Editor’s note: Once again it’s the season when California voters exercise their right to govern directly. Using the state’s initiative process, 11 measures have qualified for the November ballot. Some seem simple, but reading the proposition text can uncover what the title or summary may not fully disclose.

The Town Crier will summarize each of the 11 between now and Election Day, Nov. 6. Rather than reporting them sequentially, based on their number, the order is based on readers’ votes on our online poll. Propositions 33 and 39 garnered the least votes and therefore our series will start with them. The more controversial and higher interest propositions will appear the election approaches.

Proposition 33 — 2012 Automobile insurance discount act
Although proponents deny this proposition changes key provisions of Proposition 103 passed in 1988, careful reading shows that is not exactly the case. The key provision of the 1988 insurance reform act was to require auto insurance companies to set rates based “primarily by a driver’s safety record and mileage driven.” Also, “The absence of prior automobile insurance coverage, in and of itself, shall not be a criterion for determining eligiblity for a Good Driver Discount policy, or generally for automobile rates, premiums, or insurability.”

However, length of coverage with the same company (“persistency”) is one of 16 factors that the California insurance commissioner currently authorizes for determining rates for existing customers. But Proposition 103, the current governing law, prohibits companies from offering this discount to new customers who switch to them or for using absence of coverage as a rating factor.

Proposition 33, sponsored by Mercury Insurance’s CEO George Joseph, changes the law to permit insurance companies to provide this “discount” to customers who switch from other companies and to set prices based on the new factor of whether the driver previously carried auto insurance with any insurance company.

Conversely, the measure will, according to the California Secretary of State’s official summary, “allow insurance companies to increase cost of insurance to drivers who have not maintained continuous coverage,” even if those drivers have had a perfect driving record. This is the camouflaged nugget to which some groups object.

Under the proposal, an exception for lapsed coverage is granted if it were due to active military service or loss of employment (lapse of up to 18 months in the last 5 years), or if the lapse is less than 90 days. Other lapse scenarios, such as a prolonged illness that stops premium payments for longer than 90 days, or a period in which a driver did not need or own a car, are not covered.

While billed as a “discount” for those who have maintained coverage, the initiative is also an opportunity for insurance companies to hike rates for those with coverage lapses not addressed in the initiative.

This proposition may seem familiar. In 2010, Joseph bankrolled Proposition 17, which is Proposition 33 minus exceptions for coverage lapses due to military service or a period of unemployment.

Joseph’s stated reasons for advancing it again are that it will make his company more competitive with other California insurance companies, although all companies would be able to offer a “persistency” discount should this initiative pass.

What the voter should consider is whether this is a “discount” extended fairly or an opportunity to hike rates for those with coverage lapses not covered in the initiative, regardless of their driving records; and whether the portability of the continuous coverage discount outweighs adding a new way for insurance companies to set and increase rates.

Advocates argue that the initiative would give consumers greater ability to choose from and to shop for insurance companies, since their coverage discount would be portable.

The Legislative Analyst’s Office estimates that rate hikes to those with unpermitted lapses in auto insurance coverage could result in increased tax revenues for the state, since insurance companies pay taxes on insurance premiums garnered instead of the state corporation income tax.

Opposing Proposition 33 are the Consumer Federation of California, California Labor Federation, Consumer Action, Consumer Watchdog, Consumers Union, California Nurses Association and the California Democratic Party.

Supporting it are Mercury CEO George Joseph, the Greenlining Institute, the California Hispanic Chamber of Commerce, CDF Firefighters, and the California Republican Party.