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Mercury Insurance Group CEO proposes voter initiative on auto reforms

The head of Mercury Insurance is trying to get an initiative on the November election ballot that would undo auto insurance reforms in California and reduce the state’s ability to regulate the industry

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 roll back the current system for determining auto insurance rates to 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 the rates. (See story on page 10.)

Joseph’s proposed ballot measure would make it easier for the state Legislature to make wholesale changes to Proposition 103, the insurance reform measure passed by voters in 1988.

Proposition 103 attempted to minimize geographic differences in auto insurance rates by requiring companies to focus on a motorist’s personal driving record. Under Proposition 103, auto insurance premiums dropped significantly.

A consumer group said it would launch a counter-campaign against the Mercury General proposal, arguing that it is an attempt to gut Prop 103.

“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” Harry Rosenfield, author of Proposition 103 and head of the Foundation for Taxpayer and Consumer Rights, said in a statement.

Garamendi condemned the proposal as “something very bad for consumers” and said making large changes in Proposition 103 could “unleash an extraordinary war” between insurers and consumer groups.

Mercury is one of California’s third-largest seller of auto insurance. Since 1999, Joseph has made more than $3 million in contributions to both Democratic and Republican candidates for legislative seats and statewide offices, and initiative campaigns, according to the Los Angeles Times. Joseph was unavailable for comment by press time.