ACIC Opposes Extending Low-Cost Auto Insurance Program

May 16, 2005

Without first conducting a thorough evaluation, it is premature to expand California’s low-cost auto insurance program from two counties to the entire state, according to the Association of California Insurance Companies (ACIC).

“Expanding statewide now is too big of a jump and too soon without knowing the impact and the need for such a program in all 58 California counties. Therefore, we are opposing the legislation,” said ACIC President Sam Sorich.

The proposed expansion is contained in legislation, SB 20 by Sen. Martha Escutia (D-Whittier) that is pending on the Senate floor. The pilot, low-cost program would be available statewide beginning April 1, 2006, if the bill is signed into law this year.

The existing program is available now only in Los Angeles and San Francisco counties.

“Without more definitive information on the pilot program’s experience and the program’s impact on California consumers, the program should not be expanded to other counties. Moreover, there should be a study to determine whether the low-cost program is really needed or desirable for drivers in additional counties,” said Sorich.

He pointed out that as of Dec. 31, 2003, 9,665 policies were written in the program’s two counties. Last year, 7,202 new policies were written, a marked increase in the program’s participation.

“The impact of this recent change in the program’s business should be analyzed before there is a final decision on whether to expand the program,” Sorich said.

In addition to expanding the program statewide, SB 20 would change the program’s scheduled Jan. 1, 2007 sunset to Jan. 1, 2012 and increase the value of cars eligible for the program from $12,000 to $20,000.

“There may be merit in considering an increase in the $12,000 limit. However, SB 20’s proposed increase to $20,000 is too great. A more modest increase should be considered,” said Sorich.

Topics California Auto

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