Californians Vote To Force Auto Insurance Cuts

Posted: November 10, 1988

In a remarkable triumph of outrage over money, California voters approved a sweeping reduction of auto insurance premiums Tuesday and created new controls on the insurance industry in the nation's most expensive-ever battle over ballot proposals.

A Ralph Nader-supported proposition was the only one of five insurance- related measures approved by California voters, squeaking through by 51-49 percent, despite nearly $80 million spent by insurance companies and trial lawyers backing competing measures.

Jubilant supporters of Proposition 103, who spent $2.2 million in their ''voter revolt" campaign, predicted their victory would spark similar insurance measures in other regions with steep auto insurance rates, such as New Jersey and Philadelphia.

The winning proposition, which was immediately challenged yesterday in the California Supreme Court by insurance companies, requires insurers to reduce premiums for all "good drivers" by 20 percent below their Nov. 7, 1987, levels and maintain them at that level for at least a year. It also establishes the office of an elected insurance commissioner, effective in 1990, who must approve any future rate increases.

The auto insurance battle, which drew more campaign spending than any elective race in the nation except the presidential contest, was just one of a wide array of ballot propositions decided Tuesday by voters around the nation.

Several insurance companies reacted swiftly to the success of the door-to- door campaign for lower auto insurance rates in California. Fireman's Fund, the nation's ninth-largest insurance company, announced yesterday that it would immediately pull out of the California car insurance market. Travelers Insurance Co. said it would stop writing car, home and business insurance in the state. Allstate Insurance Co. said it would stop writing new auto and property policies in California until the court challenge is resolved.

The state is the nation's biggest car insurance market, accounting for 15 percent of the country's policies.

The insurance referendum was "the greatest consumer victory in history," exulted Jay Angoff, general counsel for the National Insurance Consumer Organization in Washington, D.C. "We did the impossible. We were outspent 35- to-1. The effect around the country will be just like the tax-rate reduction wave we saw several years ago. This time it will be insurance-rate reduction."

Angoff predicted that New Jersey, with the highest insurance rates in the country, would be the "number-one candidate" for similar change.

"And in Arizona, which for some reason has high rates, and Philadelphia, which has very high rates, I'd be very surprised if you did not see a very big insurance-rate debate now, in the wake of what has happened in California," he said.

The stocks of insurance companies with sizable auto insurance business in California have been under selling pressure recently and most were down yesterday because investors feared the effects of the initiative.

Mercury General Corp. was down 1/8 to 13 1/2, Safeco Inc. was down 3/8 to 24 3/8 and Ohio Casualty closed unchanged at 34 3/4. 20th Century Industries, which does business only in California, could see its average auto premium shrink by 54 percent, one industry analyst said.

The issues on ballots across the country read like a political agenda for the '80s: There were questions on taxes, abortion-funding, AIDS, gun control, nuclear power, cigarette-smoking and gambling.

Voters in three states proclaimed English as their "official language" and in three states rejected gay-rights measures. There were propositions on oil drilling (defeated in Los Angeles), bottle deposits (defeated in Montana) and mandatory seat-belt buckling (approved in Montana, defeated in Oregon).

Voters in predominantly black Boston neighborhoods for the second time voted against seceding and creating the new city of Mandela. Cambridge, Mass., approved a referendum supporting Palestinian rights and demanding Israeli withdrawal from the West Bank and Gaza strip, but another college town, Berkeley, Calif., rejected a measure that would have established a sister-city relationship with a Palestinian refugee district in the Gaza strip.

In other ballot-proposition voting:

* On a pair of AIDS-related issues, California voters split. They rejected a measure that would have required doctors to report to health officials the names of people who test positive for the AIDS virus and would have mandated the tracing of sexual and needle partners of AIDS-virus carriers. But they approved a measure allowing judges to require AIDS testing of people charged with certain sex or assault crimes.

* California voters approved a 25-cent-per-pack hike in cigarette taxes to aid health research and anti-smoking education. Oregon voters rejected a smoking ban extending to nearly all enclosed public places.

* Despite a $4 million media blitz by the National Rifle Association, Maryland voters upheld that state's law banning cheap handguns known as Saturday night specials.

* Anti-abortion forces won in Arkansas, Colorado and Michigan, as voters approved bans on state-funded abortions.

* Proposals to cut taxes were defeated in South Dakota, Colorado and Utah. Voters in Arkansas defeated a measure that would have made certain taxes easier to raise, and Nevadans approved a constitutional ban on personal income taxes.

* Florida and Colorado voters overwhelmingly declared English their states' official language; Arizona did likewise, but by a slim 51-49 percent margin.

* An initiative that would have forced the closure of Massachusetts' two nuclear power plants was trounced by voters.

* Oregon voters overturned a gubernatorial order protecting state workers

from discrimination on the basis of sexual orientation.

* Indiana, Kentucky, Minnesota and Idaho voters approved state lotteries. And in South Dakota, voters approved a return to legalized gambling in the Black Hills town of Deadwood, where Wild Bill Hickok, clutching aces and eights, was shot dead while playing poker 112 years ago.

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