Calif. Ballot Question Backers Revise, Reboot Campaign

Just weeks after launching a campaign to allow insurance companies to adjust automobile premiums based on coverage history, backers of a ballot measure are rebooting their efforts in a bad to stave off critics.

Californians for Fair Auto Insurance Rates, underwritten by Mercury General, has submitted new referendum language it says more clearly narrows the proposed referendum's scope. While amounting to less than two sentences, the changes required new draft language to be submitted to the state Attorney General's office for approval.

The new draft removes the sentence, "When calculating the discount or determining the eligibility for a continuity discount an insurer may also take into account the applicant's or insured's claims experience." Critics, including the advocacy group Consumer Watchdog, claimed that phrasing was a back-door means of punishing policyholders who file claims, or filed claims in the past, even when they were not at fault (BestWire, Aug. 18, 2009).

Consumer Watchdog has also objected to the larger issue of the initiative, saying it will penalize consumers who had decided not to drive and let their insurance lapse, as well as those who filed a late payment.

"There seemed to be some confusion about language in our original measure that was being misinterpreted to do more than simply make the continuous coverage discount portable. Specifically, the Attorney General questioned whether a provision would allow the absence of prior insurance coverage to more generally be a factor in determining rates," Jim Conran, co-chairman of Californians for Fair Auto Insurance Rates and president of Consumers First, an independent insurance agency network, said in a statement

The Continuous Coverage Auto Insurance Discount Act would allow insurance companies to lower premiums for drivers who "have continuously maintained auto insurance coverage," even if they switch to a different insurer. The initiative would correct an inconsistency in state law that discourages consumers from switching to another insurance company, CalFAIR spokeswoman Kathy Fairbanks said.

CalFAIR had begun to gather signatures to put the initiative on the June 2010 primary election ballot, but had to abandon that effort, Fairbanks said. Once the Attorney General's office approves the language, the drive to gather the 433,971 valid signatures can begin again. CalFAIR is now working toward appearing on the ballot "sometime in 2010," Fairbanks said.

CalFAIR's campaign is underwritten by Mercury General Corp., the state's third-largest writer of automobile insurance policies, which to date has been the campaign's sole donor. The insurer and its affiliates have donated $500,000 to the campaign, plus $12,000 in "non-monetary" support, according to California campaign finance records. The campaign Web site includes the disclaimer, "Paid for by Californians for Fair Auto Insurance Rates and Mercury General Corporation and Affiliates."

Mercury Insurance Co., a member of Mercury General Group, currently has a Best's Financial Strength Rating of A+ (Superior).

The top five writers of private passenger auto insurance in California in 2008, based on A.M. Best Co. state/line data, were: State Farm Group, with a 12.9% market share; Farmers Insurance Group, 11.0%; Mercury General Group, 9.4%; Auto Club Enterprises Insurance Group, 9.0%; and Allstate Insurance Group, 8.4%.