CALIFORNIANS PAYING LESS FOR CAR INSURANCE.

Byline: Evan Pondel Staff Writer

While Californians are paying dearly for gasoline, the cost of car insurance has shown a long-term decline while rates have soared in most of the nation, according to a survey released Wednesday by the Consumer Federation of America.

Between 1989 and 1998, auto insurance prices in California declined 4 percent, while jumping an average 38.9 percent nationwide, according to the survey.

The report highlighted provisions in Proposition 103 - passed by California voters in 1988 - as beneficial to consumers because it led to the creation of a stronger regulatory system.

``It's a model for the nation, and a nice contrast for what's going on in California with electricity,'' said Harvey Rosenfield, the author of Proposition 103 and president of The Foundation for Taxpayer and Consumer Rights.

``David slew Goliath once - he'll be there again to protect the public against the marauding when companies are free to charge what they want.''

Before the bill passed, insurance companies were not required to file rates for approval to the California Department of Insurance.

However, Proposition 103 forced insurance companies to file rates, and many believe this form of regulation has decreased the cost of auto insurance.

``Prop. 103 has been one of the key factors in bringing rates down,'' said Scott Edelen, deputy insurance commissioner for the California Department of Insurance.

After the proposition passed, drivers received rate rollbacks totaling $1.3 billion, while saving over $23 billion in auto insurance costs within the 10-year period, according to the survey.

In addition to Proposition 103, industry experts are earmarking several other variables that have led to a decline in car insurance rates.

Candysse Miller, executive director of the Insurance Information Network of California, said competition has been a major impetus in driving rates down.

``It's like a limbo contest, how low can you go?'' Miller said.

The average cost of auto insurance in California in 1999 was $650.35, according to the most recent report by the National Association of Insurance Companies. California ranked No. 25 in the nation in terms of least expensive auto insurance.

Insurance premiums have increased the most in Nebraska, up 81.7 percent from 1989 to 1998 and South Dakota, gaining 75.2 percent.

Other factors that have contributed to lower rates in California include the abolishment of third-party lawsuits directly against insurance companies, Miller said.

George Joseph, chief executive officer of Mercury Insurance, said insurance companies were simply giving money away when they were sued. Instead of Prop. 103 having an effect on rate cuts, Joseph said, the elimination of third-party lawsuits is among the most important moves that has dropped rates.

``Prop. 103 isn't beneficial to anyone, all it does is create a huge bureaucracy - it doesn't do anything to lower costs,'' Joseph said. ``If you want an adversary system you have to treat it like an adversary system.''