In accordance with California Code of Regulations (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.
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)
Noteworthy Changes in Underserved Communities Between 1996 to 1997
In our initial analysis of the data, there were three important changes that occurred between 1996 to 1997. These changes are as follows:
A 13% Decrease in the Number of Underserved ZIP Codes between 1996 to 1997 - In this year's study, it was discovered that there was a significant statewide decrease in underserved communities. This decrease was experienced in large, urban areas, such as, San Francisco (94110), San Jose (95122), Oxnard (93033) and parts of Los Angeles County - Whittier (90606), Azusa (91702), and Rosemead (91770) - as well as less populated areas of the state. Overall, the number of underserved ZIP codes decreased from 159 in 1996 to 138 in 1997 - 13% less underserved ZIP codes. This significant decrease in underserved ZIP codes was attributed to a drop in the uninsured motorist's rate for these previously underserved communities. A detailed listing of these changes is provided in Table B, page 12 of this study.
Improved Activity in Homeowners and Personal Auto Liability Insurance in Underserved ZIP Codes -The data reported in Table C of this study demonstrates that there were increases in the percentage of earned exposures for both Homeowners and Private Passenger Auto Liability Insurance in the underserved communities. The increases were 2.88% for Homeowners and 38.67% for Auto Liability.The increase in earned exposures is significant because it means that there are now more homes and automobiles with insurance coverage in these underserved communities. The increase in earned exposures also translates into an increase in the amount of activity from the licensed insurance companies in these underserved communities. The data suggests that the access to insurance coverage for Homeowners and Auto Liability in these communities has improved from 1996 to 1997.
Decrease in Commercial Multiple Peril (Non-Liability) Attributed to Two Large Commercial Writers - The data reported in Table C of this study also demonstrates that there was a decrease in the percentage of earned exposures for Commercial Multiple Peril Non-Liability Insurance in the underserved communities - a decrease of 6.60%.
The data in Table C demonstrate that the decrease in earned exposures from 1996 to 1997 can be directly attributed to declines in earned exposures from California's two largest insurers - State Farm Insurance Group (-7.33%) and Farmers Insurance Group (-28.84%). Because of the large market share commanded by these companies, their respective declines in earned exposures have significantly affected the market.
It is important to note that, while the overall statewide underserved exposures fell 6.60% due to these two large writers, the smaller insurance companies experienced increases in earned exposures in the underserved communities.
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.