As this winter’s gift-giving season proceeds, California voters might want to pause a moment and pat themselves on the back for a gift that has lasted 30 years: Proposition 103.
If there ever was a ballot measure proving the effectiveness of direct democracy, making policy by letting the public vote on important policy choices, this is it.
Voters who participated back in 1988 might also want to congratulate themselves on resisting the blandishments of a massive advertising campaign that sought to squash this initiative, whose backers were outspent by margins of more than 10-1. Fully $63 million was spent against Proposition 103 — that’s $134 million in today’s dollars, far more than the $110 million spent against this fall’s dialysis-meddling Proposition 8 — and it still won by a large margin.
Most of the money came from the insurance industry, which until then had pretty much had its way with California regulators. Before that vote, governors appointed California’s insurance commissioner, with no firm rules governing what rate increases that official could allow for car and property insurance.
Proposition 103 changed all this immediately. It made the insurance commissioner an elected state officer and imposed limits on premium increases. The Consumer Federation of America reported last month the measure has saved California motorists alone $154 billion over 30 years compared with what drivers in other states have paid — an average of about $5 billion yearly.
The group found that auto liability insurance — the most basic part of an auto policy — now costs 5.7 percent less in California than it did 30 years ago, when the law took effect in early 1989. Prices for the same coverage meanwhile rose 58.5 percent around the rest of America.
No one has calculated the accompanying savings on homeowner insurance and other property coverage, but it’s certain they have also been substantial. State Farm Insurance, for just one example, is now in court trying to avoid an order to reduce homeowners’ rates by $150 million a year.
For those whom soon-to-be-ex-Gov. Jerry Brown likes to call “declinists,” that’s one thing keeping living expenses under control even while California sales and income taxes are somewhat higher than in most other states.
“Can you name anything else that costs less now than it did 30 years ago?” asks Proposition 103 author Harvey Rosenfield, former president of the Foundation for Taxpayer and Consumer Rights, now known as Consumer Watchdog, one of the state’s leading consumer advocate groups.
“When I wrote it, I never imagined it would save motorists as much as it has,” he said.
Among other things Prop. 103 established: Auto insurance prices are based mostly on a driver’s safety record and miles driven, insurance companies now must open their books and justify all rate increases and they can no longer base rates on where customers live, a practice commonly known as “redlining,” which saw residents of the poorest areas forced to pay some of the highest prices.
Of course, enforcement of these rules has not always been certain. Over the years, the insurance industry has filed more than 100 lawsuits against Prop. 103, besides trying to get the state Legislature to nullify most of its rules. Two initiatives to water it down have also been defeated.
This fight may never end. Five current court and administrative proceedings are now challenging parts of Prop. 103, even while State Farm Insurance fights its big refund order.
“This is proof that citizen initiatives can change the way consumers are treated and make the system fairer,” says Carmen Balber, Consumer Watchdog executive director.
In this time when it’s become possible for state legislators to interfere in the initiative process and reach “settlements” with sponsors of measures that have qualified for the ballot, skeptics often question whether it’s wise to let the public — not politicians — decide important policy issues.
But Prop. 103 stands as a shining example of what the initiative process at its purest can accomplish if voters can see through the flood of special interest advertising so common at election times and make decisions of their own about key issues affecting their lives and pocketbooks.
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Email Thomas Elias at firstname.lastname@example.org. His book, “The Burzynski Breakthrough, The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It,” is now available in a soft cover fourth edition. For more Elias columns, visit www.californiafocus.net.