[QUOTE=Freddy the Pig]
No, they aren’t. They must give it less weight than driving record, even if it’s a better predictor of loss costs.
No, they haven’t. Urban drivers aren’t subsidizing rurals just because they pay a higher premium, because their loss costs are also higher. One group is only subsidizing another group if the ratio between its premiums and loss costs is different. Because, in many cases, residence is a better predictor of loss costs than driving record. Suppose the average annual loss costs are:
Clean record, urban area: $800
Accident(s) on record, urban area: $1000
Clean record, rural area: $400
Accident(s) on record, rural area: $550
By mandating that driving record be the primary consideration, you force a skewed rate structure in which rural drivers pay more per dollar of loss cost than urban..
[/QUOTE]
But it’s *not * a better predictor of costs, or so the courts and Insurance Commissioner have ruled.
The costs aren’t that much different.
No, residence is not a better predictor. Cite that it is?
Those numbers are complete made up bullshit.
News: 2006 Press Release
Insurance Commissioner John Garamendi Announces State’s Largest Insurer Has Abandoned Fight Against Good Drive Auto Insurance Reforms and Will Seek Rate Reduction of $204 Million
Announcement follows court decision rejecting an industry-led effort to stop the new regulations; pending approval of State Farm’s plan, rates for 4.3 million drivers have been scheduled for reductions totaling $370 million annually
SACRAMENTO – Insurance Commissioner John Garamendi today announced that State Farm Insurance, California’s largest auto insurer, has ended its battle against his Good Driver Reforms, and is seeking an 8% average reduction for its policyholders while simultaneously implementing the new regulations.
Insurance Commissioner John Garamendi Praises Ruling on Good Driver Auto Insurance Reforms; Auto Insurers Must Now Base Rates Primarily on How Safely You Drive, and Not Where You Live
The Commissioner’s fight to end ZIP Code discrimination by auto insurers approaches conclusion
SACRAMENTO – Insurance Commissioner John Garamendi on Thursday praised a judge’s decision to reject the insurance industry’s challenge to his Good Driver Auto Insurance Reforms. “This is a great victory for California voters and good drivers wherever they live,” said the Commissioner. “It means that Californians will finally realize the benefits of Proposition 103, which they approved more than 17 years go.”
The Sacramento Superior Court judge’s decision to reject the industry’s request for an injunction against the reforms is the latest step in the Commissioner’s battle to implement the will of voters who approved Proposition 103 in 1988. That proposition demanded that insurers base rates primarily on how safely you drive, and not where you live. Most importantly, the reforms would end the industry’s practice of penalizing good drivers simply because they live in the “wrong” ZIP Code.
“I am extremely pleased with the court’s ruling today,” said Commissioner Garamendi. “Now the industry must follow the rules and the law, and they must do so immediately.”
Over the past several weeks, the state’s fourth and ninth largest auto insurers filed applications to lower rates significantly while simultaneously implementing the Good Driver Reforms. The Auto Club of Southern California will give its nearly 1 million policyholders an average decrease of 7%, while USAA will provide most of its 426,000 customers with an average decrease of 5%.
“The rest of the industry should follow the good example set by these companies,” said the Commissioner. “Good drivers should reap the rewards of being safe, and it’s high time that the industry satisfy its obligations under Proposition 103.”
Due to the actions of former Commissioner Chuck Quackenbush, insurers have avoided the law’s provisions calling for rates to be based primarily on three mandatory factors - driving record, driving experience, and number of miles driven. Instead, the Quackenbush system has allowed them to place greater importance upon other factors, such as marital status, gender, and most frequently, ZIP code.
This system permitted insurers to charge widely varying rates to similarly situated drivers who live across the street from one another, based solely on their respective ZIP Codes.
Insurance Commissioner John Garamendi Calls Court’s Ruling on “Good Driver Reforms” A Victory for All California Drivers
The 3rd District Court of Appeal on Wednesday refused to overturn a Superior Court ruling that required insurers to comply with the Commissioner’s Good Driver Reform regulations.
SACRAMENTO – Insurance Commissioner John Garamendi on Wednesday hailed a District court’s decision to uphold an earlier ruling that rejected an insurer-sponsored effort to stop the Commissioner’s Good Driver Reform regulations. “Once again the courts have ruled that insurers must comply with the will of voters who decided in 1988 that how safely you drive is more important than where you live in the pricing of auto insurance,” said the Commissioner.
Insurers must now submit new rating plans that comply with the regulations this week. Two large insurers, the Automobile Club of Southern California, and USAA Insurance, submitted filings well before the deadline. Both gave policyholders meaningful reductions in rates, while simultaneously implementing the new regulations’ requirements.
news: Automobile Rating Factor Regulations
Automobile Rating Factor Regulations
May 24, 2006
*Thank you for your interest regarding my proposal to improve the way auto insurance is priced in California. Simply put, I want to make sure that how safely you drive is more important than where you live. I welcome your input on this matter, and as always your thoughts will be considered as the process goes forward. However, before you make your final determination on this issue, I would encourage you to read further to understand why I believe your opposition may be the result of misinformation.
