Source: Insurance Newscast

Monday was the deadline for all auto insurance companies to comply with regulations that phase out discriminatory zip code pricing in California. According to the Greenlining Institute, a consumer protection group, most auto insurers have failed to meet this deadline.

The latest Department of Insurance reports indicate that over 75 percent of California’s auto insurers have not complied with the new regulations. Moreover, all of Californian’s top ten auto insurance groups by market share and 23 of the top 25 have not complied. These companies make up over 90 percent of the California auto insurance market and are likely continuing to determine rates using a discriminatory method through the use of zip codes.

California Insurance Commissioner Steve Poizner had roughly two years to enforce the regulations and remove what Greenlining believes is a discriminatory tool against inner-city motorists. Greenlining attorney, Kenechukwu Okocha said, “Basing premiums on where you drive instead of how your drive means motorists in places like Los Angeles and San Jose, rich or poor, pay more simply based on where they live. That just isn’t fair.”

Okocha expects more auto insurance companies will comply after the deadline, but expects compliance to be slow. “You have to wonder how long it will take to get all insurers to comply if after two years only two of the top 25 have done so,” said Okocha.

Greenlining criticized California Insurance Commissioner Steve Poizner for not being more aggressive in enforcing the regulations. “My question is, what has Commissioner Poizner been doing since he was elected in 2006?” questioned Okocha. “He calls himself the state’s top consumer advocate, but 75 percent of all auto insurers are ignoring him.”

The regulations were enacted in 2006 by former Insurance Commissioner John Garamendi before he left that office to become Lieutenant Governor. The regulations were intended to enact the rate determining requirements of Proposition 103, which was approved by California voters in 1988.

Proposition 103 directed insurance companies to use three primary rate determining factors: 1) driving safety record, 2) annual mileage driven, and 3) years of driving experience.

In 1996, then Insurance Commissioner Chuck Quackenbush enacted regulations that would have allowed zip codes to take precedence over the three aforementioned factors. The courts struck down Quackenbush’s regulations finding that they invalidated Proposition 103’s aims.