This will allow Insurance companies to adjust the rates they charge based on a person’s driving history.

Summary
Changes current law to allow insurance companies to set prices based on whether the driver previously carried auto insurance with any insurance company. Allows proportional discount for drivers with some prior coverage. Allows increased cost for drivers without history of continuous coverage. Fiscal Impact: Probably no significant fiscal effect on state insurance premium tax revenues.
Controversy
  • This proposition could potentially cost consumers more than save. Generally business doesn’t make decisions to make less money. 
  • Each insurance company is not required to offer the continued discount if you change insurance carriers.
Fiscal Impact
There is no significant effect to the government’s revenues. For consumers this would allow insurance companies to offer continued service discount to new customers as long as they have had insurance before with no laps of coverage. There would be increased rates for those who have not had insurance or have lapsed in their insurance coverage.

Questions -
  1. Do you want to let insurance companies to have greater control of how much they can charge you for insurance?


YES vote- Insurance companies could offer new customers a discount on automobile insurance premiums based on the number of years in the previous five years that the customer was insured.

No vote- Insurers could continue to provide discounts to their long-term automobile insurance customers, but would continue to be prohibited from providing a discount to new customers switching from other insurers.


 

Notes-
  • According to the text of the proposed law, insurance companies want to offer a discount for continued coverage that will be portable should a driver decide to move from one insurance provider to another. This discount is not portable under current law-only continued coverage under the same company applies.
  • Consideration would be given to those who fail to maintain coverage due to military service, unemployment, and other causes on a case by case basis. Those that suspended insurance coverage for medical reasons past a 90-day ‘any reason’ window do not qualify for the continuous coverage discount. This is determined by a case by case basis.
  • The discounts offered should equate to a loss of revenue for insurance companies unless this lost revenue is made up elsewhere such as capturing new market share. A rate hike is almost certain to apply to other motorists not fortunate enough to qualify for this discount such as new drivers. The amount of this hypothetical rate increase is likely to depend on what is permitted by the State Insurance Commissioner. Automobile insurance customers in CA pay $21 billion per year in premiums. Do insurance companies really want to make less money?

 

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