Gillespie Orders Public Hearing on Insurer’s Higher Car Rates

State Insurance Commissioner Roxani Gillespie on Thursday ordered a public hearing for March 9 and 10 in San Francisco into State Farm’s post-election practice of selling auto insurance policies to new customers at rates 20% higher than the company’s old customers are charged.

Gillespie, noting that State Farm is California’s largest insurance seller and sets the pattern for many other firms, has called the practice a violation of the state’s insurance code. But a formal hearing is required before she could order the company to stop what she calls “unfair discrimination in rating.”

The insurance commissioner came under fire earlier in the week at a hearing called by state Sen. Alan Robbins (D-Van Nuys), chairman of the Senate’s Insurance Committee, for failing to call the State Farm hearing more promptly. She had first declared the company out of compliance with the law in November.

Robbins said Thursday he is pleased that Gillespie has called the hearing, but still believes she should have moved faster. He noted that, by the time the hearing is held, State Farm will have sold thousands of new policies at the higher rates.

Gillespie has said that it is taking time for the Insurance Department to develop its case for the hearing. On Thursday, she called the matter “particularly significant because of (State Farm’s) position as a market leader.”