FacebookTwitterGoogle+RedditEmail

California Voters Acted to Save $100 Billion

by RALPH NADER

A report just out from the Consumer Federation of America found that, over the past 25 years, auto insurance expenditures in the United States have increased by a sharp 43 percent — despite all the advancements in auto safety and new players entering the auto insurance market.

Only one state saw insurance prices fall — California. For that, we can thank the consumer advocates who pushed for the 1988 passage of Proposition 103, which enabled voters to enact the strongest pro-consumer insurance regulations in the nation.

Proposition 103 was a response to a 1984 law that required California drivers to have auto insurance. The insurance companies jumped on this by drastically raising their rates to squeeze as much profit from motorists as possible. Consumers were obviously not pleased. Prop 103 advocates fought back by drafting an initiative proposal requiring insurers to roll back their rates by 20 percent as well as provide an additional 20 percent discount for drivers with good safety records, as well as other vital regulations to keep the insurance industry in check and eliminate ways in which insurers took advantage of policyholders.

As one might expect, the large auto insurance companies used every obstructive and deceptive tactic in the book to oppose this law — spending upwards of $80 million fighting it. Up until that point, the powerful insurance lobby had never lost a major battle with state or federal agencies. Most state legislators were firmly under industry control or locked in neutral. Big money and political connections had provided them an aura of invincibility. So when Consumer Watchdog’s Harvey Rosenfield and I launched the drive to pass Prop 103, many people thought the effort was hopeless.

But big money and powerful connections were not enough to quell the voices of California consumers who loudly proclaimed that “Prop 103 is the one for me.” The passage of Prop 103 was a monumental accomplishment and an example of what can happen when people band together for a cause and show up at the polls. Hopelessness is merely a sentiment for the apathetic.

Rosenfield, who was the author of the measure, recently said: “Proposition 103 proves that when citizens join together, they are an unstoppable force.”

The recent report by Consumer Federation of America’s J. Robert Hunter, an insurance actuary, and his colleagues titled “What Works? A Review of Auto Insurance Rate Regulation in America” documents the spectacular successes of Prop 103.

Since 1988, over 100 billion dollars have been saved by California consumers which equals “an average annual savings of $345 per household, or $8,625 per family over the entire period.” Under Proposition 103′s rate rollback requirement, refunds totaling $1.3 billion were paid back to consumers. It banned discriminatory practices such as credit scoring and rating based on prior insurance coverage. It provided consumer intervenor funding which allows public challenges to rate hikes. All these benefits and more equal more consumer peace of mind and a more competitive but still profitable auto insurance industry — indeed, California insurers made higher than average profits compared to insurance companies in other states during the study period.

“When I was asked by the California legislature in 1986 to draft a report telling them how to fix the auto insurance price skyrocket, the leaders of the legislature scoffed at our ideas (and collected millions in campaign money from the insurers to reject the plan out of hand). But then the people spoke,” said Hunter. When government is captive to special interest it fails to act, crushing good ideas. But ideas soar into full bloom when the people take over and, not blinded by corruption, do what is right.”

A California’s Prop 103-type reform should be enacted in other states that still allow insurance companies to gouge, irritate and arbitrarily discriminate against their policyholders. According to Hunter, Americans could save $350 billion over the next decade without any serious repercussions for the insurance industry. He said: “When it comes to regulating an industry as large as the auto insurance industry that impacts so many millions of Americans who are required to purchase insurance, we ask of policymakers and regulators the same question we asked when we first began reviewing auto insurance systems around the country more than a decade ago: Why not the best?”

Let the success of Proposition 103 serve as the ultimate counterpoint to big industry lobbyists who regularly bad-mouth regulation as an undue burden on profitable business. When the system works and the companies become more efficient and less capricious — it benefits everyone.

