The Hawaii Department of Commerce and Consumer Affairs Insurance Division published a memorandum informing insurers that the use of ZIP code-based rating for motor vehicle insurance is prohibited.

The Division states that ZIP codes were designed purely for postal delivery purposes, with no consideration of insurance risk. ZIP code-based rating factors have been used to charge different premiums for risks that are otherwise largely the same, without having the loss experience or actuarial data to support the difference in premiums. The Division warns that actuarially unjustified premiums are unfairly discriminatory under Hawaii statutes.

The Division will no longer accept ZIP code-based rating factors for use in the rating or pricing of motor vehicle insurance in the state. However, county-based rating factors are still allowed, provided they are actuarially justified and in compliance with Hawaii law.