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CA Department of Insurance

Commissioner's Report on Underserved Communities

Print Report  (Updated February 2014)
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Introduction

Welcome to California Department of Insurance Statistical Analysis Division's webpage for the Commissioner's Report on Underserved Communities.

The Community Service Statement under California Code of Regulations (CCR) Section 2646.6, has the purpose of addressing the issue of availability of insurance in "underserved" communities and of promoting anti-discrimination so that all have equal access to insurance in California.

The regulations require the California Department of Insurance to collect and analyze data from home, personal auto, commercial multiple peril and commercial fire insurers in California for all ZIP codes, and report on those that are considered as "underserved".

The report focuses on the lines of business, listed below, that are most affected and that impact low-to-moderate income households and small business owners:

1) Line 1- Fire
2) Line 4- Homeowners Multiple Peril
3) Lines 5.1 and 5.2 - Commercial Multiple Peril (both liability and non-liability portions)
4) Line 19.2 - Private Passenger Automobile Liability

The report is a 5-year compilation of "earned exposures", the number of agency offices, and the number of service offices by individual or group insurer in the "underserved" areas. It measures the percentage that the "underserved" represents to the total for the state.

There are 145 communities in California that are considered "underserved" as defined herein.

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About this Report

This report consists of five tables (Tables A through E):

Table A - Zip Codes in Underserved Communities

This table lists the communities in the state of California, by ZIP code, that fall within the definition of "Underserved" pursuant to Section 2646.6(c)(1)(a-c) of the CCR (see below). All three criteria must be met for a ZIP code to be deemed "Underserved".

Per Section (c) of CCR code 2646.6, a community shall be deemed to be "underserved" by the insurance industry if the Commissioner finds:

  1. the proportion of uninsured motorists is ten percentage points above the statewide average as reflected in the most recent Department of Insurance statistics regarding the statewide average of uninsured motorists; and
  2. the per capita income [1] of the community, as measured in the most recent U.S. Census, is below the fiftieth (50th) percentile for California; and
  3. the community, as measured in the most recent U.S. Census, is predominantly minority. Predominantly minority community can be qualified as any community that is composed of two-thirds or more minorities as those groups are defined in subsection (b) (6) (A) through (D) of CCR Code 2646.6.

The Department identified 145 ZIP codes that were "Underserved" based on the criteria above.

Table B - Summary Statistics

The purpose of this table is to summarize the number of earned exposures statewide and in the "underserved" communities for each of the experience years involved, for Personal and Commercial Property Coverage as well as for Private Passenger Automobile Coverage.

Table C - Number and Percentage of Total Earned Exposure per Company

The purpose of this table is to provide total earned exposures, statewide and in the "underserved" communities, per company, for each of the experience years involved, including the percentage of total earned exposures in the "underserved" communities to statewide data. This report represents roughly 99% of the insurance market for the lines of business considered under the Community Service Statement. This table is comprised of three sections, with one section for each category of insurance business - real and personal property, private passenger auto, and commercial multi-peril and commercial fire. Each section consists of aggregate totals for the 5 experience years and reports the coverages that were written by the company (listed alphabetically).

Table D - Service Office Data per Company

The purpose of this table is to provide the number of service offices per company in California and in the "underserved" communities, for each of the experience years involved, including the percentage of service offices in the "underserved" communities to statewide data. The table lists the companies alphabetically and reports the largest number of service offices reported under the lines of business considered in the Community Service Statement for each business type - personal and/or commercial.  The total number of service offices shown in this report refers to the number of sales/marketing, claims offices and agencies a company had in the year reported.  Note that a service office can manage both business types and that a service office can represent multiple individual companies within the same parent company.

Table E - Agency Data per Company

The purpose of this table is to provide the number of agencies throughout the state of California and within the "underserved" communities, for each of the 5 experience years involved, that are contracted to write insurance for the companies (listed alphabetically), and the percentage of agencies in the "underserved" communities to statewide data. The table reports the largest number of agencies reported under the lines of business considered in the Community Service Statement for each business type - personal and/or commercial.  Note that an agency can manage both business types and that an agency can represent multiple individual companies within the same parent company.

Please note that for experience year 2008, companies had the option to report by the number of agents or agency. Thereafter, companies were to report only by the number of agencies, broken down into Captive and Independent.

