SACRAMENTO -- Billionaire insurance executive George Joseph has been fighting with consumer advocate Harvey Rosenfield for two decades over California's landmark automobile insurance law.
This November, the two are squaring off again over a ballot initiative that would roll back a provision of the 1988 law and let insurance companies charge drivers based on their history of coverage.
Proposition 33 would allow anyone who went five years without a 90-day lapse in payments to maintain a "continuous coverage" discount even if they changed insurers. Opponents have seized upon a provision that says drivers who had dropped insurance coverage in the past would pay higher premiums.
A nearly identical measure was defeated two years ago, in part out of concern that military personnel would be harmed. This version makes an exception for service members and grants an 18-month grace period to people who lose their jobs.
Joseph, the chairman of Mercury General Corp., and other supporters say the change would lower rates for the 85 percent of drivers who already have car insurance. Rachel Hooper, a consultant for the Yes on Proposition 33 campaign, characterizes the measure as a win-win for business and customers.
"George Joseph really believes in competition and opening up the market, and letting consumers shop whatever insurance companies they choose," Hooper said.
The initiative also would help Mercury and other insurers lure drivers from competing carriers because the continuous coverage discounts would follow the consumer.
Consumer groups say the initiative would hurt students, people recovering from illness, the long-term unemployed and others who dropped auto insurance for what they believed were valid reasons.
"It's like a bank robber putting an initiative on the ballot to legalize bank robberies," said Rosenfield, founder of Consumer Watchdog, based in Santa Monica. "The campaign led by Mercury to surcharge the public for not having insurance in the past has been going on since the mid-'90s."
Rosenfield said the initiative would allow companies to boost rates on people who had temporarily dropped their coverage because they could not afford to make monthly payments, and could lead to more uninsured drivers.
The initiative is necessary to get around Proposition 103, the 1988 Rosenfield-written law that forces insurers to set rates using only three main factors: driving experience; miles traveled per year; and safety record. Coverage history is specifically excluded.
If voters adopt Proposition 33, insurance companies would have the option of charging higher rates for previously uninsured drivers but still would be constrained by Proposition 103's prohibition on excessive rates.
In Texas, the Mercury Insurance quotes are 27.8 percent higher for uninsured motorists than for those who already have coverage. The Mercury loyalty discount for Californians is 5 percent.
That calculus is troubling to University of San Francisco sophomore Kelsey Craven, who said her family is scrambling to save money to make up for cuts to state financial aid. She would like to stop insuring the car she keeps in her parents' Sacramento garage, but worries that she will end up paying more in the long run if the rate-setting rules change.
"There are probably thousands of students that are in the same situation as me, who will go through college, graduate and then need a car again," said Craven, a politics major. "When we're already paying off student loans, we'll have to pay that much extra on top of car insurance."
Nan Brasmer said the change could hurt her when she has knee surgery next year and has to give up driving for several months.
"It is hard enough," said Brasmer, 74, who is president of the California Alliance for Retired Americans. "I pay $50 a month toward my car insurance, enough to pay my water bill or buy some food."
In 2010, Joseph outspent opponents of his ballot initiative 12 to 1 and is again pouring millions into his campaign. The 91-year-old executive also has won over the Berkeley-based Greenlining Institute, an economic justice advocacy group that opposed his 2010 initiative.
Greenlining's executive director, Orson Aguilar, said he supports Proposition 33 because it includes an exemption for active duty military and will reduce insurance rates for most drivers. The institute has accepted a $195,000 donation from Joseph.
Brian Sullivan, editor of the Auto Insurance Report newsletter, thinks Joseph and Rosenfield are "well-matched opponents" who make convincing cases.
In the end, he said, voters will have to choose whether they care more about lowering rates for themselves or helping out drivers with spotty coverage histories, who tend to be lower-income.
"It's not a matter of good and evil, it's a matter of what we deem to be fair," Sullivan said.