Ballot prop eyed on uninsured motorists

State Insurance Commissioner Steve Poizner, hoping to raise his political profile in advance of a potential run for the governorship, is taking soundings for a 2008 ballot initiative that is likely to target uninsured motorists.

The language of the proposed initiative has yet to be worked out. But versions and ideas have been floated and discussed by a number of people, including strategists, insurance executives and others. The proposal stems in part from Poizner’s desire to cut down on the numbers of uninsured motorists–perhaps 3.2 million drivers, by one estimate–by expanding the state-backed, low-income automobile-insurance program statewide. The program, which began in 2000, currently serves 42 counties.

One possible provision is to crack down on uninsured motorists by removing the license plates from the offending drivers’ vehicles. Another version includes attaching the “Denver boot” to the cars, a device commonly used against scofflaws, which locks one of the vehicle’s wheels and prevents the car from being moved. Other possibilities, including consumer protections in the homeowners’ insurance market, also have been aired.

Wayne Johnson, a top political strategist who handled Poizner’s 2006 run for insurance commissioner, said no final decision has been made to pursue an initiative next year, and that a specific topic has not been picked. He noted that Poizner is open to ideas, and that an initiative could contain provisions that make his job easier and serve to highlight his job performance. He said the main function of such an initiative would not be to boost Poizner’s political chances in a race for governor.

“I would say you certainly don’t file an initiative because you want to run for higher office. You file an initiative because you need the tools to do a better job. The issue is job performance. You do the best job wherever you are,” Johnson said, adding that a ballot initiative may be the best method of effecting new policy.

“The Legislature has proven to be pretty much dysfunctional. We saw that in the most recent session, to the point that the governor had to call a special session, and [lawmakers] were dragging their feet on that as well,” he said.

Poizner himself did not discuss the issue with Capitol Weekly.

Others said the political benefits of linking a candidate to a ballot initiative are uncertain at best.

“Generally, they do not have much impact on the governor’s race. John Van de Kamp tried three of them. They didn’t go anywhere, and he didn’t go anywhere,” said political historian Tony Quinn, a co-editor of The Target Book, which tracks legislative campaigns. Quinn was referring to the 1990 gubernatorial race, in which Democrat Dianne Feinstein defeated Van de Kamp in the Democratic primary. Feinstein, in turn, lost to Republican Pete Wilson that year in the general election.

“Pete Wilson tried them and they generally were a disaster, with the exception of Proposition 187 [the anti-illegal immigration initiative of 1994], which was a disaster later,” Quinn added.

The larger issue is the state’s low-cost auto-insurance program, which Poizner supports and which he–like his predecessor, John Garamendi–believes cuts down on the number of uninsured drivers by making it easier for low-income drivers to purchase coverage. The problem of uninsured drivers has been a thorny one for years because it forces insured drivers to pay more for coverage, and the insured drivers–and the companies that sell them coverage–are not happy.

The impact of the program, known as Low Cost Auto, or LCA, is the subject of debate within the insurance industry and in the Capitol. But the numbers suggest that its impact has been scant.

There are nearly 23 million licensed drivers in California, and DMV files show that about 19.3 million are legally registered. State law requires drivers to display proof of insurance to register their vehicles.

The Department of Motor Vehicles tracks those who do not have proof of insurance. The DMV is linked electronically to insurers; when drivers’ policies lapse, the DMV sends out letters to motorists, reminding them that their coverage has expired and they must get coverage to continue to drive legally. Through September 26, some 3.25 million letters were mailed out. The first ones were sent out last November.

“We send them a letter telling them that they are no longer insured, and that their registration is going to be canceled or suspended, which means they’re driving around without insurance. At that point, they have to come into a DMV office,” said DMV spokesman Armando Botello.

According to figures supplied by the insurance industry, about 38,000 policies have been issued since the program went into effect in July 2000. Currently, about 11,200 policies are in effect.

Poizner’s initiative proposal has been floated privately to insurance executives and others. People familiar with the discussions told Capitol Weekly that the commissioner himself has made personal presentations of the idea. The proposal evoked surprise from some, who wondered whether such a plan–with its provisions to punish low-income motorists–would backfire politically on the commissioner.

Poizner, a billionaire Silicon Valley businessman, is the ranking Republican state officeholder and is viewed as a likely candidate for governor in 2010. Of the half-dozen people who discussed the commissioner’s initiative proposal with Capitol Weekly, all were critical, including several who have been supportive of Poizner. “Bashing poor drivers who have no assets to protect. Oh, right. We wondered, ‘What planet are you on?'”

Insurers are cautious when publicly discussing LCA, at least partly because they don’t wish to anger the insurance commissioner, who is perhaps the state’s most powerful regulator. Officially, they are neutral about LCA.

“I wouldn’t say that it’s not working,” said Sam Sorich, president of the Association of California Insurance Companies. “Our best estimate is that it has made a minimal improvement in the number of uninsured drivers. Of course, one unknown factor is the number of insured drivers who ‘bought down’ to get a low-cost policy. They wouldn’t really have been taken out of the ranks of insured drivers.

“We are not opposed to the program,” Sorich added. “We wish it well. We hope it improves the situation, but thus far its impact hasn’t been extremely significant.”

Insurers say the low-cost policy provides minimal liability coverage, in other words coverage to protect the LCA driver in an accident when the other driver, who is insured, is at fault. And because the low-income driver has few, if any, assets to protect, selling that driver-insurance coverage is problematic. The LCA policy allows a driver to legally drive, but offers little else, insurers argue.

Johnson, for one, is not persuaded.

“The economic argument is nonsense,” he said. “First of all, a low-income driver with a good record will be protected. It may cost $25 a month, and if you can’t afford $25 a month, you probably shouldn’t be driving anyway.”

“The question,” he added, is “can we really provide low-cost auto insurance for good drivers who otherwise wouldn’t be able to afford it?”

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