An agent group reacting to the dispute over new California auto insurance regulations said they are hopeful the new rules encourage more uninsured motorists to get coverage.

The Latin American Agents Association, based in El Monte, Calif., also said it believed insurers, consumer groups and the state insurance department should wait and see which way the market is impacted by the change, before "more darts are thrown--or backs are patted."

Insurer trade groups have sued to overturn the rules promulgated by Insurance Commissioner John Garamendi, which requires them, when setting individual driver rates, to deemphasize the weight they give to where the motorist is domiciled.

LAAA said it is hopeful that given carrier announcements of rate decreases and the publicity over the new regulations, "more uninsured drivers will rethink their decision to ignore California's compulsory insurance laws and do the right thing, for themselves, their families and communities."

An initial effort by insurers to secure an injunction before their suit is heard was unsuccessful, and last week the new rules went into effect. Insurers contend the impact of the regulation is to make rural drivers subsidize those in urban locations.

Since the new rules were released, four insurers have announced they were cutting rates for drivers.

The LAAA said it is "anxiously waiting" to see whether the new rules actually subsidize premiums of urban and inner-city drivers, or if drivers get premium relief that "consumer groups and the California Department of Insurance believe has been owed to drivers since the passage of Proposition 103 [the insurance reform voter initiative] nearly two decades ago."

"As our membership is comprised largely of producers doing business in larger metropolitan areas, as well as in communities with a high percentage of Latino residents, we have long held that the less weight given to ZIP codes in determining premiums, the better it will be for our customers," the LAAA said.

The group said further it does not believe that premium reductions should be held to a "zero-sum" standard.

"The across-the-board rate reductions by USAA and the Automobile Club of Southern California, as well as the recent rate request by State Farm--which would lower premiums for most of its policyholders by 8 percent--seem to bode well for all California drivers," the group said.

"Because the areas in which LAAA members do business historically have high uninsured motorist rates, our association is especially pleased to see a decrease in premiums," the group added. "In some cases, drivers automatically assume they will pay high insurance rates because of where they live, and do not even consider getting coverage."

The LAAA said it is "encouraged by what has happened in a short time, in relation to new rates."

"As insurance agents and brokers, we have a duty to provide our communities access to affordable insurance products," the group said. "Although it is still too soon to tell, it appears that the new regulations will prove to be a help to us, and not a hindrance. Ultimately, if it is good for our customers, it is good for us all."

Special Reports /

Calif. Auto Regs May Cut Uninsured Motorists, Agents Say

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