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home / insurance / in the media

Oakland Tribune
May 08, 2003

by Steve Geissinger - Sacramento Bureau

Panel OKs Perata's insurance legislation

Bill would give discount to drivers who have continuous auto coverage
SACRAMENTO -- Despite an outcry from consumer groups, an East Bay senator won initial approval Wednesday of a resurrected, industry-backed auto insurance measure that critics say would hurt the poor more than it helps good drivers.

The Senate Insurance Committee voted 6-0 to advance the measure by Senate Majority Leader Don Perata, D-Oakland.

The bill would allow insurers to give discounts to long-term "persistent" customers, then get back the difference through surcharges on other customers with spotty coverage histories.

Gov. Gray Davis vetoed virtually the same bill by Perata last year, saying the state insurance commissioner believed the proposal conflicted with the intent of voter-approved Proposition 103, a 1988 initiative that overhauled regulation of insurance practices.

"We oppose this bill for the same reasons we opposed last year's bill," said Norma Garcia of Consumers Union. "SB841 will make auto insurance more expensive for people who haven't been able to afford auto insurance in the past.

"It does this by permitting a discount to motorists who have remained insured for a period of time," Garcia said.

"The problem with the bill is that other motorists who do not have a long history of insurance will have to pay more to fund this discount," she said.

Mike Dean of Colma said he has "been forced to let my insurance lapse at different times during the last seven years because I have been unable to continuously afford auto insurance."

Perata dismisses the criticism, saying the bill is designed to provide a discount to "working people" with continuous coverage. Discounts foster competition and lower rates for all good drivers, according to supporters of the measure.

Critics say Mercury Insurance, the bill's sponsor, has been trying to buy the legislation with campaign contributions -- assertions dismissed as unfounded by the company and lawmakers.

"The history of this legislation is like a playbook in political corruption," said Jamie Court of the Foundation for Taxpayer and Consumer Rights. "The voters' will, the regulators' authority, the poor's interests are all being forgotten for cash to keep the party machine running."

The measure's foes say Mercury -- which has contributed to the campaign coffers of the majority of the Legislature in recent years -- donated $35,000 to Perata last year.

In a new wrinkle to this year's bill, members of the military who were away on duty would be exempt from surcharges. And other consumers would be allowed to let their insurance lapse for as many as 90 days without penalty.

The bill is now headed to the floor of the full Senate, where passage requires a two-thirds majority vote because it amends Proposition 103.

If the Senate and Assembly both pass the measure again, then it is unclear what Davis would do. Davis' aides said the governor has not yet taken a position on the new legislation.
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Contact Sacramento Bureau Chief Steve Geissinger at sgeissinger@angnewspapers.com



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