Triple-A has been American drivers’ friend almost since U.S. roads linked the nation together. It has rescued families from flat tires and worse. It has planned millions of family vacations and sold well-regarded auto insurance. It has always skewed toward older drivers and welcomed their devoted renewal of memberships. Its employees got good benefits and stayed with the organization.

For all those reasons, it’s a shock to hear that-at least in Northern California-AAA is dumping senior employees like so much excess baggage, according to a lawsuit filed by 10 of them. At AAA’s California State Auto Club branch, successful veteran insurance agents report being fired or forced out and replaced with younger, cheaper hires and call center employees.

Drivers who have kept up their AAA memberships for decades should be steamed about this on principle. But there are practical reasons to be angry, especially for drivers with AAA auto, home or boat insurance.

The laid-off AAA insurance agents are the people you would have called if you had a policy question or problem with a claim. Or if you wanted to add your child to a policy. Or maybe just for advice-for instance about whether a rental car is covered or whether your auto insurance is good in Canada.

Where are you going to get that help now? Who you gonna call?

Your file would likely become a “house account,” often with no agent assigned. Maybe the call center kid can find your file, put you on hold and hunt for a manager to help him figure it out. The hourly workers answering the phone won’t know you from Adam.

If the same thing is going on at other AAA chapters, it’s not likely the public will know unless more lawsuits emerge.

The “why” of these dismissals is not complicated. Insurance agents get bonuses when they sell new policies and smaller yearly payments from the insurance company as policies are renewed. The agents are expected to earn your loyalty and keep you in the fold.

The senior agents service up to thousands of policies built up by sales over the years. This takes time, so they may sell fewer new policies.

By dismissing the agents, CSAA gets to keep their yearly servicing payment.

CSAA’s bet is that you won’t care enough to endure the thrash of taking your business elsewhere. The fact that anyone laid off at age 50 is unlikely to ever find a comparably paying job? Not AAA’s problem.

Layoffs off of older, higher-paid employees are nothing new in modern corporate culture. But this is a case when the fallout also harms the customer in a direct way. It’s worth thinking about before you dial the number on the AAA insurance brochure you got in the mail.

Posted by Judy Dugan, Research Director Emeritus for Consumer Watchdog

I’m truly humbled.

It was a big deal when, 25 years ago this month, you and other California voters joined with me to pass Proposition 103, the toughest auto insurance regulation in the nation. But I had no idea exactly how big.

Today, in downtown Los Angeles, the Consumer Federation of America released the findings of a new report: Prop 103 has saved California drivers over $100 billion dollars since 1988. That’s about $8,125 per California household. In fact, California is the only state in the country where auto insurance rates actually went down over the last 25 years.

Back in 1984, the California Legislature passed a law requiring drivers to have auto insurance…but didn’t limit how much insurers could charge. Predictably, insurers hiked prices by double digits. Voters revolted against the price gouging by passing Prop 103, and the result was billions in savings.

Now, the federal health reform law is requiring everyone to buy health insurance. But Obamacare doesn’t limit what insurers can charge. It’s déjà vu all over again. Not surprisingly, insurance companies are hiking prices by double digits.

We Californians have been through this before, and with your help we’ll revolt again next year. Consumer Watchdog has put an initiative on the November 2014 ballot that will apply Prop 103’s money saving reforms to health insurance companies. Health insurers will have to open their books and justify any rate increase before it takes effect.

This will be another David v Goliath battle like the one we won together twenty-five years ago.

Auto insurance in California is a $20 billion a year industry. Health insurance is more than a trillion. Imagine the savings we’ll be celebrating 26 years from now once voters regulate the health insurance industry at the ballot next year.

Thanks for all of your support.

Posted by Harvey Rosenfield – Founder of Consumer Watchdog and author of Proposition 103. For more on Consumer Watchdog and Prop 103 visit our website

The Mercury Insurance initiative’s lawsuit to stop the Attorney General and us opponents from telling the truth about Proposition 33 – how it will raise auto insurance rates – got tossed out of Sacramento Superior Court last Thursday. The Mercury campaign asked the court to rewrite the Official Ballot Pamphlet, which is sent to every voter’s home, so it would contain only Mercury’s false claim that everyone will get “discounts” if Proposition 33 passes.  After an hour-long argument, the judge said no.

