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Mercury Insurance Group CEO proposes voter initiative

The head of Mercury Insurance is trying to get an initiative on the November election ballot to restore portable persistency discounts.

George Joseph, CEO of Los Angeles-based Mercury General Corp., submitted a proposed ballot measure to the California state attorney general’s office and has hired campaign strategists, lawyers and others to work on the qualifying initiative, the Los Angeles Times said.

Among other things, the proposal would freeze the current system for determining auto insurance rates as of last August.

That is several months prior to a proposal announced last month by Insurance Commissioner John Garamendi that would force California insurers to change how they calculate auto insurance rates. (See story on page 10.)

According to Joseph, after Proposition 103 was passed, 16 optional rating factors, including persistency, were allowed to be used in calculating auto rates. “We began to give discounts based on length of time the person was insured with Mercury,” Joseph said.

However, consumer groups persuaded the courts that persistency discounts were inconsistent with Proposition 103 because it did not make insurance affordable for everyone, he said.

Joseph believes that by giving discounts to drivers based on the number of years they have consistently been insured, no matter which insurer they choose, the system is more competitive. That’s the reason he proposed the ballot initiative, Joseph said.

He indicated he does not agree with Commissioner Garamendi’s recent proposal to change the auto rate regulations. “We’re not trying to make any great changes,” he said, “but if we did not say something about it in the proposal, the Commissioner could give the persistency rating factor so little weight it becomes meaningless.”

A consumer group said it would launch a counter-campaign against the Mercury General proposal.

“California motorists, homeowners and businesses can expect to pay hundreds or thousands of dollars more every year for insurance if the insurance industry is able to trick voters into passing their initiatives” said Harry Rosenfield, author of Proposition 103 and head of the Foundation for Taxpayer and Consumer Rights.

Garamendi condemned Joseph’s proposal.

Mercury is one of California’s largest sellers of auto insurance, according to the Los Angeles Times.