Proposition 103

Proposition 103 is a California ballot initiative approved by voters on November 8, 1988, that reshaped how the state regulates property and casualty insurance, including auto. It ordered insurers to roll back rates to at least 20% below their November 8, 1987 levels, made the insurance commissioner an elected office, and replaced open competition with prior approval of rates.

Several of its rules still define the California market. Insurers must file rates and get approval before using them; a filing is deemed approved 60 days after public notice unless a hearing is held, and consumers can intervene and request one. Auto rates must be based on three mandatory factors in decreasing order of importance: driving safety record, miles driven each year and years of driving experience. Other factors may be used only if the commissioner adopts them by regulation. Drivers who meet the state's criteria must be offered a Good Driver Discount policy priced at least 20% below the rate they would otherwise pay.

For drivers, the result is that a clean record and low mileage carry more weight than in many states, and rate filings are open to public review. Critics argue the approval process delays needed increases, which can make insurers reluctant to write new business. See California Proposition 103 explained and good driver discount.