George Joseph is hoping persistence pays off.

Joseph, the 91-year-old founder and chairman of L.A. insurance firm Mercury General Corp., has poured $16 million of his own $1 billion-plus fortune into his second attempt to pass a state initiative next month that would allow auto insurers to use discounts to lure drivers with continuous coverage away from other insurers.

The idea is to reward conscientious drivers while giving insurers like Mercury a better crack at attracting lower-risk customers.

Joseph’s first attempt to pass this so-called “portable persistency” measure in June 2010 lost by less than two percentage points. Opponents, led by Joseph’s longtime nemesis, consumer advocate Harvey Rosenfield, successfully painted the measure as an attempt by Mercury to wring more money out of military personnel, students and other drivers who didn’t carry auto insurance continuously.

Never one to give up, Joseph has come back with a second measure with several tweaks that he hopes will put it over the top next month. Military personnel would be eligible for the discounts, as would students and drivers recently laid off from their jobs. The aim: convince these groups to drop their opposition to the measure and possibly even support it.

“He has learned from the last campaign: Add things to appeal to just enough more people that it would pass,” said Robert Stern, former president of the now-defunct Center for Governmental Studies, who is closely tracking the statewide initiatives on next month’s ballot.

Joseph’s money

In 2010, Mercury poured in $16 million, or about 98 percent of the total funding. This time around, Joseph has put in $16 million of his own money – again, virtually all the funding. The opposition’s budget is $100,000.

Joseph ranks No. 29 on the Business Journal’s Wealthiest Angelenos list with a net worth estimated at nearly $1.4 billion. The initiative’s campaign personnel could not reach him for comment late last week.

The Yes on 33 campaign maintains Joseph is stepping up to the plate out of his deep-seated conviction that the measure will help drivers shop around for the best insurance rates.

“Insurance has been George Joseph’s life and it has been good to him,” said Terry McHale, a Yes on 33 campaign consultant. “There is no cleaner, more absolute way to say that you’re committed to this than putting in your own money.”

But there’s also a strategic component. Last time around, Mercury became a lightning rod for opponents who claimed that the insurance giant was out to change the law to enrich itself.

“It’s harder to campaign against an individual than it is against an insurance company that can benefit directly from the initiative’s passage,” Stern said.

Opponents are trying to tie Joseph to Mercury.

“They are trying to hide the fact that Joseph is still the chairman of an insurance company that stands to benefit if this passes,” said Carmen Balber, Washington, D.C., director of Consumer Watchdog, a consumer advocacy group founded by Rosenfield.

Polling on Proposition 33 has so far been scarce, with only two independent polls released last week tracking the measure. A California Business Roundtable/Pepperdine University Survey showed 54 percent of 830 likely voters surveyed supporting the proposition, with 34 percent opposed. The remaining 12 percent were undecided.

The other poll, from Survey USA, had only 539 respondents. It showed more than two-thirds of likely voters were still undecided; only 13 percent said they would vote “yes,” while 16 percent said they would vote “no.”

Surcharge dispute

Consumer Watchdog said that despite the changes to the measure, Proposition 33 will still harshly penalize drivers who have let their insurance policies lapse or who are seeking coverage for the first time.

In the zero-sum game of insurance underwriting in California, Balber said that if discounts are given to certain groups, then an equivalent amount of money must be made up through surcharges on the remaining drivers.

“In this case, a majority will get small discounts, which will be offset by large increases on drivers without continuous coverage – mostly lower-income and minority drivers,” she said.

Proponents dispute this, saying Proposition 103 limits the amount of increases. That 1988 measure by Rosenfield lowered auto insurance rates and subjected rate increase requests to approval of the state insurance commissioner.

That same proposition also banned the practice of portable persistency, or allowing drivers with continuous coverage to keep their good-driver discounts when they switch insurers.

Joseph had built Mercury into an auto insurance powerhouse in large part through using discounts to attract good drivers from other insurance companies and has spent most of the last 24 years trying to restore portable persistency.

“There is a fairly consistent pattern that if someone maintains their insurance coverage, they are more likely to be good drivers who present lower liability risk,” said Gretchen Roetzer, director of insurance for Fitch Ratings Co. in Chicago.

Roetzer said that if Proposition 33 passes, it could benefit Mercury over time.

“It would help Mercury and other insurance companies to better price the risk, and that in turn could lead to growth,” she said.

But Roetzer cautioned against Mercury investors putting too much hope in the measure.

“If this passes, it would be a two-way street,” she said. “Yes, Mercury could gain low-risk customers, but it could also lose low-risk customers it currently has to other insurers.”

PROPOSITION 33 at a GLANCE

WHAT IT WOULD DO: Allows auto insurance companies to offer discounts to drivers who have had continuous coverage with other insurers, a practice currently illegal.

HOW IS IT DIFFERENT FROM THE JUNE 2010 PROPOSITION? It expands the pool of drivers who would be eligible for discounts by including:

• Military personnel who served out-of-state or abroad

• Those who have been unemployed or furloughed for up to 18 months

• Students who have attended out-of-state schools

SUPPORTERS SAY: Gives drivers with good records the ability to shop around for cheapest rates.

OPPONENTS SAY: Penalizes drivers – mostly lower income – who have lengthy lapses in insurance coverage.

– Sources: Yes on 33 campaign;

Consumer Watchdog; Business Journal research