California's insurance commissioner, Ricardo Lara, will hold an investigatory hearing into how insurers' use of occupational, educational, and other groups for setting automobile insurance rates affects insurance premiums for lower-income Californians.
The hearing will take place Tuesday, September 17, at the Ronald Reagan State Building in Los Angeles.
The commissioner explained in a statement that because California law allows insurers to issue insurance coverage on a group plan, some insurers rely on this law to offer lower automobile premium pricing to certain “affinity groups” including professional groups and alumni associations. He said that the department “has long heard complaints alleging that this way of setting rates affects lower-income drivers and other groups, in violation of other California laws.”
This hearing will be the first fact-finding hearing the department has held in its history to examine the use of affinity groups in automobile insurance rate-setting.
“Affordable auto insurance can increase Californians' economic mobility through access to employment and higher-paying jobs,” Commissioner Lara said. “Since we require drivers to have insurance, I want to hear the facts about how lower group rates for some Californians affect the cost of insurance for all Californians, including lower-income drivers.”
The department is responsible for the review and approval of automobile insurance premiums in the state to ensure they are fair and based on objective factors. The 1988 voter-enacted Proposition 103 established the mandatory factors to be a driver's driving safety record, miles driven, and years of driving experience, followed by optional factors that the commissioner may permit for use in automobile insurance rating.
In January, the department prohibited the use of gender in private passenger automobile rate-setting in order to remove factors that are beyond a driver's control.
Commissioner Lara will invite stakeholders and other interested persons to respond to specific questions in advance of the hearing that focus on the manner in which rates and rating practices are used for group private passenger automobile insurance in California.
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Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].