Table E contains the number of agencies by marketing system based on captive/exclusive or independent agency outlets. Please note that companies using a different marketing system other than agencies, such as a direct marketing system or having brokers to market their products, will not report any agencies.

Data Differences

Any data differences from year to year can be attributed, but not limited to the following:

  • companies' confirmation of the increase/decrease in business that consequently changed their marketing strategies as far as the total number of service offices/agencies is concerned
  • discontinuance of a particular business line/program or if a book of business was in run off
  • addition of a business line from one year to the other
  • *change in service type reporting from "by Agents" to "by Agency"
  • a group submission with an additional (or deletion) company's data for a particular experience year

*It is important to note that the number of agents or agencies will differ greatly between companies due to the different marketing techniques that each company incorporates, namely: captive, independent, and direct marketing/use of brokers.  In addition, some companies provided the number of agents in experience year 2008, whereas, others provided the number of agencies. Thereafter, for experience years after 2008, reporting by agency is the only reporting method. For those companies that write business using the direct marketing/brokerage approach, no agency data is found in this report.

Important Terms and Insurance Coverages Provided

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Conclusion

Communities that are considered "underserved" are with no or little insurance protection. Absence of or inadequate insurance protection can be detrimental to people's lives. To ensure that All individuals and families, as well as businesses or organizations get the insurance protection they need against the adverse financial consequences of losses is one of the goals of California Department of Insurance. California Code of Regulations (CCR) Section 2646.6 paves the way for the department in its strong mission to continually identify these "underserved" communities, so they too, can acquire the insurance protection they need.

This report cannot address the issue as to why some people do not have insurance. It is up to the community, insurance industry and the Department to make sure adequate coverage can be made available to all people. However, with this report, it is with hope that it can continue to encourage the insurance industry to invest and to make insurance accessible in the"underserved" communities, while the California Department of Insurance, continues with its utmost goal of trying to educate and help everyone benefit from the protection and the peace of mind that insurance can offer.

Below are examples of how the department and the State tackled or is dealing with the "underserved"communities:

What have the California Department of Insurance (CDI) and the State done or is still doing to address these "underserved" or uninsured communities?

1) California Low Cost Automobile Insurance (CLCA) Program was established by the Legislature in 1999 and exists pursuant to California Insurance Code Section 11629.7 as a program designed to provide income eligible persons with auto liability insurance protection at affordable rates as a way to meet California's financial responsibility laws.

On December 10, 2007, the program became available in all 58 counties of the state. The California Department of Insurance has an aggressive public relations campaign, including a new website at www.mylowcostauto.com and paid advertising and related publicity in targeted areas.

"Since the program's inception, 87,282 Californians have applied for insurance through the program, of which 73,786 assignments were made. At the end of 2012, there were 9,068 policies in force. According to statistics from the California Automobile Assigned Risk Plan (CAARP), approximately 53% of last year's assigned motorists had previously been uninsured…… The program has met the success measures outlined in statute and CDI will work aggressively to promote the CLCA program, through its Consumer Education and Outreach project, to "underserved"communities." [2]

2) COIN (California Organized Investment Network ) was established in 1999 and is a collaborative effort among the California Department of Insurance, the insurance industry and the community. Its goal is to provide leadership in increasing insurance industry investment in "underserved" and rural communities throughout California. It has its shares of successes with insurance companies investing in California urban and rural communities with low-income families.

3) In January 2012, the formation of an Insurance Diversity Task Force was made to consider and make recommendations about diversity in the insurance industry. One of the missions is to identify and promote insurance companies that are actively engaged in diversity issues. This is in connection to the Assembly Bill 53 that was signed into law and requires insurers to report to the California Insurance Commissioner their procurement efforts with minority, women and disabled veteran-owned businesses. It was noted in this Bill that it is in the state's interest to encourage competitive business opportunities for all of its people.

Contact Information

Any questions or comments regarding the methodology of the data collection presented in this report may be forwarded to:

Luciano Gobbo
Division Chief
Statistical Analysis Division
e-mail: Luciano.Gobbo@insurance.ca.gov

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[1] Per capita income was estimated by Western Economic Research.
[2] Excerpt from the "Report to the Legislature & Consumer Education and Outreach Plan 2013", Low Cost Auto Website.

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