Californians for Fair Auto Insurance Rates

This article is part of the Center for Media & Democracy's spotlight on front groups and corporate spin.

Californians for Fair Auto Insurance Rates (Cal-FAIR) is a front group for Mercury Insurance, California's third largest auto insurer, which uses the CAL-FAIR group to circulate a proposed ballot initiative that would allow insurers to slap surcharges on people who allow their auto insurance to lapse, even if the reason they allowed it to lapse was that they had stopped driving for a time. As of December 16, 2009, Mercury had contributed $4.5 million towards passage of the ballot measure.

Cal-FAIR's sole contributor is Mercury Insurance.

Cal-FAIR helps insulate Mercury's Chief Executive Officer, Gabe Tirador, and and its billionaire Chairman, George Joseph, from the news media and inquiries about the origins of the bill.

Cal-FAIR's proposal will be on the June 2010 California state ballot, under the title "Continuous Coverage Auto Insurance Discount Act."

History

In 1988, Californians enacted Ballot Measure 103, which prohibited auto insurers from considering a driver's prior insurance coverage in setting rates. Mercury's proposed ballot initiative would supersede Proposition 103’s prohibition, and permit auto insurance companies to base premiums on whether or not a driver has been continuously insured. Cal-FAIR portrays the measure as giving discounts to people who’ve had auto insurance continuously, while failing to acknowledge that the measure also will allow rate increases on anyone else -- like students, people who use public transportation for a time, people who allow their coverage to lapse while recovering from an illness or an absence from the state, like military personnel, or others who don’t have or need insurance for a time. For people who are late on their insurance payments or stop making payments for a time and get canceled (for example, due to loss of a job, foreclosure, etc.) Mercury's ballot measure also allows insurance companies to jack up rates when people seek to resume paying.

In 2003, the California Court of Appeals invalidated a virtually identical Mercury-sponsored law. In its ruling, the Court cited the Department of Insurance's senior actuary, who ruled that Mercury's proposal "would result in a surcharge equal to a 40 percent increase in premium for ... policyholders who do not qualify for the 'continuous insurance' discount."

Other groups sharing Cal-FAIR's address

Cal-FAIR's address, 1215 K Street, #2260, Sacramento, California, is the address of Goddard Claussen, a public relations firm that boasts that it is "the most successful issue-advocacy firm in America." Cal-FAIR's address is also the same as a number of other "organizations" with names that may disguise actual agendas like Californians Against Higher Property Taxes and Californians for Clean and Reliable Water.

California Department of Insurance calls Mercury Insurance "abusive"

California's Department of Insurance, in an official filing made in an action against Mercury Insurance earlier in 2009, described the company as an "abusive anti-consumer company," The Department wrote:

Mercury's lengthy history of serious misconduct, and its attitude -- contempt towards and/or abuse of its customers, the Commissioner, its competition, and the Superior Court -- are all relevant to determining the penalty needed to best ensure the protection of the public from future violations and wrongdoing...Among Department [of Insurance] staff, consumer attorneys, and consumer victims of its bad faith, Mercury has a deserved reputation for abusing its customers and intentionally violating the law with arrogance and indifference."

Ballot Title and Summary

The official ballot title for 09-0028 is: Allows Auto Insurance Companies to Base Their Prices in Part on a Driver's History of Insurance Coverage. Initiative Statute.   The official ballot summary is:

Changes current law to permit insurance companies to offer a discount to drivers who have continuously maintained their auto insurance coverage, even if they change their insurance company, and notwithstanding the ban on using the absence of prior insurance for purposes of pricing. Establishes that lapses in coverage due to nonpayment of premiums may prevent a driver from qualifying for the discount.

Contact

• Cal-Fair's Web site

Californians for Fair Auto Insurance Rates
1215 K Street, #2260
Sacramento, CA 95814
Phone: 916-325-0056
Fax: 916-442-3510

info@Cal-FAIR.org

Names of Groups Associated with Cal-FAIR's proposal

Mercury Insurance

"Consumers First"

"Consumers Coalition of California"

California Chamber of Commerce

"Small Business Action Committee"

California Black Chamber of Commerce

California Hispanic Chamber of Commerce

League of United Latin American Citizens

"California Taxpayer Protection Committee"

Sourcewatch resources

• Front groups
• Astroturf
• Grassroots