Ballot Measure is Supposed to Allow Insurers to Give Loyalty Dis - Central Coast News KION/KCBA

Sacramento, Calif. Among the many political ads you may see is one pushing a ballot measure which claims it will save California drivers money on their auto insurance rates. That claim is partly true. Proposition 33 would allow insurance companies to offer the same loyalty discounts to new customers they received from their previous insurer.  but it may also lead to a rate increase for other customers. 

The proposition is being backed mostly with money from George Joseph, the chairman of Mercury Insurance, California's fourth-largest insurer.  He would like to use the discount incentive to bring in new customers. Joseph has tried for years to get the law changed, most recently when he backed a similar initiative two years ago.

OPPONENTS SAY

That while it would provide discounts for some drivers, it would also lead to increased rates for uninsured drivers or those who haven't had continuous coverage in the past.

California Congressman, John Garamendi, who led the fight against similar proposals when he was State Insurance Commissioner, says this one harms consumers.  "What's always going on in insurance is for a company trying to get a special piece of the market and to carve out other people and it really discriminates against others. The problem here is if you don't have insurance, you�re going to find yourself on the outside. You will  not be able to get insurance, at least from this company, at a reasonable rate. The way the market is set up under the current california laws, we're all treated equally unless we're looking at our driving record and the miles you drive every year, which really are the pertinent factors.

But Mike D'Arelli, Executive Director of American Agents Alliance, the measure's sponsor, says talk of rates going up is fear-mongering. He says rates didn't increase for uninsured drivers when a law similar to proposition 33 was in effect in the late 1990's."There may have been one company that may have raised rates on certain drivers, which is their right to do. They chase drivers away when they raise rates, so i don�t think companies want to lose customers. Companies that start raising rates on new drivers, uninsured drives, they're going to lose business."

The latest poll from the California Business Roundtable had the proposition leading 37% to 35% with more than a quarter of voters undecided..