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Insurance Reform - Solving the Insurance Crisis


In 1988, Californians revolted against excessive auto, homeowner and business insurance premiums and other abuses by insurance companies. They passed a ballot measure, Proposition 103, which ordered insurance companies to roll back rates by 20%, required a further 20% discount for good drivers, imposed stringent regulation of the insurance industry, and stripped away special laws that allowed insurers to abuse their policyholders. Insurance companies spent $80 million in their campaign to defeat the measure, but on election day, the voters approved Proposition 103, which was written by Harvey Rosenfield of the Foundation for Taxpayer and Consumer Rights. Proposition 103 forced insurance companies to refund over $1.2 billion dollars to Californians and has blocked over $23 billion in automobile insurance rate increases since 1988.

Insurance Reform in California: The 1988 Battle for Proposition 103
Read a history of the $80 million "David vs. Goliath" battle to reform California's insurance industry at the ballot box.
View the official voter ballot pamphlet, published by the Secretary of State, describing Proposition 103.
View a sample ad by the insurance industry urging voters to vote against 103.
Read a selection of news clips about the campaign and 103's stunning passage.

Text of Proposition 103:
This is the full text of California's 1988 historic insurance reform law as approved by the voters.

An Analysis of California Proposition 103:
This is a detailed description of Proposition 103, explaining the purpose and impact of its main reforms.

Propostion 103 -- Current Status:
This table shows the current status of important provisions of Proposition 103.

Proposition 103 Resource Center:
If you live in California, here's how you can use Proposition 103 to protect yourself. This page explains your rights under Proposition 103 in simple terms. From there, you can study Proposition 103's provisions in greatest detail. Links from each new consumer protection contained in Proposition 103 will take you to source materials, such as legal briefs, court decisions and other useful information.

Other Important Prop. 103 Materials:

Proposition 103's Impact on Auto Insurance Premiums in California.
A study by Dr. Robert Hunter of the Consumer Federation of America published in 2001 shows that Proposition 103 has saved Californians ten of billions of dollars in lower auto insurance premiums and is a model for other states faced with insurance industry price-gouging and abuse.

Read FTCR's 1998 report showing the impact of Prop. 103.

How Proposition 103 Changed Insurance Law in California:
Prior to Proposition 103, California did not regulate the rates or practices of the insurance industry. Indeed, the insurance industry was authorized by law to engage in anticompetitive activities. This monograph describes the law prior to Proposition 103, and the massive changes imposed by Proposition 103. Also included are original source materials describing the pre-103 insurance law.

The Right to Sue Under Proposition 103:
Proposition 103 gave consumers a powerful new right to challenge the rates and practices of insurance companies in California courts, as well as before the California Department of Insurance. This monograph, useful for lawyers representing consumers, discusses this little-known tool in more detail.

Elected Insurance Commissioner:
Proposition 103 made the office of insurance commissioner an elective post so that consumers can hold the commissioner accountable. Insurance companies have tried hard to regain control of the office through corruption. Follow this link to read more about California's elected commissioners.

The Insurance Industry's Idea of Reform: Eliminating Consumer Rights:
Insurance companies oppose regulation and other reforms that limit their conduct. Instead, they lobby for legislation that restricts, rather than expands, the rights of consumers -- "tort reform." There are big differences between consumer-backed reforms and the insurance industry campaign, backed by other industries, to restrict the right to go to court. Read a fact sheet that describes the differences.
Learn about the insurer's latest attack -- on victims of bad medicine.
Review the evidence showing that "tort reform" does not lower insurance premiums. To learn about so-called "tort reform" in more detail, visit our Fair Justice section.

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