Prop. 103 Group Offers Its Own Pricing Plan : Auto insurance: A coalition of groups would narrow price distinctions between cities and suburbs. But whose rates would be affected was not made clear.
With Insurance Commissioner Roxani Gillespie scheduled to announce next Tuesday her decision on how to alter the pricing of auto insurance in accord with Proposition 103, the measure’s author and a coalition of 20 minority, consumer and low-income groups joined Thursday in proposing their own pricing plan.
In rough terms, the plan endorsed by Voter Revolt’s Harvey Rosenfield would tend to narrow price distinctions that now exist between central cities and suburban areas. But how much, and whose rates would go up and whose would go down, were not precisely disclosed.
The plan was largely drafted by State Board of Equalization member Conway Collis, Rosenfield’s candidate to replace Gillespie as commissioner in next year’s election. It would, in a literal interpretation of Proposition 103, set a driver’s safety record, annual miles driven and years of driving experience as the most influential factors in pricing.
To the extent that a driver’s home address could continue to be used to determine prices, the plan would end use of individual zip codes, as is now often the case, and use 21 “standard metropolitan statistical areas” designated within California by the Bureau of Census. A flat geographically based rate component would be applied to drivers in each of these areas.
For instance, if territory is used to make up 25% of a person’s rate, that factor would be applied uniformly to all drivers either living in or commuting into a statistical area. (The commuter’s destination would be introduced as a pricing factor for the first time).
Los Angeles County as a whole and areas based on Orange, San Diego and Kern counties form four of the 21 statistical zones. In the plan proposed Thursday, the geographical-based price would be the highest in Los Angeles, but Orange County drivers commuting into Los Angeles would pay the Los Angeles rate.
Rosenfield and Collis said they do not have statistics yet that would allow them to say what their plan would mean in terms of precise upward or downward adjustments of individual rates in various places.
But Joseph Duff, president of the Los Angeles branch of the NAACP, who was also at the news conference, said that in general it would mean that auto insurance rates in the suburbs would go up, while those in the central cities would go down. He said this was the intent of the voters when they passed Proposition 103 last year.
However, by defining the rates according to the Census Bureau’s statistical areas, the geographically based adjustments would be limited to a certain extent. Drivers in Northern California counties such as Humboldt or Sacramento would not be paying higher rates so that Los Angeles drivers could pay lower ones, as would be the case with an unqualified end to neighborhood-based pricing.
Collis said the biggest increases would fall on bad drivers--those with two or more traffic violations or with at-fault accidents--no matter where they live. Gillespie has vowed to avoid most sharp adjustments of individual rates in her pricing plan next week. Unlike the plan proposed Thursday, hers will have the force of law.
Among those joining in support of the plan were the California Council of Urban Leagues; the Latino Issues Forum; the League of United Latin American Citizens; the Mexican American Political Assn.; the American G.I. Forum; the Rainbow Coalition; the Filipino-American Political Assn.; the Chinese for Affirmative Action; the Center for Public Interest Law and the Consumers Union.
