Judge Upholds Auto Insurance Pricing Based on ZIP Codes

Insurance Commissioner Chuck Quackenbush’s approval of auto insurance pricing plans that keep ZIP Code-based pricing as the most important single element in the rates has been upheld by an administrative law judge as consistent with Proposition 103.

Quackenbush said Friday that he has accepted the ruling by Judge Patricia K. Staggs, and that the rates he implemented last fall for the state’s three largest auto insurance sellers are now permanent.

This means that motorists in urban centers such as Los Angeles and San Francisco will typically continue to pay more than those in suburban or rural areas.

The companies involved in the ruling are State Farm, Farmers and Allstate. But the pattern established is likely to hold for other companies as well.

In October, Quackenbush said new pricing plans would deemphasize the use of ZIP Codes or territorial ratings. However, it later developed that there was a provision that allowed them to continue.

The public hearings had been requested by consumer groups, especially the Proposition 103 Enforcement Project, which insisted that the new pricing plans were a violation of Proposition 103.

Gina Calabrese, a lawyer for the Enforcement Project, said Friday that the group may sue to challenge the pricing plans.

However, Proposition 103 was somewhat ambiguously written on the issue, and Quackenbush has expressed confidence that his policies will hold up.

The commissioner says that on an average insurance prices have gone down in the past year in the state by about 10%.