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home / insurance / in the media

Associated Press
Aug 04, 2003

by JESSICA BRICE, Associated Press Writer

Davis signs bill giving discount to insured drivers

SACRAMENTO (AP) -- Consumer activists were fuming Monday after Gov. Gray Davis signed a bill allowing discounts to drivers who maintain auto insurance coverage, saying it benefited a major campaign contributor and penalized first-time insurance buyers.

The measure, which Davis signed Saturday, could lead to higher premiums for drivers who let their coverage lapse for more than 90 days.

It comes a year after Davis vetoed a nearly identical bill, also authored by Sen. Don Perata, D-Oakland. Last year, Davis said the measure violated Proposition 103, a 1988 voter-approved initiative that prohibits companies from using lack of prior insurance as a factor in setting customer rates.

But in a statement released over the weekend, Davis said the bill -- which was overwhelmingly approved by both houses -- furthers the intent of Proposition 103 because it encourages competition by allowing customers to leave their insurers for a cheaper plan without losing their discount. Currently, companies can only offer discounts to longtime customers that are
already signed on with that insurer.

The move has infuriated opponents of the bill, who say it discourages uninsured drivers from getting insurance.

They also point to generous campaign contributions made by Mercury Insurance, the bill's sponsor. Since 1999, Mercury Insurance has donated $220,000 to Davis' campaign, said Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights.

"This governor clearly cares more about the interest of Mercury Insurance than drivers and voters," Court said.

Campaign finance reports filed with the secretary of state's office indicate the company gave California politicians more than $1 million for the 2002 election.

Mercury representatives didn't return calls seeking comment Monday.

The Foundation for Taxpayer and Consumer Rights has promised to sue to stop the bill. The consumers group, as well as the Department of Insurance and California Insurance Commissioner John Garamendi, has said the bill goes against Proposition 103.

"I can't say it's a violation," said Norman Williams, a Department of Insurance spokesman. "But in our assessment, it doesn't follow the spirit of Prop. 103."
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On the Net:
Check out SB841 at: www.leginfo.ca.gov




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