Car insurance rates go back to court in California

Mostly people think auto insurance rates a rather boring subject. We pay them reluctantly, but see the benefits when we have an accident. Yes, some politicians get excited every now and again. They start shouting about what is wrong with the auto insurance industry through their megaphones, although for most of us it is something that we care very little about.

These campaigns don't factor into the decisions at the ballot box when it comes to voting for our representatives. Perhaps they should. It would be a good use of democracy to be able to vote in a state government that would, at a stroke, make all insurance premiums cheaper. But, for now, the only time to use the ballot box to make a judgement on insurance matters is when Propositions appear. With Proposition 33 heading to the courts month ahead of the vote, California is one place where the fights become bitter very quickly.

The Sacramento Superior Court now has to decide on an action against state officials and consumer advocate Harvey Rosenfeld alleging the summary written for the ballot and the more general pamphlets intended as supporting information for voters are "inaccurate" and likely to prejudice the minds of the voters. At its simplest level, the argument in favor sees discounts offered to drivers with a good track record if they switch insurers. This is a reward for safe drivers and shows competition is working well in the industry. The argument against says that if all the good drivers are seduced away from some insurance companies, the car insurance rates for the bad drivers will have to shoot up to compensate. As it is, there's a cross subsidy with the good drivers subsidizing the bad. That why sharing the risks across a broad group provides a good average car insurance premium for all.

For those who live outside California, this is a rerun of almost exactly the same court case when Proposition 17 was run as a ballot issue in 2010. Despite the rejection of the voters last time around, the same team are back again with a new ballot measure and are fighting to get the most favorable wording on the ballot. It's cheap auto insurance for the few, and expensive insurance for the rest.