City Attorney Urges Auto Insurance Change

Los Angeles City Atty. James Hahn warned state Insurance Commissioner Chuck Quackenbush on Thursday to start enforcing the law that downgrades ZIP Code pricing in auto insurance, or he may sue to compel him to do so.

In a brusque letter to Quackenbush, Hahn accused him of violating the provisions of Proposition 103 by allowing insurers a loophole to keep a driver’s place of residence as what Hahn called “a predominant factor in determining rates.”

The city attorney cited an advertisement by the Mercury group of insurance companies listing rates in a Los Angeles neighborhood at $2,145 for a couple with a 17-year-old son, while the same couple would pay $1,078 in Orange County.

“Since the difference in rates apply to the same couple, where they live not only seems to be the predominant factor in rate determination, but it appears to be the only factor,” Hahn said.

He noted that under Proposition 103, adopted by the electorate nine years ago, driving record, miles driven and years of driving experience are mandated as more important factors in setting prices than the ZIP Code in which one lives.

Hahn urged Quackenbush to retract the pricing plans he implemented last week and review the situation.

But Quackenbush said in a written statement that he has no intention of withdrawing his order.

“The Office of Administrative Law reviewed these regulations and determined that they are in full compliance with the law,” the commissioner said. “They will withstand any legal challenges.”

The commissioner said, “By calling on me to put a hold on the implementation of the new auto regulations . . . Hahn favors higher rates, and for that he will have to answer to the people of Los Angeles.”

Hahn was one of the relatively few politicians who originally supported Proposition 103. In an interview, he did not rule out running against Quackenbush next year on a pro-103 platform, although he called the question premature.

Also assailing Quackenbush on the issue Thursday were the Consumers Union and the Southern Christian Leadership Conference. Both filed a brief in continuing public hearings on the new rating plans.

Bill Ahern, senior policy analyst at Consumers Union, said Quackenbush is allowing the insurers to use a “statistical sleight of hand” to get around Proposition 103.

Ahern also cited what he termed misleading or incorrect statements by Quackenbush claiming that he was acting to de-emphasize ZIP Code pricing when he wasn’t.

“The continued priority of ZIP Code in auto insurance pricing is outrageous,” said Genethia Hayes, executive director of the SCLC of Greater Los Angeles.

“How can a company charge $7,844 per year for a single male in inner-city Los Angeles who drives 15 miles to school, and charge $1,710 for the same driver with the same driving record if he lives in Atascadero?” she asked.