Ralph Nader is a consumer advocate, lawyer and author of Only the Super-Rich Can Save Us! He is a contributor to Hopeless: Barack Obama and the Politics of Illusion, published by AK Press. Hopeless is also available in a Kindle edition.

Ralph Nader is a consumer advocate, lawyer and author of Only the Super-Rich Can Save Us! 

More articles by:

CounterPunch Magazine

minimag-edit

bernie-the-sandernistas-cover-344x550

zen economics

February 23, 2017
Dave Brotherton
Trump, Moral Panics and Resistance
Jonathan Cook
One State: Trump Has Reminded Palestinians What It Was Always About
Bill Quigley
Ten Examples of Direct Resistance to Stop Government Raids
Linn Washington Jr.
Bigot Boy Business: Trump Exposes His Ignorance and Intolerance, Again
John W. Whitehead
The Illusion of Freedom: the Police State Is Alive and Well
Ralph Nader
Restricting People’s Use of Their Courts
David Macaray
Women As Labor Union Organizers
Kathy Kelly
Friendship in Defiance of War
Doug Weir
Why Did the US Use Depleted Uranium Weapons in Syria?
Steve Horn
Former GOP Congressional Staffer Follows Revolving Door, Now Latest Keystone XL Lobbyist
Binoy Kampmark
From Rights to Repentance: Norma McCorvey and Roe v Wade
Thomas Knapp
The Target of the “Border Adjustment Tax” is You
Chris Zinda
Open Letter to Neoliberal Environmentalists
February 22, 2017
Mike Whitney
Liberals Beware: Lie Down With Dogs, Get Up With Fleas
John Grant
On Killers and Bullshitters*
Peter Linebaugh
Catherine Despard, Abolitionist
Patrick Cockburn
The Bitter Battle for Mosul
Ted Rall
Sue the Bastards? It’s Harder Than You Think
Yoav Litvin
The Emergence of the Just Jew
Kim Scipes
Strategic Thinking and Organizing Resistance
Norman Pollack
Mar-a-Lago, Ideological Refuge: Berchtesgaden, II
Fred Donner
Nixon and the Chennault Affair: From Vietnam to Watergate
Carl Kandutsch
Podesta vs. Trump
Ike Nahem
To the Memory of Malcolm X: Fifty Years After His Assassination
Jesse Jackson
Trump’s Tough Talk Won’t Fix Chicago
Paul Donnelly
Betsy DeVos and the War on Public Education
Ebony Slaughter-Johnson
The End of an Alliance for Police Reform
Richard Lawless
Wall Street Demanded the Nuclear Option and the Congress Delivered
Liaquat Ali Khan
Yes, Real Donald Trump is a Muslim!
Ryan LaMothe
“Fire” and Free Speech
CounterPunch News Service
Bloody Buffalo Billboards
February 21, 2017
Sharmini Peries - Michael Hudson
Finance as Warfare: the IMF Lent to Greece Knowing It Could Never Pay Back Debt
CJ Hopkins
Goose-stepping Our Way Toward Pink Revolution
John Wight
Firestarter: the Unwelcome Return of Tony Blair
Roger Harris
Lenin Wins: Pink Tide Surges in Ecuador…For Now
Shepherd Bliss
Japanese American Internment Remembered, as Trump Rounds Up Immigrants
Boris Kagarlitsky
Trump and the Contradictions of Capitalism
Robert Fisk
The Perils of Trump Addiction
Deepak Tripathi
Theresa May: Walking the Kingdom Down a Dark Alley
Sarah Anderson
To Save Main Street, Tax Wall Street
Howard Lisnoff
Those Who Plan and Enjoy Murder
Franklin Lamb
The Life and Death Struggle of the Children of Syria
Binoy Kampmark
A Tale of Two Realities: Trump and Israel
Kim C. Domenico
Body and Soul: Becoming Men & Women in a Post-Gender Age
Mel Gurtov
Trump, Europe, and Chaos
FacebookTwitterGoogle+RedditEmail