October 19, 2018—The insurance industry disagrees with a new report commemorating the 30th anniversary of one of California's primary auto insurance laws. The report claims the law saved drivers billions of dollars, according to Insurance Journal.
Mark Sektnan, vice president of the Property Casualty Insurers Association of America, says it wasn’t Prop 103 that saved Californians all that money but other reforms that have been made since then.
The Consumer Federation of America reported on Wednesday that Proposition 103, the insurance reform law passed by California voters in 1988, has saved drivers $154 billion on their auto insurance and that the law has lowered auto liability premiums in California by 5.7 percent since 1989, even as liability premiums rose across the rest of the country.
The CFA study showed that:
- Californians have saved $154 billion, or $6 billion a year, since Prop 103 took effect, compared to what premiums would have been had they followed the national average growth rate.
- Auto insurance liability premiums, excluding comprehensive and collision coverage, went down 7 percent in California since 1989; during the same period, liability premiums went up 58.5 percent nationwide.
- Californians spent just $93.48 more on auto insurance in 2015 than they did in 1989; nationwide drivers spent $352.71 more.
Proposition 103 was passed by California voters on Nov. 8, 1988. Among other provisions, Prop 103 requires that auto insurance rates be based primarily on a driver’s safety record, miles driven and driving experience. It requires all automobile rating factors be approved by the California Department of Insurance and prohibits rating factors like credit score, ZIP Code and race.
