$62 Billion Savings on Auto Insurance in California Since Voters Approved Insurance Reform Proposition 103 Twenty Years Ago, According to National Study


Contact: Doug Heller, +1-310-392-0522 ext. 309, or Carmen Balber, +1-310-392-0522, ext. 324, both of Consumer Watchdog

BREAKING TODAY: Allstate In Court To Block $250 Million Prop 103 Rate Cut

SANTA MONICA, Calif., April 24 /PRNewswire-USNewswire/ — California has the best automobile insurance regulation in the nation, with the slowest-growing premiums and one of the most competitive markets in the country, according to a state-by-state study the Consumer Federation of America released in Washington, DC today. In 1988, California voters approved Proposition 103, which enacted the nations toughest insurance reform.

Ironically, Allstate is in a San Francisco Superior Court today asking a judge to block a 15.9% rate cut for its auto insurance customers that was ordered by Insurance Commissioner Steve Poizner last month. Poizner required the approximately $250 million rate reduction under the very rules of Proposition 103 that are highlighted in the Consumer Federation study. The rate decrease, which will average $124 per motorist, is set to take effect next Monday if Allstates request for a delay is rejected.

The report concludes that California stands out as a model of consumer protection:

— California drivers have saved $61.8 billion in auto insurance rates since enacting the strongest regulation in the nation, an

average of $1670 per Californian;

— California is first among all states in holding down insurance premiums, with a 12.9 percent increase compared to an average

national increase of 50 percent;

— California is the fourth most competitive auto insurance marketin the nation; Completely unregulated Illinois ranks 44th; and,

— Changes to auto insurance rules that will take effect thissummer will continue to lower rates for good drivers.

Twenty years ago, Californians got fed up with paying exorbitant insurance rates to feed the insatiable greed of the insurance industry, so they took matters into their own hands and passed Prop 103, said Harvey Rosenfield, author of Proposition 103. After two decades of fighting the insurance industry in court, the industrys political allies in Sacramento and their endless pressure on the Insurance Commissioner, Proposition 103 stands as a massive victory for peoples pocketbooks.

The full report compares insurance regulatory systems nationally and finds that prices increase for consumers as regulation gets weaker. The Consumer Federation of America press release is available at: http://www.consumerfed.org/pdfs/ state_auto_insurance_release.pdfand the full report can be downloaded at: http://www.consumerfed.org/pdfs/ state_auto_insurance_report.pdf

Auto insurers fare as well as consumers in California, the report finds, with strong profits over the last ten years – 10.1% – and the fourth most competitive insurance market in the nation.

The report highlights other unique aspects of California’s regulatory scheme under Proposition 103 that make the state a national model. California is the only state to:

— Require that a person’s driving record is the most importantfactor in determining rates;

— Fund consumer participation in the ratemaking process if they make a substantial contribution; and

— Completely repeal its antitrust exemption for automobileinsurers.

California is also one of only three states to prohibit credit scoring as a factor in setting auto insurance rates, is among just eleven states with the highest seat belt laws, and is one of only four states to guarantee insurance to a good driver from the driver’s insurer of choice.

The report also highlights Californias state of the art prior approval regulations that:

— require insurers to be transparent about how rates aredeveloped;

— prohibit companies from passing on excessive costs includingunjustifiable expenses, fines, and excessive executive

salaries; and

— set standards to test the assumptions insurers make in setting rates.

Consumer Federation of America argues against federal proposals to weaken state insurance regulation and replace it with looser federal oversight – including recent recommendations by Treasury Secretary Paulson to allow insurers to choose whether to be regulated at the state or federal level. The Consumer Federation report concludes:

Proposition 103 has been an enormous success from both a consumer and an industry perspectiveAs Congress considers an optional federal charter that would allow insurers to offer coverage in California but be (poorly, if at all) regulated in Washington D.C., it should carefully consider the negative consequences of overriding the will of the voters of the nations largest state and undermining the most effective system of insurance regulation in the country.

SOURCE Consumer Watchdog

(c) 2008 U.S. Newswire. Provided by ProQuest Information and Learning. All rights Reserved.