Prop 103 Case Study

There have been a few propositions passed in the history of the United States in order to establish fairness in society. In November of 1988, California voters passed Proposition 103 which requires insurance company to receive a “prior approval” from the Insurance Commissioner before they are able to apply insurance rates to automobile, property, and casualty (California Department of Insurance). Passing Proposition 103 allowed more regulation of rates that are implemented by insurance companies. Additionally, Proposition 103 required each insurer to “roll back” its rates 20 percent. Most of California consumers were in favor of Proposition 103 because, if passed, it would allow consumers to save money. On the contrary, Proposition 103 would

Policyholders, which are the consumers of these insurance plans, are the ones who funded Proposition 103 and entered it into the ballot of 1988. Specifically, California insurance policyholders benefitted greatly from Proposition 103 because it allowed for consumers to save billions of dollars over the past 25 years. Proposition 103 also gave the 20% discount to policyholders, allowing policyholders to save even more money. Policyholders wanted to pass Proposition 103 in order to take away power that insurance companies had when setting insurance rates. So how much did Californians save since the passing of Proposition 103? According to the Consumer Federation of America, a 2013 report detailed that more than $100 billion were saved by California drivers over the past 25 years as a result of Proposition 103. Additionally, focusing only on auto insurance rates between 1989 and 2010, insurance premiums dropped by 0.3% in California but it rose to 43.3% nationally. California was the only state in the United States where prices dropped throughout this period. (Hunter, Consumer Federation of