If you want to know the benefits of Proposition 33 in the future, all you have to do is look to the past.
As a former Deputy Commissioner for Rate Regulation at the California Department of Insurance (CDI), I strongly support Proposition 33 in large part because history tells us the initiative will cut the number of uninsured drivers.
Specifically, from 1996 to 2002, the CDI reviewed and approved applications for a portable persistency discount (these applications included at least ten of the top 20 auto insurance companies in the state). According to CDI, the percentage of uninsured motorists in the state in 1996 was just over 28%. In 2002, when the Department of Insurance stopped approving the portable persistency discount, the uninsured motorist rate had decreased to just over 14%, a reduction of almost 50% of all uninsured motorists.
This is reason enough to support Prop 33. But there are other benefits.
Prop 33 will also promote competition, I believe, by potentially lowering auto rates or offering better coverage or service for more than 80 percent of all drivers in the state of California who will again have the option to shop around for personal automobile insurance and not lose their persistency discount.
Currently, this discount you receive as a long time policyholder reflects your long-term, faithful relationship with your current automobile insurance company. The longer your relationship with that company the greater the discount. However, you cannot take this discount with you should you wish to shop around for better service, cheaper rates or broader coverage. The persistency discount you currently enjoy with your current company will cease to exist when you move to another company and this can severely limit your ability to find a better product or affordable price. Proposition 33 will help to solve this problem by allowing you to take your discount with you.
Proposition 103 was passed in 1988 and, with one exception mentioned below, eliminated the ability for drivers to move to another auto insurance company and take the persistency discount with them. It is my view that Proposition 103 has done many good things for automobile insurance consumers over the years, but this is not one of them. It is simply unfair to penalize the vast majority of drivers in this state who follow the law by not allowing this discount to be portable.
Opponents of Proposition 33 argue that insurance premiums for that small percent of drivers who drive without insurance will increase substantially if Proposition 33 passes. However, there is absolutely no evidence that this will be the case. Here’s why:
- The state of California requires all insurance rate changes be approved by the Department of Insurance prior to their use by the insurance company. Further, the law states that the Department of Insurance cannot approve a rate that is excessive, inadequate or unfairly discriminatory. Thus, as the opponents of Proposition 33 would have you believe, insurance companies cannot arbitrarily surcharge uninsured drivers.
- The vast majority of drivers in the state of California are good drivers. These good drivers are extremely attractive to insurance companies because, over time, good drivers are involved in fewer accidents. The more good drivers an insurance company insures, the more premium it collects and the fewer claims it pays. Given this logic, there is very little incentive for these companies to add additional surcharges for the uninsured driver.
If those companies offering portable persistency discounts during that time (1996-2002) had also surcharged uninsured drivers that the opponents of Proposition 33 claim will happen, surely California would have seen an increase in the number of uninsured motorists because of higher insurance rates. Clearly this did not happen, and there is no reason to believe that it will happen when Proposition 33 passes.
The simple fact is that the passage of Proposition 33 will allow the vast majority of drivers in the state of California the ability to shop around for auto insurance without the fear of losing an important discount such as persistency. Unsubstantiated fear mongering by opponents should not deter the many millions of drivers in the state of California who will potentially benefit with lower premiums, better coverage and better service through their unfettered ability to shop around for insurance.
History says to Vote Yes for Proposition 33. So do I.