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NEWS RELEASE
Aug 23, 2002


CONTACT: Doug Heller - 310-392-0522 x309

Democrats Resurrect Bill to Punish the Poor

Last-Minute "Gut & Amend" Bill Creates Surcharge On Previously Uninsured Drivers, Enshrines Quackenbush Rules
Democratic lawmakers beholden to Mercury Insurance CEO George Joseph have revived a bill that defies Insurance Commissioner Harry Low and was defeated (as AB 1488-Chavez) by the Senate Insurance Committee, according to the Foundation for Taxpayer and Consumer Rights (FTCR). The bill, sponsored by Mercury Insurance, would override Commissioner Low's regulations to protect previously uninsured motorists from unfair rate discrimination.

SB 689 - Perata (as proposed to be amended) would add a surcharge on low-income motorists simply because they could not afford continuous insurance coverage (often because of price gouging in poor communities). There is no guarantee of a rate reduction for anyone in SB 689, and it is likely all insured motorists will pay higher uninsured motorist premiums if it passes, since there will be more uninsured motorists.

"The question is why would Democrats grease hasty passage for an attack on the poor in exchange for an illusion of a discount for the well-off? This is an economic rights issue and the lawmakers who are carrying the water for a big insurance company and political donor are just wrong," said Douglas Heller, senior consumer advocate with the Foundation for Taxpayer and Consumer Rights (FTCR).

The bill, which is expected to be amended Saturday (!) on the Assembly floor, is opposed by Insurance Commissioner Harry Low, the Southern Christian Leadership Conference, the California Reinvestment Committee, Public Advocates, OCCUR (Oakland Citizens Committee for Urban Renewal), FTCR and other consumer groups.

Mercury Insurance, a major political contributor to Democrats and Republicans, is proposing to enshrine Quackenbush-era rules that would allow the company to offer a purported discount to previously insured drivers and, at the same time, impose a large surcharge on drivers who have not continuously maintained insurance or have never been insured. Under the Mercury scheme, a good driver with 22 years driving experience -- but without continuous coverage -- would pay $208 more per year than an equivalent driver who had continuous insurance coverage. Voter-approved Proposition 103 makes it illegal to surcharge good drivers as a result of their prior insurance status, and Insurance Commissioner Low will soon produce regulations to enforce that rule.

Consumer Group Demands a Public Hearing of the Proposal
This issue has never had a policy hearing in the California Assembly; despite that fact, it has been suggested that the bill would not be called back to the Assembly Insurance Committee for a proper policy hearing. FTCR has requested, in a letter (attached) to Speaker Wesson and Committee Chairman Tom Calderon that the Assembly Insurance Committee hold a hearing on this bill if it is amended.
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