In the mid-eighties, the California legislature was responsible for controlling insurance practices and residents of the state experienced a massive series of rate hikes over a three year period. In 1988 Californians passed Proposition 103, a state initiative that mandated a 20% rollback in auto insurance; applied state consumer protection and antitrust laws to the industry for the first time; required full disclosure of insurance rate information to the public; and made the Insurance Commissioner an elective post. The insurance companies spent $80 million trying to defeat the measure and lost.

As a result of Proposition 103, California auto insurance premiums, which were second highest in the nation prior to the initiative, dropped to 20th after the initiative passed. The average premium has fallen 22% in California, while it has risen an average 30% throughout the rest of the country since 1988.

One elected Insurance Commissioner was forced to resign in 2000 after stories surfaced that he had waived millions of dollars in earthquake claims in return for industry contributions to his political slush fund. The current Insurance Commissioner announced some new consumer-oriented policies in June and won a Democratic primary contest for Lieutenant Governor despite a last minute $2.5 million dollar media campaign against him funded by the insurance lobby.

More after the jump…