Auto Premiums to be Investigated by California Insurance Commissioner for Inequity
California Insurance Commissioner Ricardo Lara will investigate whether California motorists that pay reduced auto insurance premiums, due to being part of a group plan, creates hike rates for other low-income drivers. He scheduled an investigatory hearing for Sept. 17 at the Ronald Reagan State Building in Los Angeles to get to the bottom of the issue. The investigation comes after his department received complaints from consumer organizations saying that low-income drivers are affected by others paying reduced auto insurance premiums. Lara stated the following regarding the matter,
We’ve been hearing complaints for a couple of years now. Consumer groups are leery of this. They’re saying it impacts rates for low-income drivers, so I decided to get the facts.
Current California law allows insurers to issue coverage on a group plan that can provide lower auto rates for members of affinity groups. These affinity groups include alumni associations and professional organizations, which Lara believes some working class people may not have access to in order to get the same discounts. The California Department of Insurance is responsible for reviewing and approving auto insurance premiums in the state to ensure that they are fair and based on objective factors. Voters actually passed Proposition 103 in 1988 to establish the mandatory criteria for auto insurance premium rates to include a driver’s driving safety record, miles driven and years of driving experience, as well as optional factors the commissioner allows. We will have to wait and see what Lara’s investigation reveals and what he plans to do when he concludes his investigation.