Consumer Watchdog, an important non-profit organization dedicated to protecting American consumers, recently issued a press release about threats to California’s Proposition 103. Since 2003, challenges filed under Proposition 103 have saved the public $3.4 billion. That’s more than a quarter of a billion dollars saved per year, on average for consumers in California. Proposition 103 was passed in 1988 and requires insurance companies to open their books to public scrutiny. This means they have to justify the rates they’re charging before the Insurance Commissioner can approve them. This important piece of legislation helps to keep insurance rates from being illegally hiked up.
Saving California Drivers Money
According to Consumer Watchdog, drivers in California have saved more than $100 billion since voters passed Prop 103 in 1988. Furthermore, California is the only state in the nation where auto insurance rates went down between 1988 and 2013. All of this happened while the national average rate increased by 47 percent. This isn’t at the expense of insurance companies either. They still have the ability to make a fair profit. In fact, California’s auto insurance market is the third most competitive in the country. Profitability for auto insurers in California is rated as above average. Under Prop 103, they’ve essentially lost the ability to rip off consumers with secret and unlawful price hikes.
Insurance Companies Are Trying to Undo Prop 103
Unfortunately, Proposition 103 is now in danger from being judicially undermined. Multiple insurance companies, including State Farm, Mercury Insurance and Farmers Insurance, are trying to undo this critically important piece of legislation. State Farm has filed a suit in San Diego Superior Court to block $250 million in rate reductions and refunds. Their suit claims they can’t afford to lower homeowners’ insurance premiums. They’re the nation’s largest insurance company, and they have more than $168 billion in assets. These rate reductions and refunds are essential for homeowners in California. Mercury is trying to get out of a $25 million penalty due to overcharging California motorists, and Farmers is also trying to overcharge unsuspecting motorists.
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