Proposition 33 Auto Insurance Changes: George Joseph's Record Under Fire

Comments (0)


Mon, Nov 5, 2012 at 9:45 AM

click to enlarge George Joseph: Consumer groups say his record is one reason not to vote for Prop 33.
  • George Joseph: Consumer groups say his record is one reason not to vote for Prop 33.
The guy behind Proposition 33, insurance magnate George Joseph, has spent nearly $17 million to fight for the right to extend discounts to drivers who've had five years of uninterrupted coverage, even if that coverage has come from more than one company.

Joseph has said that he's pushing the measure because he believes it would lead to more competition -- which would be good for consumers. But critics say the self-made billionaire has profit on his mind, and that such "discounts" are a sneaky way to ensure rates will rise for young, and poor, drivers.

Their best argument may be Joseph's own legacy.

The 91-year-old Joseph has an inspiring story -- he founded Mercury Insurance after fighting in World War II and attending Harvard on the GI Bill. But consumer groups point to a darker side of that story: The California Department of Insurance, in 2006, accused Mercury of having "a lengthy history of serious misconduct."

(Coincidentally, Joseph stepped down as CEO soon after that, although he continues to serve as Mercury's Chairman.)

According to a 2006 motion from the California Department of Insurance, "Mercury has a deserved reputation for abusing its customers and intentionally violating the law with arrogance and indifference."

Among consumer advocates, they also have a reputation for fighting against consumer protections.

In 1988, California voters passed Proposition 103 to reform the auto insurance industry. At the time, auto insurance had become mandatory, but many drivers found they couldn't afford it, even though they had good driving records. They were being charged exorbitant rates because of where they lived, say, or that they had a limited history of insurance, says Carmen Balber, a consumer advocate at the organization Consumer Watchdog.

Prop 103 declared that insurers couldn't price their coverage based on a driver's history of insurance -- or lack thereof, Balber says. Good driver discounts were allowed, but not those that penalized drivers who were newbies, or had to take a few years off from owning a car for economic reasons.

Joseph and Co. have fought that ever since. Balber describes a long history of efforts: trying to get regulators to ease up on enforcement. Illegally charging drivers in spite of the law -- until finally the courts intervened. Lobbying the Legislature, only to (first) get vetoed by Governor Gray Davis, and (second) have the resulting law struck down by the courts. And finally, Prop. 17, a similar proposition that voters narrowly rejected two years ago.

"This ballot measure is just the latest in a long history of efforts fo roll back consumer protections and discriminate against drivers in California," Balber says.

Groups fighting Prop 33 have helpfully compiled a dossier of "10 Reasons Not to Trust Mercury Insurance's Billionaire Chairman."

"They claim this is to protect consumers, but every major consumer advocacy group in the state is opposed," says Balber.

Related Content

Now Trending

  • Yes, L.A. Is One of the Most Expensive Cities For Car Insurance

    It's not your imagination: Angelenos pay some of the highest car insurance rates in the nation, according to a new study conducted by Quadrant Information Services for insuranceQuotes.com. You could probably guess why. We live in a dense city with dense traffic. We buy nicer cars. We're the hit-and-run capital of...
  • Final Dodger Games to Be Televised For Free

    Time Warner Cable has pissed off a lot of Dodger fans in L.A. because it has a monopoly on broadcasting the team's games, and most of Los Angeles isn't seeing them. Of course, there are two or more sides to every story, and TWC says the folks it has been...
  • L.A. Pot Factory Churned Out Millions Worth of Weed, Cops Say

    In the middle of the scenic San Fernando Valley stood a 14,000-square-foot warehouse. And in this warehouse, cops say, was much weed. So much weed, in fact, that the operation allegedly churned out $3.7 million dollars with of street-value marijuana every two months, the Los Angeles Police Department announced in...
Los Angeles Concert Tickets