Attorney General Tells Court Voters Should Not Be "Misled" Mercury's Prop 17 "Will Allow Insurance Companies" to Raise Premiums Published on Mar 11, 2010 - 11:10:59 AM
SANTA MONICA, Calif. March 11, 2010 - Attorney General Jerry Brown has filed a legal brief in Sacramento Superior Court over Proposition 17 stating, "The proponent's arguments that the Attorney General cannot tell voters that this measure would allow insurance companies to increase the cost of insurance for certain drivers is without legal merit."
Propositon 17 backer Mercury Insurance, which has spent more than $3.5 million on the initiative, is challenging Brown's right to say the June ballot measure "will allow insurance companies to increase cost of insurance to drivers who do not have a history of continuous insurance coverage" in the measure's official title and summary. The legal showdown takes place in Sacramento Superior Court Friday.
"If the title and summary does not make voters aware that the measure will allow surcharges, voters will be misled into thinking that Proposition 17 simply allows insurers to offer a new discount," the Attorney General's brief states. View a copy of the brief at http://www.consumerwatchdog.org/resources/AGReplyBrief031010.pdf
Key excerpts from the Attorney General's brief follow:
"What is certain is that any company that decides to offer this new discount will be allowed to surcharge drivers who don't qualify for it. And that is all the title and summary says. The fact that car insurance is complicated should not prevent voters from being accurately and fully informed about the key components of Proposition 17."
"The proponents and opponents of Proposition 17, as well as the Department of Insurance, are all well aware that in the world of car insurance pricing, you cannot have a discount without a surcharge. The only people who probably are not aware of this principle are the voters."
"Proposition 17 provides that insurance companies may offer the new discount "[n]otwithstanding section 1861.02 (c)[.]" The effect of this language is to ensure that companies will be allowed to impose surcharges as well as the new discount. Thus, contrary to the proponent's suggestions, the actual language of Proposition 17 allows surcharges by waiving the statutory provision that would have prohibited them."
Prop 17 opponent Harvey Rosenfield also filed a brief with the court in support of the Attorney General's Title and Summary, calling Mercury's efforts "another attempt by Mercury to prevent the voters from learning the truth about the true impact of Proposition 17 on California's motorists…. [Mercury wants] the Attorney General's title and summary for Proposition 17 to include ‘all the sweet' - the initiative's offer of a new discount to drivers who have continuously maintained insurance coverage with any insurance company - while excluding ‘all the bitter' - any mention of the corresponding surcharges that would be imposed on those drivers who have not continuously maintained insurance coverage."
Prop 17, sponsored by Mercury Insurance, would give insurance companies a new way to raise premiums by allowing insurance companies to base premiums on whether or not a customer bought auto insurance in the past. Voters prohibited this practice in 1988 with the passage of Prop 103 to ensure that drivers wouldn't face unnecessary hurdles to buying auto insurance. For example, Prop 17 would allow insurance companies to unfairly surcharge military personnel who stopped driving while they were sent to a base in another state, for example, when they returned to civilian life and tried to sign up for auto insurance.
