Proposition 33 Is About Economic and Racial Discrimination, Says Consumer Watchdog Campaign

Prop 33 Would Reinstate Auto Insurance Redlining Practice Outlawed By California Voters 24 Years Ago

SANTA MONICA, Calif., Oct. 26, 2012 /PRNewswire-USNewswire/ -- Proposition 33 would legalize a discriminatory auto insurance pricing scheme and allow insurance companies to raise rates on drivers solely because they had a break in auto insurance coverage. Drivers having financial difficulties in this recession and those in low-income communities of color will be hardest hit if Prop 33 reinstates the unjust and unfair discrimination that voters banned 24 years ago in California, said Consumer Watchdog Campaign today.

Yesterday, a former auto insurance agent brought a lawsuit blowing the whistle on a California insurer, Auto Club of Southern California, for slashing the commissions of agents who sold insurance policies to previously uninsured motorists in order to disincentivize sales to those drivers.

The agent, Jill Rogers, said: "Some agents though, if they didn't have prior insurance and it was going to be a $20 policy, they would just make up some outrageous premium just so they could get them off the phone." By contrast, Rogers said policies for drivers with prior insurance paid agents $100 to $500. Read about her and the case: http://www.consumerwatchdog.org/resources/auto_club_conformed_complaint_10-24-12.pdf

"Some insurance companies obviously don't want new drivers or those without prior insurance as their customers, but the current law forces them to charge a fair price," said Jamie Court of Consumer Watchdog. "Prop 33 would turn back the clock to the day when outright price discrimination against new drivers and those who stop driving for a while was rampant."

Auto insurance companies have a long history of using prior insurance history as a redlining tool in California. Civil rights and low-income organizations challenged the practice in a 1987 Supreme Court case, King v Meese.

In the King v Meese ruling the Supreme Court noted: "When it comes to automobile liability insurance, the poor pay more or do without. Private companies have been increasingly unwilling to insure residents of certain low-income urban neighborhoods, particularly South Central Los Angeles. …This case arises from the attempt of the California Legislature to solve a serious social problem – the uninsured driver - without taking into account an equally serious problem - insurance pricing practices which make automobile liability insurance prohibitively expensive for many of the urban poor."

When the Supreme Court acknowledged the discrimination, but did not act to stop it, the voters banned the practice at the ballot by passing Proposition 103 in 1988.

Download a history of this auto insurance redlining in California, dating back to 1985: http://www.consumerwatchdog.org/resources/discrimination_and_history_of_no-prior_surcharge.pdf

For more information on Prop 33 visit http://stopprop33.consumerwatchdogcampaign.org/

SOURCE Consumer Watchdog Campaign