But the ink was hardly dry on Thursday’s court order when Mercury told yet another lie – this time about what we said in court.

In a press release issued Friday morning, Mercury said: “CONSUMER WATCHDOG ARGUES IN COURT THAT THE TRUTH IS ELASTIC.”

We never said that, of course. (The release also called us “corporate lawyers,” which the corporations we take on would no doubt find bewildering.)

I guess we shouldn’t be surprised that George Joseph, the multi-billionaire Chairman of Mercury Insurance who has contributed 99.1% of the $8.29 million received by Proposition 33, can’t stop lying about his proposition and the consumer, citizen, senior and patient’s organizations who vehemently oppose it.  After all, according to the California Department of Insurance:

“Mercury [has a] lengthy history of serious misconduct, and its attitude – contempt towards and/or abuse of its customers, the Commissioner, its competition, and the Superior Court….Among Department staff, consumer attorneys, and consumer victims of its bad faith, Mercury has a deserved reputation for abusing its customers and intentionally violating the law with arrogance and indifference….”

Mercury’s dirty propaganda campaign didn’t work back in 2010, when the company mounted a nearly identical proposition to deregulate auto insurance, also sued the Attorney General and us, spent $16 million, and still lost. Joseph and the pigs at the Mercury trough (an assortment of PR hacks, phony non-profit groups, insurance agents and bought-and-paid-for politicians) think the voters are stupid. But they are wrong. California voters can smell a dirty, self-serving initiative a mile away.

The Mercury Insurance campaign might have gotten away with its Friday fabrication, except we were able to catch them red-handed.

Hours before Thursday’s hearing, I found out that Joseph’s lawyers had not requested a court reporter be there to take down everything that was said in court. (Thanks to severe budget cuts, state courts can no longer afford to pay for court reporters – the parties in a lawsuit have to pay.) It seemed odd that this mega-billionaire would not spring for someone to record the truth… and then I realized that the Mercury campaign might not want a transcript of what happened in court, so they could lie about it later.

So I pulled out my checkbook, went to a special window at the Sacramento Superior Court, and paid the $30 for the court reporter myself.

Good thing, as it turns out.

The court reporter’s transcript confirms that our lawyer, the highly respected James Harrison of Remcho, Johansen & Purcell, never uttered what Mercury quoted him as saying. Rather, citing the First Amendment and many legal decisions, he urged the court to reject Mercury’s attack on our conclusion that Proposition 33 will “deregulate” auto insurance premiums. Here are his words:

“Your Honor, as the Court noted, deregulation is an elastic and ideological concept. In the Huntington Beach case, for example, the Court refused to make a change to the argument that the measure requires AES, the electricity company, to pay its fair share. And the reason that the Court refused to intervene was that the term ‘fair share’ is a very elastic and ideological concept. What you understand to be a fair share might not be what I understand. The same is true of deregulation, your Honor. What I understand to be deregulation may have a very different meaning to someone else. It’s a very elastic concept.”

Mercury’s legal shenanigans wasted a lot of taxpayer money at a time when California courts are struggling to deliver justice fairly and efficiently despite a gaping hole that the Legislature has inflicted on the judicial branch budget. (Late Friday, Joseph’s lawyers filed an appeal, hoping to overturn the Superior Court’s decision.  It was summarily denied.)

Forcing the Attorney General to defend in court her summary of Proposition 33, which she is required by law to prepare for the ballot, was also an unnecessary drain on that law enforcement agency’s scarce resources. (Joseph was also furthering a strategy recently adopted by Wall Street and other corporate interests: Attacking Attorney General Kamala Harris in an attempt to intimidate and undermine her.)

