The Politics of Auto Insurance
While the banking sector dominates the national news headlines, the insurance industry is capturing attention at the local level. Yesterday, I blogged about Arizona’s decision to privatize its workers compensation fund. Today, let’s turn our attention to California where residents are debating the merits of Proposition 17, a measure designed to lower auto insurance rates and increase competition. Opponents of the measure, which appears on the June 8 ballot, say it will do just the opposite. The existing law in California allows drivers with good safety records and continuous insurance coverage to benefit from premiums discounts. Proposition 17 allows drivers to carry those discounts over to new insurance providers. The measure is backed by major insurance players, which may see an opportunity to capture market share. I see no reason why an insurance company cannot match a discount for a driver with a good safety record to win the business, without putting the measure to a public referendum. Market practice, not political fiat, should govern rates.