OAI: Calif. Auto Insurance Initiative on Ballot as Competing Measure Fails

This November, California voters will decide on a lone auto coverage measure seeking to alter the way the industry rates policyholders after a competing measure narrowly fell short last week of qualifying for the ballot, according to Online Auto Insurance.

Supporters of the Automobile Insurance Discount Act (AIDA) say it will promote affordable auto insurance by expanding insurers' use of prior coverage history when determining rates. Under the proposed rating system, an insurer can maintain markdowns awarded to a policyholder for continuous coverage even if their prior coverage was from another insurer, a practice that AIDA backers say will increase competition between companies and produce better prices for consumers. Consumers currently get discounts for continuous auto coverage if they stay with the same company but are unable to transfer the discount to other carriers if they switch.

The Insurance Rate Public Justification Accountability Act (IRPJA) was slated to appear on November's ballot after gathering more than 800,000 signatures in a campaign petition, but narrowly fell short of reaching a state-mandated threshold in a random sampling last week.

An IRPJA provision would have eliminated use of continuous car coverage as a way insurers could rate their policyholders, explicitly butting heads with AIDA's provision seeking to establish a rating system that did the opposite.

After a bitter public battle between IRPJA and AIDA supporters, the latter initiative will stand alone on this November's ballot for a decision by state voters; in January, state officials approved AIDA for the November ballot.

If coverage lapses, AIDA allows discounts to remain intact for up to 90 days so that consumers can bring that discount to other insurers as they shop around.

Discounts are similarly retained for state residents who have been furloughed or laid off for up to 18 months and children living with a parent.

Motorists lacking continuous coverage are still eligible for applicable discounts but will only receive a percentage of the discount for a year, with that percentage increasing annually for five years.

AIDA supporters say it is "an improvement on Proposition 17," which fell to a narrow vote in 2010. The proposal sought to establish "persistency discounts" similar to those in AIDA and was also sponsored primarily by Mercury.

If passed, AIDA would reshape the state's rating structure set by Proposition 103. Regulations under Proposition 103, passed in the late '80s, established the factors that could determine rates-including driving history and how often the car is used-but specifically prohibited insurers from considering a consumer's history of coverage unless it was his or her history with that company.

For more on this and related insurance issues, head to http://www.onlineautoinsurance.com/affordable/ to access informative resource pages and an easy-to-use quote-comparison generator.