The Mercury campaign’s public relations minions don’t care about the cost to taxpayers. To them, filing a lawsuit in court is just another gambit in their greed-driven, deceptive campaign to get the voters to pass a law allowing companies like Mercury Insurance to raise your auto insurance rates and make more money.

_______________________

Posted by Harvey Rosenfield, Founder of Consumer Watchdog and Author of California Proposition 103, the landmark Auto Insurance Regulation law in California.

Consumer Advocates Say Prop 33 Means Auto Insurance Rate Hikes of 33% or More

The newly numbered Proposition 33, funded by Mercury Insurance’s billionaire Chairman George Joseph, is a replay of Mercury’s unsuccessful 2010 initiative aimed at raising auto insurance premiums on millions of Californians.

According to the Attorney General’s official title of the initiative, Prop 33: “Changes Law to Allow Auto Insurance Companies to Set Prices Based on a Driver’s History of Insurance Coverage.” The Attorney General’s summary explains that Prop 33 “Will allow insurance companies to increase cost of insurance to drivers who have not maintained continuous coverage.”

Prop 33 aims to change over 20 years of insurance law by repealing a key anti-discrimination provision from the 1988 voter initiative Proposition 103. In addition to broadly reforming insurance rates in California, Proposition 103 specifically prohibited an insurance industry redlining scheme first brought to public attention by the 1985 California civil rights case King v. Meese. While Prop 103 made that scheme illegal 24 years ago, Prop 33 would rollback that protection and revive this discriminatory practice by insurance companies that particularly targets low-income and other Californians struggling financially.

Consumer advocates opposing Prop 33, including Consumers Union, Consumer Federation of California and Consumer Watchdog, say that Prop 33 is another deceptive insurance company trick to raise auto insurance rates for millions of responsible drivers in California. While the insurance industry backers of Prop 33 promise that it will give people discounts, the measure is actually designed to get around an existing law that prevents unfair surcharges on good drivers.

Prop 33 allows insurance companies to charge dramatically higher rates to customers with perfect driving records, just because they had not purchased auto insurance at some point during the past five years. Drivers must pay this unfair penalty even if they did not own a car or need insurance at the time.

“The insurance companies are at it again with another deceptive initiative that says one thing but does another,” said consumer advocate Douglas Heller with Consumer Watchdog Campaign. “When an insurance billionaire spends millions of dollars on a ballot measure, hold onto your wallet. Prop 33 is the newest edition of Mercury’s long-running effort to give insurance companies a new way to unfairly raise auto insurance premiums.”

Mercury Insurance Chairman George Joseph has already spent eight million dollars on Prop 33 and will likely spend more than the $16 million spent by Mercury for its 2010 initiative, according to consumer advocates. Prior to his serial attacks on consumer rights at the ballot box, Joseph and his company pushed for legislative repeal of the consumer protection laws, but that change was ruled illegal by the California Court of Appeal.

About ten years ago, Mercury was caught illegally surcharging many of its customers using the same so-called “continuous coverage” scheme proposed in Prop 33. At the time, Mercury added a 40% surcharge on drivers with perfect records who did not have prior insurance coverage at some point in the past, even if they did not need coverage. In other states where Mercury is allowed to add the Prop 33 surcharge, rates jump by 50% to 100% and sometimes more.

“Wherever Mercury has imposed the financial penalty that would be allowed under Prop 33, premiums for many drivers skyrocket,” said Heller. “When California voters go to the polls in the November, they should ignore the insurance industry’s slick ad campaigns and simply remember that Prop 33 will raise auto insurance rates by 33% or more.”

Prop 33 would increase premiums for Californians who stopped driving for legitimate reasons, including:

• graduating students entering the workforce;
• people who dropped their coverage while recuperating from a serious illness or injury that kept them off the road
• Californians who previously used mass-transit; and
• the long-term unemployed.

Californians who had chosen not to drive for a time and did not need insurance would be surcharged when a new job, move or some other circumstance requires them to buy insurance again. Prop 33’s unfair penalty would punish drivers with premium surcharges that could reach $1,000 a year or more just because they took a hiatus from driving their automobile.

