Proposition 103, titled Insurance Rate Reduction and Reform Act, was a California ballot proposition voted on in the 1988 California General Election. It passed with 51% of the vote on November 8, 1988.[1] Proposition 103 expanded the regulatory capacities of the California Department of Insurance, especially in property and casualty insurance.
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The ballot measure required insurers to reduce their rates by at least 20 percent. [2] In addition, the act expanded the Department's responsibility for enforcement to include: property insurance, automobile insurance, life insurance and other types of casualty coverage, requiring that the Department approve rates submitted by insurers prior to their taking effect.[3] The law also made the California Insurance Commissioner an elected position (previously being a governor-appointed position).[4]
Proposition 103 devised a process enabling consumer participation in the setting of insurance rates, and allowed consumer "intervenors" witness fees and expenses in some cases.[5]
Insurance regulation
editInsurance types regulated by Proposition 103 are: Personal automobile, dwelling fire, earthquake, homeowners, inland marine, and umbrella; Commercial aircraft, automobile, boiler and machinery, burglary and theft, business owners, earthquake, farm owners, some fidelity, fire, glass, inland marine, medical malpractice, miscellaneous, multi-peril, other liability, professional liability, special multi-peril, umbrella, and coverage under the Longshore and Harbor Workers' Compensation Act.[6]
According to the California Insurance Commissioner, Proposition 103 "has saved consumers billions" since being implemented, specifically a $4.29 billion per year dividend.[7] It also claims "Californians spent 0.3% less on auto insurance in 2010 than they spent in 1989, while the nation spent 43.3% more". The Commissioner quotes a 2013 report of the Consumer Federation that more than $100 billion had been saved by consumers in the 25 years after passage. [8][9]
Intervenors
editInvestigatory and regulatory hearings are open to intervenors. Members of the public or organizations can observe or may attend the hearing and request to be heard, submit written comments or present live testimony. Attorney fees can be reimbursed when written comments are submitted that "make a substantial contribution within the time frame in the notice".[10]
Election
editWith $207 million spent, the most expensive election campaign in U.S. modern history was the 1988 California insurance initiatives election battle. Only Prop. 103 won voter approval. The $207 million spent, in 2020 dollars adjusted for inflation, which was $95 million in 1988, was reported by the Los Angeles Times.[11]
Opponents of Prop. 103 spent over $200 million trying to defeat it or trying to pass competing initiatives. Prop. 103 raised $6.4 million in small donations of about $30 from a statewide door-to-door canvass. These small donations from the canvass paid for the modest offices and canvasser salaries, which going into the election reached one million households. TV ads for Prop. 103 were run at no cost by TV stations only due to the fairness doctrine in place at the time, with some equal-time ads. These ads were in response to the tens of millions of dollars being spent by the insurance industry, which also used large direct-mail campaigns, coordinated by consultant Clint Reilly, who acknowledged the efforts against Prop. 103 by insurance companies lacked a lot of public support. With $200 million spent among the other initiatives, both pro and con, however, it came down to the wire, with Prop. 103 winning by only 1%, with a 51% yes vote. The campaign, and its results, received extensive national attention. Court challenges were turned down, and the California Supreme Court upheld every provision of 103.
"Three other insurance measures--Proposition 104, the industry's no-fault proposal, Proposition 100, backed by the state's trial lawyers, and Proposition 101, ... sponsored by dissident insurer Harry Miller,--all were overwhelmingly defeated," reported Kenneth Reich, the L.A. Times staff writer who covered the insurance industry and this election. Reich wrote "But Proposition 103 campaign chairman Harvey Rosenfield suggested that if the insurance industry was in trouble with the public, it had only itself to blame."[12]
References
edit- ^ Ralph Nader (2004). In Pursuit of Justice: Collected Writings 2000-2003. Seven Stories Press. pp. 240–. ISBN 978-1-58322-629-2.
- ^ CA Ins Code § 1861.01 (2023)
- ^ CA Ins Code § 1861.05 (2023)
- ^ Fredrick C. Harris; Robert C. Lieberman (30 June 2013). Beyond Discrimination: Racial Inequality in a Post-Racist Era. Russell Sage Foundation. pp. 280–. ISBN 978-1-61044-817-8.
- ^ J. David Cummins (23 June 2004). Deregulating Property-Liability Insurance: Restoring Competition and Increasing Market Efficiency. Brookings Institution Press. pp. 196–. ISBN 978-0-8157-9841-5.
- ^ Dergler, Jon (July 2, 2018). "Insurers Question California Commissioner's Authority to Make Comp Writers Report Federal Tax Savings". Insurance Journal. Retrieved September 4, 2018.
- ^ Kamisher, Eliyahu; Reyes, Max; Carson, Biz (June 2, 2023). "It's not just State Farm. Allstate no longer sells new home insurance policies in California". Los Angeles Times. Bloomberg. Retrieved June 3, 2023.
- ^ "Information Sheet: Proposition 103 Intervenor Process". insurance.ca.gov. Retrieved September 4, 2018.
- ^ Daniels, Jeff (December 7, 2017). "Why California's big fire losses this year won't mean massive insurance rate hikes in 2018". CNBC. Retrieved September 4, 2018.
- ^ Impact Analysis of Weighting Auto Rating Factors to Comply with Proposition 103. Office of Policy Research, California Department of Insurance. 1994.
- ^ See "$23 a Vote, Insurers Spent $55.87 on Prop. 104," by Leo C. Wolinsky, Los Angeles Times, Mar. 31, 1989, p. 3 and p. 23.
- ^ "Voters Splitting Evenly on Nader's Prop. 103". Los Angeles Times. November 9, 1988. Retrieved January 28, 2020.