Proposition 33 could have major implications for auto insurance
In California, Proposition 33 has won the support of the insurance industry. The legislative measure is designed to allow consumers that have held policies in good standing with the same auto insurance company for five years to switch companies and still receive so called “loyalty benefits.” Though Proposition 33 seems straightforward, it has created some controversy in the world of auto insurance and with some special interest groups. Nonetheless, many in the insurance industry support the measure, claiming that it will be beneficial for the state as a whole.
Opponents of measure argue that it’s all about making money for insurers
Opponents of Proposition 33 argue that many of the benefits linked to the measure are overstated due to the massive support it has received from the auto insurance industry. Opponents suggest that the measure is a move by the auto insurance industry to find good drivers that companies are more willing to provide coverage too. This is similar to a practice that was common amongst insurers in 1988. Back then, the auto insurance industry would regularly raise rates on coverage as a way to force out consumers with poor driving records, leaving only those with pristine records left in the market.
Insurers note that measure will allow consumers to shop around for new policies
Though opponents of Proposition 33 argue that the measure is all about making money for the auto insurance industry, supporters of the measure claim that it will actually save drivers money. Many auto insurance companies offer loyalty benefits for those that have held policies for long periods of time. This is a common tactic in various industries of business to ensure consumers stick with particular companies. Proposition 33 will allow consumers to shop for new insurance policies without having the deal with the threat of losing the loyalty benefits they have acquired from a single company.
Voters to decide fate of measure in November
The auto insurance industry is the strongest advocate for Proposition 33. The measure will be up for public vote in November, giving consumers a chance to determine whether the measure will be officially inducted into the California auto insurance regulatory structure or be dismantled like similar propositions that have been introduced in the past.