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Commissioner Lara to Hold Hearing Into How Automobile Insurance Groups Affect Driver Premiums

News: 2019 Press Release

For Release: May 10, 2019
Media Calls Only: 916-492-3566
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Commissioner Lara to Hold Hearing Into How Automobile Insurance Groups Affect Driver Premiums
First fact-finding hearing in Department’s history on use of ‘affinity group’ discounts set for September 17 in Los Angeles

LOS ANGELES, Calif. — Insurance Commissioner Ricardo Lara will 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 will take place Tuesday, September 17 at the Ronald Reagan State Building in Los Angeles. The notice of hearing is available to the public.

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

This is the first fact-finding hearing the Department has held in its history to examine the use of affinity groups in automobile insurance rate-setting.

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

Unlike home or earthquake insurance, auto coverage is required by law. The Department of Insurance is responsible for the review and approval of automobile insurance premiums in the state to ensure they are fair and based on objective factors. The 1988 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.

Commissioner Lara will 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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Media Note:

The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.

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