For more information about Prop 33, Consumer Watchdog Campaign has created: www.StopTheSurcharge.org

– 30 –

Today’s California Blog Roundup is on the flip. Teasers: infrastructure bonds and the governor’s race, just the governor’s race, CA-50, CA-04, CA-11, immigration, CA-45, auto insurance, levees.

Infrastructure Bonds

• Alliance for a Better California outlines the effect the infrastructure bonds may have on the race for governor. Also, Julia’s got the two main Democratic candidate’s press releases on the topic: Angelides thanks the Democratic leaders, while Westly uses the “bipartisanship” buzzword.
• Frank Russo likes the bonds, but doesn’t think the bonds will help Schwarzenegger much, given that the legislative leaders asked him to just stay out of the way. Apparently, when Schwarzenegger governs least, that’s when he governs best.
• See also Bill Bradley: Arnold wants the “Bipartisan” cred anyway and is looking for ways to use the current revenue windfall, probably politically.

Gubernatorial Race

• Fired Up! California points us to a Sherry Bebitch Jeffe op-ed, which suggests that in supporting Schwarzenegger the extremist California Republican Party will, against their instincts, truly be choosing the lesser evil.
• Apparently, we now have to learn “flip-flop” in a variety of Native American languages in order to describe Arnold Schwarzenegger’s approach to Indian gaming.
• New Westly ad in Spanish: it’s clean, fast and optimistic.

CA-50

• Down With Tyranny explains that CA-50 is a choice between sane and honest Democrat Francine Busby on the one hand, and on the other either extremist Republican Roach or corrupt Republican Bilbray. Oddly, the Republicans don’t seem to be doing as well as their voter registration numbers suggest they should be.
• San Diego Politics notes that Cheney, McCain, and Hastert will be raising money for the corrupt Republican.
• Words Have Power notes that Christian values don’t seem to go much past gay-bashing and anti-choice positions in CA-50.

15% Doolittle / CA-04

• Dump Doolittle has a nice summary of 15% Doolittle’s corruption, delivered in convenient bite-sized pieces, with quotes. Also, some creative signage in CA-04.
• This is rich: 15% Doolittle has gone too far in opposing civil rights even for Tex Sensenbrenner, the Republican chairman of the House Justice Committee that wanted to turn assisting out-of-status immigrants into a felony.

Immigration

• janinsanfran spent some time on Sunday thinking about the new immigration movement. In related news criticism, left i on the news notes the peculiar disparity in coverage of two different rallies.
• Dan Ancona also penned a meditation on immigration issues.

Paid-For Pombo / CA-11

• Not even Republicans like Paid-For Pombo. That makes sense. Paid-For Pombo doesn’t really like America.
• Progressive 11th has a news roundup covering Jerry McNerny and Paid-For Pombo.
• Say No To Pombo asks the timeless question: “Does Paid-For Pombo’s knowing lie in a campaign mailer constitute mail fraud?”

The Rest

• Frank Russo. One post, one idea: Clean Money.
• Get Your Blog Up notes another entrant into the CA-45 race, but doubts the wisdom of the entrant.
• Whatever It Is, I’m Against It is actually for Proposition 81, but against Proposition 82. So, I guess he’s against being against Proposition 81?
• The California Observer reports a new battle in the auto insurers’ decades-long war on John Garamendi. What’s amusing about this is that the auto insurers are attacking Garamendi in the Democratic primary for lieutenant governor, when his competition is Jackie Speier. First, this is just punitive, since he’s termed out of the insurance commissioner position. Second, do they think that Speier would be more insurer friendly?
• There is no industry so libertarian that it won’t seek a government subsidy.
• The mess at Devil’s Slide.
• Running statewide, downticket.
• Brian Dennert here asks a good question: Is Tom McClintock really from Thousand Oaks, or has he gone all Sacramento?
• California Progress Report asks what happens when the levees fail? Terry Preston thinks we’ll get it sorted, no help from the outside.