Effort Begins to Educate Californians about Pending Auto Insurance Rate Increases

A group of local elected officials, chambers of commerce, tax groups and insurance companies announced that Californians to Stop Unfair Rate Increases (CSURI) will begin distributing educational information to Californians through television ads and mail to their homes about proposed auto insurance regulations. The group is partly funded by insurance companies, and says the regulations will unfairly raise rates for millions of drivers statewide.

“I testified at a town hall meeting in Fresno and expressed my concerns when these auto rating changes were being discussed in early 2004,” said Kings County Supervisor Jon Rachford. “I also drove from Hanford to San Francisco in February of this year to testify against the changes again at the public hearing. I’m not alone in my opposition or in my frustration. Over the past several months, dozens of local elected officials, chambers, and other community leaders have registered concerns with the regulations. Unfortunately, we have been ignored.”

“I want to ensure my constituents understand how this regulatory change will impact their pocketbooks,” said Inyo County Supervisor Linda Arcularius. “I’m sure elected officials from other negatively affected regions would feel the same. We are confident that when more Californians are made aware that they are about to pay as much as 30 percent more for auto insurance — just to subsidize arbitrary rate decreases for drivers in the state’s biggest cities — they will take action and urge Insurance Commissioner Garamendi to drop the plan before it is implemented.”

The law proposed by California Commissioner John Garamendi in December 2005 seeks to reduce the influence location carries in the formula when insurers calculate auto rates. By reducing the influence of location, the group says drivers in more congested areas of the state like Los Angeles, San Francisco and Beverly Hills, where there are more people on the road and more risk of an accident or theft, will pay less for auto insurance. Alternatively, rates will go up for drivers in more rural and suburban areas, where there are fewer people on the road and less risk of an accident.

The proposed changes ignore other factors that greatly contribute to risk associated with certain regions, the group said. Population density and congestion are two such factors, another is fraud. According to the National Insurance Crime Bureau, there are more staged accidents in Los Angeles than any other city in the country, except Miami, they said.

Some members of CSURI also participate in Californians Against Higher Insurance Rates, a loosely formed coalition that has been speaking out against the proposal during regulatory proceedings held by the Department of Insurance. The coalition said many local leaders became frustrated with the lack of response to their opposition and look forward to participating in a more expansive effort to educate and engage more Californians before it’s too late.

CSURI will be requesting contributions from the public and businesses, but in the meantime a few insurance companies, Farmers, 21st Century, State Farm, Safeco and Allstate agreed to fund the education effort because, according to the group, they believe that auto insurance rates should be based on actual costs and risks and not arbitrary desire to reduce rates for certain customers.

A budget of approximately $2 million will allow the coalition to educate households in the following counties: Butte, Del Norte, Humboldt, Imperial, Inyo, Kern, Kings, Mendocino, Nevada, Lake, Plumas, Santa Barbara, San Benito, San Diego, Solano, Tulare and Yolo. Additional counties may be added later.

To see a list of CSURI Steering Committee members, a PDF of the mail piece and the script for the TV ad, visit http://www.stopunfairrates.org/.

Topics Trends Auto Legislation Pricing Trends