The latest attack on insurers and rate setting comes from California Insurance Commissioner Ricardo Lara. He’s going to hold an “investigatory hearing” on September 17th of this year into how insurers use information from occupational, educational and other groups to set auto insurance rates.
These affinity groups — like professional groups and alumni associations — are allowed to purchase insurance on a group plan. That lowers the rates of members and — in a roundabout way — causes rates to be higher for the poor.
He said the department has been hearing complaints about this practice for years. By offering lower rates to these groups, poorer Californias pay higher rates. That violates — Lara thinks — California law.
“Affordable auto insurance can increase Californians’ economic mobility through access to employment and higher-paying jobs,” 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.”
California’s insurance regulating Proposition 103 says ratings can be determined by a safe driving record, the number of miles driven, driving experience and from other factors.
Lara has already prohibited the use of gender in passenger auto rate-setting to remove factors for rates that are beyond the control of a driver.
The commissioner said he is going to invite stakeholders and others that are interested to answer questions in advance of the hearing.
Source link: The California Department of Insurance