Hearings on Assigned-Risk Policies Halted

Hearings into a proposed 112.3% average increase in auto insurance rates for more than a million drivers insured under California’s assigned-risk plan were recessed Friday amid indications that any state Insurance Department decision on the matter will be put off until the social and economic implications of the increase are formally studied.

Administrative Law Judge J. L. Whitfield suggested that representatives of the assigned-risk governing board confer with lawyers for a coalition of 15 minority groups on the parameters and the financing of such a study, which could take several months. The coalition had intervened in the hearings to oppose an increase they said could “wreak havoc” among low-income policyholders.

Whitfield’s decision to press for the study, meanwhile holding the hearing in abeyance, was hailed by John Gamboa, executive director of the Latino Issues Forum, one of the minority groups represented. “It is the first time anyone in authority has looked at the total implications of a rate increase,” Gamboa said.

The proposed increase would raise rates for the minimum state-required auto liability insurance to as high as $2,187 a year in Los Angeles and to an average $1,500 statewide. Opponents suggest this would force thousands of people to illegally drop their auto insurance.

Under the assigned-risk system, insurance companies doing business in California are required to accept a quota of drivers who either cannot get insurance or choose not to buy regular coverage. Insurers said at the hearings earlier this week that the statewide deficit on assigned-risk coverage will amount to $600 million this year.