California Commissioner to Hold Hearing on Auto Insurance Groups And Premiums

May 14, 2019

California Insurance Commissioner Ricardo Lara plans to hold an investigatory hearing into how insurers’ use of occupational, educational, and other groups for setting automobile insurance rates affects insurance premiums for lower-income Californians.

The hearing is set for Sept. 17 at the Ronald Reagan State Building in Los Angeles.

Since California law allows insurers to issue insurance coverage on a group plan, some insurers rely on this law to offer lower automobile premium pricing to certain “affinity groups” including professional groups and alumni associations, according to the California Department of Insurance.

The CDI reports it has has long heard complaints alleging that this way of setting rates affects lower-income drivers and other groups, in violation of other California laws.

“Affordable auto insurance can increase Californians’ economic mobility through access to employment and higher-paying jobs,” Lara said in a statment. “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.”

The voter-enacted Proposition 103 established the mandatory factors to be a driver’s driving safety record, miles driven, and years of driving experience, followed by optional factors that the Commissioner may permit for use in automobile insurance rating.

In January, the Department of Insurance prohibited the use of gender in private passenger automobile rate-setting in order to remove factors that are beyond a driver’s control.

Lara plans to invite stakeholders and other interested persons to respond to specific questions in advance of the hearing that focus on the manner in which rates and rating practices are used for group private passenger automobile insurance in California.

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