Coalition Urges State to Force Auto Insurance Rate Reforms : Proposition 103: Consumers and the city and county of L.A. want rates to reflect driving records, not ZIP codes.
A coalition of consumer groups and the city and county of Los Angeles on Tuesday filed a petition with the state insurance commissioner in an effort to force auto insurers to place less emphasis on where drivers live when setting premiums.
The groups want newly elected Insurance Commissioner Charles W. Quackenbush to implement provisions of Proposition 103--passed in 1988--that would require auto insurers to determine premiums based primarily on drivers’ safety records rather than their place of residence or ZIP code. Consumer groups have claimed that insurers use ZIP codes to “redline” neighborhoods where they don’t want to sell insurance, primarily because of the racial or income characteristics of the residents.
“Six years have elapsed since voters statewide mandated reform approving Proposition 103,” Los Angeles City Councilman Mark Ridley-Thomas said in a statement. “We must cut through the needless delay. We have all the information needed to develop rules so that good drivers are not unfairly and arbitrarily overcharged based on where they live.”
Richard Wiebe, a spokesman for Quackenbush, said the department welcomes the comments of the petitioners as it studies the ZIP code issue and other factors that determine auto insurance rates. Quackenbush has 30 days to respond to the petition.
Last week, consumer groups were angered when Quackenbush adopted emergency regulations allowing insurance companies to set rates in a way the groups say does little to mitigate the impact of a driver’s ZIP code. The emergency rule was needed until a permanent policy is adopted, Wiebe said.
“It is still a policy that is under consideration,” Wiebe said. “It’s obviously a difficult issue.”
Jamie Court, organizing director of the Proposition 103 Enforcement Project, a nonprofit consumer group based in Los Angeles, said the most recent petition is designed to get Quackenbush to deal with the ZIP code issue quickly.
“He just can’t study it for four more years,” Court said.
The issue has been the subject of two major and contradictory studies. In 1993, an insurance industry-sponsored study found that de-emphasizing ZIP codes would lead to much higher rates for suburban and rural residents. As a result, then-Commissioner John Garamendi directed the state Insurance Department to conduct a study to help draw up regulations.
That study, which was released last December, found that most California drivers would notice only modest changes in their premiums if ZIP codes were de-emphasized and Proposition 103 were fully implemented.
Tuesday’s petition--whose supporters include Rep. Maxine Waters (D-Los Angeles), the Consumers Union and the Proposition 103 Enforcement Project--calls upon Quackenbush to review the state study and start proceedings that would lead to regulations. Last week, the Los Angeles City Council and the County Board of Supervisors voted to join the petition.
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Times staff writer Thomas S. Mulligan contributed to this report.
