L.A. Supervisor Hits State Study on Insurance Rates

Supervisor Kenneth Hahn on Wednesday blasted as “hogwash” a study by the California Department of Insurance that concluded that “redlining” is fair.

“I was very much disturbed by all this,” Hahn said at a news conference.

“The commissioner’s large and wordy report only provides a signal to the insurance companies that they can proceed with business as usual,” Hahn said. “The state insurance commissioner is just a mouthpiece for the big automobile insurance companies.”

Redlining is the practice--called “territorial rating” by insurance companies--of basing automobile insurance rates primarily on where a motorist lives rather than on his driving record. Insurance companies contend that they charge higher rates in areas where the risk is higher and that the practice is not discriminatory.

Preliminary results of an 11-month study released Tuesday by the California Department of Insurance found that rates in Los Angeles County are generally reasonable and that redlining is justified by the losses that insurers incur in each territory, usually defined by ZIP codes.

The study revealed “very strong justification that territorial rating differentials are warranted” by risk, Everett Brookhart, the insurance department’s consumer affairs chief, said at a news conference Tuesday. “We don’t see a rip-off in some of the territories where that’s been alleged,” he added.

Hahn, a longtime opponent of redlining, called the study “false” and questioned the statistics on which it was based. He said his staff has determined, for example, that an accident-prone drunk driver in San Diego County would pay less for insurance than a safe driver in Los Angeles County.

The average premium on a basic policy for a safe driver of a 1985 Chevrolet in San Diego County is $535 a year, compared to $1,503 a year for a safe driver in Los Angeles County, he said.

Hahn said he hopes that legislation will be introduced next year that would base insurance rates on a driver’s record and not on where he lives.

Hahn said he also favors turning the state insurance commissioner’s office into an elected, rather than appointed, position.

Hahn last year objected to a blue ribbon committee’s report to the Los Angeles County Board of Supervisors that defended redlining.