Auto Insurance Study Shows Gaps in Minority Areas : Survey: Statistics identify underserved residents by ZIP code. Aim is to put brakes on ‘redlining’ by carriers.

The highest proportion of California’s uninsured motorists live primarily in low-income and minority communities, according to a statewide survey released Wednesday by the state Insurance Department as part of an effort to prevent insurance industry discrimination.

In one inner-city Los Angeles neighborhood, 9 out of 10 motorists were uninsured, the survey said.

“It’s a very serious problem,” said Los Angeles City Councilman Mark Ridley Thomas, whose South Central Los Angeles district’s uninsured motorist rate exceeds 60%. “It’s a function of putting food on the table versus paying for car insurance. It’s really obvious what one does.”

The survey--the first of what is to be an annual check of coverage on a ZIP-code-by-ZIP-code basis--supports widely held beliefs and previous findings that inner-city neighborhoods suffer from an acute shortage of auto insurance coverage.

“This study underscores the obvious,” Insurance Commissioner Chuck Quackenbush said in a statement. “Since low-income communities often contain more minority drivers, the high cost of auto insurance disproportionately affects minorities. I call upon the insurance industry to work with consumer groups and my office to find ways to reach out to the state’s underserved communities.”

The survey found that 27.75% of all vehicles in California are driven by uninsured motorists and that residents of 157 ZIP codes in the state are underserved when it comes to insurance coverage. The department defines an underserved ZIP code as one where most residents are minorities or have low incomes; the proportion of uninsured motorists is 10 percentage points above the overall statewide level.

Although many rural and agricultural communities fell into the underserved category, nearly half the underserved ZIP codes are in Los Angeles County. At least half the motorists in 39 ZIP codes in the city of Los Angeles were uninsured, according to the survey, which was based on 1990 figures from the U.S. Census Bureau and the state’s Motor Vehicles and Insurance departments.

While no one disputes the large numbers of uninsured motorists in low-income, minority neighborhoods, there is disagreement over the reasons. Consumer activists blame discriminatory practices by insurance companies. The insurers blame legal judgments for inflating the cost of coverage. The Insurance Department took no position on the causes of the problem, saying it needs to study the issue further.

James A. Snyder, president of the Personal Insurance Federation of California, an industry trade group, said the organization has “been working with a number of consumer groups to provide a more affordable product that does good for low-income people by providing them with coverage and benefits as opposed to protecting assets that they don’t have. Obviously, we still have a ways to go.”

Insurance industry critics say the companies avoid writing policies in inner-city neighborhoods via a method called “redlining.” The industry practice of setting rates primarily according to a policyholder’s address also raises insurance bills to unaffordable levels, critics say.

The figures show that “some inner-city drivers--no matter how good they are--will never find affordable auto insurance” because of redlining, said Jamie Court, organizing director of the Proposition 103 Enforcement Project.

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Uninsured Motorists

Los Angeles County has the highest rate of uninsured motorists in Southern California. Percentage of uninsured motorists by county:

Los Angeles: 37.0%

Orange: 23.0%

Riverside-San Bernardino: 25.6%

San Diego: 24.6%

Note: Ventura County data not available.

Source: California Insurance Department