EJS Opposes Prop. 33

On September 20, 2012, EJS submitted a letter to the California Senate and Assembly Committees on Insurance stating our opposition to Proposition 33, which will allow insurance companies to set insurance rates on the basis of whether a driver has previously carried auto insurance.

Our letter says that Proposition 33 will disproportionately impact people of color by allowing companies to charge higher auto insurance rates to individuals who have not had continuous auto coverage. The letter asks the Committee Chairs to oppose the initiative and help ensure that all Californians have access to affordable auto insurance coverage.

The Committees are holding a joint informational hearing on the proposition tomorrow, September 25. The full text of our letter is below.

September 20, 2012

Dear Chairperson Calderon and Chairperson Perea:

The Equal Justice Society (EJS) writes in opposition to Proposition 33. EJS is a national legal organization focused on restoring constitutional safeguards against discrimination. We oppose Proposition 33 because the initiative will impose harmful financial burdens on all Californians, and will disproportionately impact communities of color.

Proposition 33 will allow insurance companies to set insurance rates on the basis of whether a driver has previously carried auto insurance. In effect, this proposition penalizes drivers without a history of continuous coverage by imposing higher insurance rates on these individuals.

The high cost of auto insurance has historically excluded many California drivers from the insurance market. Proposition 33 would make it even harder for them to buy insurance in the future. The inevitable victims of these increased insurance costs will be good drivers in low-income communities of color.

Approximately 3.5 to 4 million drivers on California’s roadways do not have auto insurance; these are the drivers who will pay more under Proposition 33. According to the most recent survey from the California Department of Insurance, in 1999, 54 percent of uninsured drivers were Blacks and Latinos (twice their representation at that time in California’s population) and 51 percent had incomes under $20,000. Nearly two-thirds of these drivers gave unaffordable cost as the reason they didn’t have auto insurance.

About 2 million uninsured drivers (40-50 percent of all the uninsured drivers in California) live in only 2 percent of the State’s zip codes; these neighborhoods are communities characterized by low median income and high concentration of non-White populations.

California should be increasing access to auto insurance, not increasing the cost of auto insurance to make it more inaccessible for the most vulnerable drivers.

Proposition 33 will impose higher insurance prices on those drivers least able to afford it, including:

• Low-wage workers who commute by bus but find they need a car in order to maintain a new job;
• Immigrant drivers who may finally be able to obtain a California driver’s license soon, but will be forced to pay more;
• Drivers who have found it financially impossible to maintain uninterrupted insurance coverage, but who then turn to the auto insurance market in hopes of complying with the mandatory insurance law and face a financial penalty for being poor.

California drivers have been protected from this insurance redlining practice for nearly 25 years. Turning back the clock is never a good idea, least of all when California’s most disadvantaged communities are more vulnerable than any time in recent memory.

For all of these reasons, EJS opposes Proposition 33 and we urge you to join us in opposing this regressive initiative.

Sincerely,

Eva Paterson, President
Equal Justice Society