In accordance with California Code of Regulation (CCR), Section 2646.6, the Commissioner shall report those communities within California by ZIP code that the California Department of Insurance finds to be underserved by the insurance industry. The three main criteria to identify an underserved ZIP code are: 1) Uninsured Motorist Rate; 2) Minority Percentage; and 3) Per Capita Income.
Underserved Community ZIP Codes
The Department identified 159 ZIP codes that were underserved in 1996.
In 1995, the Department identified 151 ZIP codes. 3 ZIP codes that were underserved in 1995 did not meet the criteria for underserved in 1996. These three ZIP codes were too small to be considered since their population size or number of registered vehicles were below 1,000 per ZIP code.
In addition, 11 ZIP codes that did not meet the criteria for underserved in 1995, were identified as having met the requirement in 1996.
This report provides company data for the major property and casualty lines of business: fire, home, auto, and commercial multiple peril. The report shows the following data for the state of California and in the identified underserved ZIP codes:
- the number of earned exposures (Table E)
- the number of agents or agencies (Table F)
- the number of service offices (Table F)
- the number of direct solicitations by mail for private passenger automobile (Table G)
Due to the exemption of companies with annual written premium of less than $10 million, in the lines of business covered under CCR 2646.6, and the additional reporting options covered under CCR 2646.7 (Strategic Plan) and 2646.8 (Evidence of an Existing Presence), there was a drop in the number of companies submitting statistical plan data under CCR 2646.6.
- Not much changed from 1995 to 1996. The amount of insurance sold in underserved communities as a percentage of insurance sold statewide did not increase dramatically from 1995 to 1996.
- In some lines of insurance, there was an increase in the amount of insurance sold in underserved communities.
- Even with these small improvements, the data still presents a picture of far too many communities in California that are disconnected from the insurance marketplace. This is particularly evident in the auto insurance market.
- There was a slight increase in the amount of auto insurance written in underserved communities as a percentage of all auto insurance sold statewide.
Private Passenger Auto Liability (liability for bodily injury to others or damage to property of others): Approximately 6.3% of all private passenger auto liability insurance sold in California was sold in underserved communities in 1996. This is an increase from 5.6% in 1995.
Private Passenger Auto Physical Damage (protection against loss or damage to your own vehicle): Approximately 5.9% of all private passenger auto physical damage insurance sold in California was sold in underserved communities. This is an increase from 5.1% in 1995.
- Even with this slight increase in the percentage of auto insurance sold in underserved communities, this percentage is still well below the percentage of registered vehicles in underserved communities, approximately 13.62%.
- Several smaller auto writers wrote a high percentage of their auto liability insurance in underserved communities. Examples are: Western Pioneer (22.6%), now known as Commerce West, Coast National (21.4%), Superior (14.2%), and Millers Mutual Fire (12.4%).
- Of the larger auto liability writers, 20th Century had the highest percentage of its business written in underserved communities (11.4%). 20th Century also led the way for big auto insurers in 1995 (11%). Other large auto insurers above the statewide average were Allstate Indemnity (9.5%), Auto Club of Southern California (8.7%), Farmers (6.7%), and Allstate Insurance (6.7%).
- Large statewide insurers below the California average in 1996 were: GEICO (5.6%), State Farm (5.3%), Liberty Mutual (4.9%), Nationwide (4.4%), Safeco (4.3%), National General (4.1%), and Progressive (3.6%).
Fire and Homeowners Insurance
- Dwelling fire insurance is still sold at a much higher rate in underserved communities than homeowners insurance. The difference between the products is that homeowners insurance coverage includes not only fire protection, but also protection against theft and liability. While 17.51% of California's population resides in underserved communities, 27.2% of the fire insurance sold in California was sold in underserved communities, versus only 7.6% of homeowners insurance was sold in underserved communities.
- underserved communities as a percentage of all fire insurance sold statewide from 1995 (21.7%) to 1996 (27.2%). By far, the two leaders in California's fire insurance market in underserved communities are: Allstate (34.7% of its business was in underserved communities) and Farmers (31.8% of its business was in underserved communities).
- A slight positive development was that the amount of homeowners insurance sold in underserved communities as a percentage of all homeowners insurance sold statewide increased from 1995 (6.6%) to 1996 (7.6%). This could be attributed to two programs instituted by Farmers and State Farm during this period. The percentage of Farmers' overall business located in underserved communities increased from 6.4% in 1995 to 8.2% in 1996. The percentage of State Farm's overall business located in underserved communities increased from 5.2% in 1995 to 6.0% in 1996.
- Overall however, the amount of homeowners insurance sold in underserved communities as a percentage of all homeowners insurance sold in the state is still low, even with the progress from 1995 to 1996. While 17.51% of California's population resides in underserved communities, only 7.6% of the homeowners insurance sold in California was sold in underserved communities.
- There was a slight increase in the percentage of Commercial Multiple Peril Non-Liability insurance sold in underserved communities from 1995 (9.6%) to 1996 (10.7%).
- The data indicates that only two large companies were in the Commercial Multiple Peril marketplace in 1996: Farmers and State Farm. Both companies showed increases of approximately one percentage point in the percentage of Commercial Multiple Peril business in the underserved communities.
- Of the smaller insurers in the Commercial Multiple Peril marketplace in 1996, Crusader was the leader with 31.5% of its business being written in underserved communities.
- In the Homeowners market, the percentage of the insurance industry's agents located in underserved communities increased slightly from 1995 to 1996, from 4.2% to 4.9%. Of particular note was Farmers Insurance Group who increased its number of agents in underserved communities from 188 to 256 (with 5.3% appointed in underserved communities). The leader in appointing agents in underserved communities in 1996 was Clarendon National Insurance Company. In 1996, 11.7% (314) of Clarendon's 2,676 agents were in underserved communities.
- In the Auto insurance market, the percentage of agents appointed to sell auto liability insurance decreased from 1995 to 1996, from 5.4% to 4.9%.
- In the Commercial Multiple Peril (Non-Liability) market, the percentage of agents appointed in underserved communities stayed the same at 3.9%.
Public information requests should be directed to the Department's press office at (916) 492-3566. Any questions or comments regarding the methodology of the data collection presented in this report may be forwarded to Ben Gentile, Bureau Chief - Statistical Analysis Bureau at (213) 346-6316.