Arelli, executive director of the American Agents Alliance, one of Prop. 33’s major backers. The case is expected to be heard next week, before the reported deadline for the copy for the ballot on Aug. 13. And they argue those who wrote the language may not understand how the insurance industry works in California.

The recently issued ballot label for Prop. 33 from the Secretary of State reads:

“Changes current law to allow insurance companies to set prices based on whether the driver previously carried auto insurance with any insurance company. Allows proportional discount for drivers with some prior coverage. Allows increased cost for drivers without history of continuous coverage. Fiscal Impact: Probably no significant fiscal effect on state insurance premium tax revenues.”

The problem the Prop. 33 campaign has is with the term “allow insurance companies to set prices,” and specifically the idea that is conveyed: “setting prices.”

“The Ballot Label and Ballot Title and Summary prepared by the Attorney General for Proposition 33 contain inaccurate language that is highly likely to prejudice voters against the measure,” the lawsuit states. “Specifically, the Ballot Label and Ballot Title and Summary state that Proposition 33 changes current law to allow insurance companies to ‘set prices.’ This is not true. Under California law, insurance companies cannot simply set prices, and Proposition 33 will not change this fact.”

The suit recommends the language be changed to:

“Changes current law to allow an insurance company to offer a continuous coverage discount based on whether the driver previously carried auto insurance with any insurance company.”

“I think it’s unneccessarily prejudicial,” said Prop. 33 campaign spokesman Terry McHale, who believes the proposition’s major detractor, Santa Monica-based Consumer Watchdog, will seize the language in their efforts to upend the Prop. 33 campaign. “I think Consumer Watchdog already struggles with the truth, and they will use whatever is given them.”

He added, “I think we can all agree (Consumer Watchdog has) a long history of hyperbole. We think most of what they say is scattered with half-truths. Read the initiative. Read the initiative.”

On the other hand, Consumer Watchdog believes teh wording in both the proposition label and the opposing language is accurate and fair.

“They’re trying to hide the part of the initiative that they don’t want the public to see,” said Carmen Balber, a Consumer Watchdog spokeswoman. “They want to hide the fact that anyone who had the lapse in insurance for any number of a good reasons … will be surcharged if Proposition 33 takes effect.”

She added, “They want to edit that to change the fact that it will allow insurance companies to set prices based on whether or not you’ve had insurance in the past.”

Prop. 33, backed by an $8.3 million contribution by Mercury Chairman George Joseph, but not by Mercury, would allow consumers to take their auto insurance discounts and shop around and change insurers but retain their discounts. It addresses California Proposition 103, requiring personal automobile insurance rates to be determined using the following factors in decreasing order of importance: insured’s driving safety record, number of miles driven annually by the insured, and number of years of driving experience the insured has had.

Prop. 103 also prevented rates from being determined based on a person’s history of insurance.

Unlike Prop. 17, which was narrowly defeated, this measure would contains protections for military personnel sent overseas, the unemployed, students and others for insurance lapses, according to the Prop. 33 campaign, which noted that unemployed people would have their auto insurance discounts protected for 18 months, something that isn’t offered currently.

But proponents say the bottom line of the measure is it would punish people who haven’t been insured for a period of time by raising their rates, and Consumer Watchdog said that’s what Prop. 33 proponents are trying to “hide” with the lawsuit.

“They’re essentially trying to change the Attorney General’s argument from an impartial argument to a partial argument,” Balber said of the official ballot language. “In truth this (proposition) will deregulate insurance prices and raise rates for many Californians.”

Prop. 33 proponents also want the language in the ballot argument against Prop. 33 changed.

Specifically, the suit takes issue with the opposition language: “Proposition 33 unfairly punishes anyone who stopped driving for a good reason but now needs insurance to get back behind the wheel.”

The suit asks that the “entire statement be stricken” because it’s “false and misleading.”

Evan Goldberg, chief deputy to California Secretary of State Bowen, said she isn’t taking a position on the case.

“The Secretary of State’s position has always been she doesn’t comment on pending litigation,” Goldberg said. “She takes no position on the merits of the case.”

He noted that the wording isn’t edited and reviewed by the Secretary of State, and she was named in the suit to stop her from giving the order to have the ballots printed.

The Attorney General’s office writes the ballot language, he noted.

A spokeswoman with the Attorney General’s office did not return a call for comment.

McHale said he believes the ballot was worded that way it was because of a lack of understanding of how California’s insurance system works, and that he doesn’t believe it was intentional.

“I don’t question anybody at the Secretary of State’s office or Attorney General’s office in terms of them being conscientious. They are,” he said. “The truth is you do a rate filing, and Department of Insurance and the commissioner set the rates, and approve the rates.”

He added that the ballot language as it is creates the “false imagery that unilaterally an insurance company is going to set rates. That is just not true.”

Aside from some strong consumer opposition to the measure, Prop. 33 has picked up some bipartisan support, gaining endorsements from former San Francisco Willie Brown and state Sen. Juan Vargas, D-San Diego.

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