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A viewpoint by Thomas D. Elias: 14 years later, car insurance rates still unfair

April 03, 2001

What could be more fair to drivers than car insurance rates based primarily on their own driving records? Add the number of miles driven each year and years of driving experience as secondary pricing factors and you'd have a rate structure fair to everyone. Right?

That's what the majority of Californians thought in 1988, when they passed Proposition 103, which rolled back insurance rates in the state and tried to take geography out of the car insurance equation.

And that's the system voters would have today, but for ex-Insurance Commissioner Chuck Quackenbush, who left office last year under a thick black ethical cloud. Quackenbush kowtowed to the insurance companies on earthquake insurance rates, in reducing fines they should have been assessed — and in setting car insurance rates.

Now his appointed successor is infuriating consumer advocates by trying to hang onto the system set up by Quackenbush, the apparent insurance company tool. The companies and many drivers in the most rural areas have always opposed the rate-setting criteria of Proposition 103. They'd rather base car insurance prices on where people live. Fewer accidents occur in rural areas, they argue, so why should drivers there pay as much as folks who live in big cities where fender-benders are commonplace?

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What they don't say is that since many more people live in urban areas than in rural counties, charging higher rates based on residence alone is sure to bring more money into insurance company coffers.

Some rural drivers argue that if rates are based primarily on driving records, they'll end up subsidizing city dwellers.

That's because a mountain-dweller living a few miles outside Nevada City in the Sierra Nevada foothills would pay the same prices under such a system as someone living in South Central Los Angeles with the same experience and accident record.

Sure, and why not? Assume, as the insurance companies do, that far more accidents occur in crowded South Central L.A. or San Francisco than in the desert or the foothill country: Doesn't a clean driving record for someone in the urban neighborhood indicate that individual might even be a superior driver to the rural resident he's being compared with? Maybe he or she should even pay lower rates. After all, the city driver navigates an obstacle course every day, if the insurance companies are to be believed. It takes some doing to keep a record clean.

But now Quackenbush's successor, caretaker Insurance Commissioner Harry Low, is asking the state Supreme Court to pay no attention to these realities. Low, who testified in his confirmation hearings that he would be "fair to everyone, and that includes business," appears now to be behaving somewhat more than fairly toward insurance companies. He asked the state's highest court to uphold the Quackenbush rate system, which consumer advocates say makes a driver's home address more important than his or her driving record.

"In his first major test as insurance commissioner, Harry Low sides with Chuck Quackenbush and the insurance industry against … the motorists of the state," said Harvey Rosenfield, author of Proposition 103.

Rosenfield placed the emphasis in his ballot initiative on driving records, rather than the territorial rating system based on addresses, partly because the priority given to addresses was driving insurance prices up to prohibitive levels in central cities, forcing many motorists there — even superb drivers — to go uninsured.

Plainly, any system that claims where a car is garaged can be the leading determinant of accident risk will largely ignore how individuals handle their cars. It's a form of group discrimination that penalizes some drivers for what has befallen others.

The voters spoke plainly in 1988, rejecting insurance company claims and ballot arguments that maintained driving records were largely irrelevant.

Voters plainly came down on the side of individual responsibility. And so should the California Supreme Court, which has a moral obligation to eliminate territorial ratings and rectify one of the many damaging and questionable actions of Chuck Quackenbush.

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