This measure is stated to allow auto insurance companies to set prices based on a driver’s history of insurance coverage, and implies discounts for all.

It has appealing features cited by proponents, such as forgiving lapses in coverage of less than 90 days, lapses of up to 18 months if due to layoff or furlough, and the ability to transfer from one company to another. But the proposal, as it appears on the ballot, fails to provide and is not specific as to dollar amounts allowed or percentage of changes allowed to insurance companies to alter pricing formulas.

Current law, Proposition 103, previously passed in 1988 provides insurance companies the ability to offer discounts to individuals who maintain coverage with a company for a said period of time, but not for those who transfer coverage from one company to another. That law also maintains a formula for insurance companies to apply in determining rates that include such factors as, in order of importance, the insured’s driving safety record, number of miles driven per year, and the number of years that an individual has been driving as the primary.

The state insurance commissioner may adopt additional rating factors and currently an optional 16 factors are already available for insurance companies to use determine rates.

If Prop. 33 passes, these rating factors and then more could potentially all be available to insurance companies to use as penalty or risk factors against the individual at newly negotiated rates, if the insurance commissioner is allowed or mandated to allow a rate change medium.

The proposal would also give insurance companies the standard of five (5) years of previous insurance coverage not driving history (as the law is currently) to apply the proposed discounts and potential inverse penalties. Insurance companies proposed a similar law during the 2010 election that voters vehemently struck down.

Founder of Consumer Watchdog.org, Harvey Rosenfeld said that the principal backer of this proposal is George Joseph, chairman and founder of Mercury Insurance.

“Prop. 33 repeals a consumer protection that the voters enacted in 1988,” said Rosenfeld. “If it passes, the measure will allow insurance companies to surcharge people who are good drivers merely because they didn’t have insurance in the past, or even if they didn’t drive in the past. That could include students, people who are seriously ill, people who use mass transit and family members of those in the military who are not on active duty.”

Carmen Balber, also of Consumer Watchdog added, “Proposition 33 is a deceptive trick by one insurance industry billionaire to try and raise auto insurance rates on good drivers,” she said. “It would allow insurance companies to raise rates for good drivers who have a lapse in coverage for almost any reason, if they were sick, went back to school and (temporarily) got rid of their car to save money, or one of the many Californians that were in the long-term unemployed.”

“He (Joseph) contributed more than $8.4 million which is more than 99 percent of the money that has been given,” she said. “It was his insurance company that spent the $60 million trying to pass the measure on the ballot in the election a few years ago and the voters rejected it.”

Rosenfeld and other analysts have described Joseph as a smart man who found a niche market by providing insurance in an L.A. market where previous insurance companies ignored higher-risk drivers in high risk urban areas such as L.A. Now years later, his insurance company–Mercury–holds a large share of that market. African American drivers also often fit into the temporarily uninsured and thus lacking continuous coverage category, which would deny any potential savings for some and possibly heavily penalize many others.