Insurers Ask High Court to OK Risk Hike

California auto insurers, citing losses of more than $2 million a day, asked the state Supreme Court on Friday to overturn an order by Insurance Commissioner Roxani Gillespie denying them a 112% increase in assigned-risk insurance rates.

Lawyers for the California Automobile Assigned Risk Plan, an association of companies that issue insurance to more than 1 million drivers who do not have regular coverage, warned that without the increase, insurers would be forced into insolvency or prompted to withdraw from doing business in the state.

In an emergency petition filed with the court, the association urged the justices to sidestep the lower courts and grant direct review of its challenge to Gillespie’s Dec. 18 rejection of the massive rate increase.

Last year, the group said, losses and administrative expenses on assigned-risk policies exceeded premiums by $600 million.

The commissioner’s decision, the insurers claimed, put them in an untenable legal position. Charging regular policyholders to make up the deficit would violate Proposition 103 prohibitions against excessive rate hikes, they said. But forcing companies to dip into their own capital would conflict with constitutional guarantees against confiscation of property.

The proposed rate increase would have boosted the average driver’s cost for minimum liability coverage from $695 a year to $1,488. In denying the request, Gillespie expressed concern that the rate hike would encourage motorists to forgo any insurance coverage.

“If plan rates are set as the commissioner proposes, the viability of the plan as well as the financial integrity of the entire California automobile insurance industry are threatened,” Edward Held, chairman of the governing board of the plan, said in a written statement.