Online Auto Insurance: Two Calif. Insurance Initiatives Could Face Off in November

    RANCHO CUCAMONGA, CA, June 01, 2012 /24-7PressRelease/ -- Officials behind a petition to increase insurance industry regulations said recently that the measure got more than 800,000 signatures, easily qualifying it for a statewide vote and setting up a battle between provisions in a competing auto coverage initiative that has already been approved to appear on the November ballot, according to Online Auto Insurance.

The Insurance Rate Public Justification and Accountability Act (IRPJA) requires health insurers to disclose rate hikes publicly and open up proposals to state regulators and the public before the increases are fully implemented. The changes are meant to bring oversight of health insurers closer to regulatory practices in the auto, business and home industries.

Currently in California, all proposals for increases on auto coverage rates are vetted by regulators, meaning even the cheapest car insurance companies have to put their rate hikes up for scrutiny before they take effect. Supporters say regulators need IRPJA to give them the power to protect patients, who have already seen skyrocketing health care premiums, from unexpectedly exorbitant rate increases.

Two provisions in IRPJA are meant to bolster consumer protection by prohibiting insurers in all industries from considering a consumer's history of credit or prior policies in determining premiums.

The latter IRPJA provision clashes with a provision in the Automobile Insurance Discount Act (AID), an initiative that that will be on the November ballot. A major part of AID allows auto policyholders to take discounts they were awarded for staying at the same company to other insurers, a move that supporters say will increase competition within the auto coverage industry.

Currently, consumers can't transfer such discounts from insurer-to-insurer, but AID's proposal to allow companies to consider prior policy prices in setting their own rates puts the measure directly at odds with IRPJA, which explicitly forbids the practice.

The competing proposals have already yielded heated rhetoric from both sides.

Consumer Watchdog has waged a public campaign against George Joseph, chairman of Mercury and one of AID's chief backers, labeling him a "Chairman Grinch" who "loves money more than you know" in a video released as AID's political campaign ramped up in December 2011.

Consumer Watchdog contends that language in AID amounts to a premium surcharge to motorists who don't hold continuous coverage for years but need coverage afterward, such as college students who did not drive but need an auto policy after college.

Offering his endorsement of AID, Sen. Juan Vargas (D-San Diego) also chided Consumer Watchdog for what he called "fear-mongering" tactics.

"I find it absolutely ridiculous that every consumer group in the state of California is not supporting this initiative," Vargas said in a statement. "I am extremely disappointed that a group like Consumer Watchdog, with their own special interests, has resorted to fear-mongering and name-calling in an ugly bit of behavior that demeans them as a group and deliberately misleads consumers."

Both proposals expand on regulatory measures set by Proposition 103 in 1988. At the time, California was an "'open competition' state in which competition regulated the marketplace," according to regulators.

Source: http://www.insurance.ca.gov/0500-about-us/0500-organization/0400-rate-regulation/prop-103.cfm

A total of 504,000 valid signatures are needed to qualify to appear on the November ballot. The total 800,000 signatures submitted for IRPJA need to be certified by state officials by June 28 to appear on the November ballot, according to Consumer Watchdog. The same officials approved AID for the ballot in January.

For more on this and related insurance issues, head to http://www.onlineautoinsurance.com/cheap/companies/ for access to an easy-to-use quote-comparison generator and informative resource pages.

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