First of all, my plan, contrary to what the insurance industry contends, does not distinguish between rural or urban drivers. There is absolutely no element of this proposal that calls for higher rates in rural areas to subsidize lower rates in urban areas. In fact, good drivers in rural areas will likely see their rates go down under my proposal.
The industry, in order to protect the status quo and its marketing plans, has launched a highly dubious $2.4 million advertising attack campaign against me and my proposal. In fact, industry leaders attempted to delay these regulations by threatening me with this attack campaign. I will let law enforcement deal with what I believe to be the industry’s blackmail attempt, but I won’t stand silent while its campaign frightens and misleads rural Californians.
What my plan does is reward those who drive safely, and end the insurance industry’s unfair treatment of drivers – both rural and urban – who live in the “wrong” zip code. Are you aware that your neighbor just across the road, with whom you share an identical driving record, may be paying much less for auto insurance just because his or her house happens to sit in another zip code? It happens all over this state in rural areas and urban, and it isn’t fair. Furthermore, because of zip code rating, the current system sometimes allows drivers with accidents and/or tickets to pay less than a driver with a clean record. It doesn’t make sense.
Of course, location can be an important factor in considering how much to charge for auto insurance. That’s why my regulations still allow zip codes to be used, to a very significant extent. In fact, after I heard from so many people earlier this year about this issue, I revised the proposal to strengthen the provisions that relate to risk of loss.
In 1988 California voters passed Proposition 103, which required insurers to consider driving record, driving experience, and miles driven before any other factor. My new rules will finally accomplish this mandate – and they will do so without making rural drivers subsidize urban drivers. Don’t believe the industry’s misleading campaign.
Sincerely,
JOHN GARAMENDI
Insurance Commissioner*
*SANTA MONICA, Calif., May 18 /U.S. Newswire/ – Five of the nation’s largest auto insurers began airing an expensive TV advertising campaign today in order to mislead Californians, mostly in rural parts of the state, about the effects of Insurance Commissioner John Garaamendi’s proposed Good Driver pricing reforms. Garamendi’s reforms, which are mandated by the 1988 voter initiative Proposition 103, require auto insurers to base drivers’ premiums primarily on driving record rather than other factors such as ZIP Code or marital status.
The industry sent an explicit message to Garamendi last month, saying it would unleash the campaign just as Garamendi was running for the office of Lieutenant Governor unless he retreated from the reforms. Garamendi refused, and reported the extortion attempt in letters sent last week to the United States Attorney and FBI. Now, carrying out the threat, the industry is spending an estimated $2.4 million to mislead Californians into believing that the Good Driver reforms would hurt them, when, in fact, the new rules will benefit good drivers and low-mileage drivers in every corner of the state, according to the non-profit, nonpartisan Foundation for Taxpayer and Consumer Rights (FTCR).
“The insurance industry will use any means necessary, from TV ads to extortion, to stop pricing reforms for good drivers, and this campaign should be seen for what it is: a big lie meant to mislead Californians about the impact of Garamendi’s reforms,” said consumer advocate Douglas Heller, Executive Director of FTCR. “Anyone who sees these ads or receives the mailer should ask themselves why they should trust the insurers’ attack ad when their goal is to protect themselves, not you.”
Over the past two years auto insurers have enjoyed record profits in California (reaping over $4 billion in profits from California auto insurance policies over the past two years) and are desperate to keep the status quo, which has allowed them to increase profits by charging good drivers throughout the state unfairly high premiums simply because of the ZIP Code in which they live. The new Garamendi rules will still allow insurers to consider geography in setting premiums, but will require factors related to a motorist’s driving record to be most important.
Insurance Company Statistics Lie
The premise of the insurance industry’s ad campaign is that Good Driver reforms will lead to higher rates for rural drivers. The campaign cites statistics that are misleading in order to create unfounded fear of price increases among - good drivers and low-mileage drivers. For example, the statistics that the attack ads cite reflect aggregate data that include likely and appropriate rate hikes on bad drivers, such as those with DUIs, and long-haul drivers, who should pay more than neighbors who put fewer miles on their car every year, consumer advocates said. Even State Farm, one of the primary funders of this ad campaign, admitted that “There is…no study from which the impact on California policyholders can be assessed,” in a formal filing with the California Department of Insurance earlier this year.
Proposition 103, the 1988 initiative that mandated these Good Driver reforms, overcame an $80 million industry campaign of similar lies, but this portion of the initiative has never been implemented because of insurance industry-driven delays.
“Don’t believe the insurance industry hype. These ads are not to be trusted and drivers should call their insurers to demand a stop to the spending of their premium dollars on this deceptive scare campaign,” said Heller.
Over the past three years, Commissioner Garamendi has heard testimony from drivers throughout the state, as well as economists, actuaries and other experts, who have illustrated how the current system, installed by disgraced former Commissioner Chuck Quackenbush, hurts good drivers. Under the current rules that Garamendi proposes to change, forces drivers to pay as much as $500 more for basic auto insurance than a neighbor across the street in a different ZIP code.*
These are press releases from a government agency, thus I quote in full.
) for $1million.