1996 Commissioner's Report on Underserved Communities
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. There are many reasons why individuals do not have insurance. This report does not catalogue the possible explanations. Rather, the goal of this report is to identify the underserved communities and to begin the process of asking the tough questions about why communities are underserved. It is the Commissioner's hope that this report will be an aid in increasing carriers' presence in underserved communities. Moreover, it is the Commissioner's belief that this report provides further evidence of the need to commence a comprehensive inclusion effort aimed at underserved communities through the combined efforts of the insurance industry, community organizations, and the Commissioner's office.
About this Report
This report consists of the following information:
Table A - 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) of the CCR (see below). Keep in mind that 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:
a) 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
b) the per capita income of the community, as measured in the most recent U.S. Census, is below the fiftieth (50th) percentile for California; and
c) 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.
Table B - New and Removed ZIP Codes
This table lists those ZIP codes that have been added to this year's Commissioner's Report of Underserved Communities and those that have been removed from the 1995 Commissioner's Report of Underserved Communities. The shaded data indicates which criteria did not meet Section 2646.6(c)(1)(A) of the CCR (see definition above).
Table C - Statewide and Underserved Community Summary
This table summarizes the information provided in Tables D and E below. The table also includes the following information for reference:
- the number and percentage of registered vehicles in the underserved communities;
- the population size and its percentage that is in the underserved communities.
Note that the statewide uninsured motorist rate for 1995 approached 29% for private passenger automobile and that the 50th percentile (median) for per capita income for the state of California was $17,572. Thus, the uninsured motorist rate must be above 10 percentage points of the statewide uninsured motorist rate to trigger one of the criteria. The other two criteria are per capita income below the statewide median of $17,572 and a minority percentage above two-thirds. All three must be met to label a ZIP code underserved.
Important terms and Descriptions of Lines of Business
Table D - Total Earned Exposures
These tables, 10 in all, provide the number of earned exposures in the state of California and in underserved communities, and the percentage of total earned exposures in underserved communities for each of the coverages under Section (1) of CCR Code 2646.6 (see footnote). For each table the companies are sorted by their percentage of total earned exposures in the underserved community. Companies with the highest percentage are at the top. An aggregate count, basically the sum of the companies in each table, is provided at the top of each page in the shaded area. The dark border separates those companies that fall above the aggregate percentage of total earned exposures in the underserved communities and those that fall below.
Table E - Agent and Servicing Office Data
These tables, 10 in all, provide the number of agents or agencies and the number of service offices maintained in the state of California and in the underserved communities. The table sorts the companies based on the percentage of agents in California that are in the underserved communities. The companies with the highest presence are on top. Keep in mind that the number of agents or agencies will differ greatly between companies due to the different marketing techniques that each company incorporates. The three major marketing techniques are: captive, independent, and direct. Also, some companies provided the number of agents, whereas, others provided the number of agencies. And those that write using the direct approach are not included.
On top of each table, in the shaded area, an aggregate number of agents/agencies and servicing offices is provided. The aggregate number is the sum of all the companies in each table. The dark border separates those companies that fall above the aggregate percentage of total agents in the underserved communities and those that fall below.
Table F - Direct Mail
The table shows the number of direct mail solicitations for the state of California and in the underserved communities, and the percentage of the total that was mailed in the underserved communities for private passenger automobile.
Appendix A - Percent of Non-Responding Applicants
The purpose of this handout is to provide a table that highlights the increase in percentages of non-respondents between experience year 1995 and experience year 1997. The percentage of non-respondents is a percentage of applicants that did not provide their racial and/or gender identity.
As seen on this table, the percentage of non-respondents for personal lines grew from 65.29% (1995) to 69.13% (1997). Also, the percentage of non-respondents for commercial lines grew from 81.98% (1995) to 82.61% (1997).
In reviewing our notes and goals from the previous years, we hoped that companies would have experienced significant increases in their response rates from applicants over time. Our assumption was that over time, consumers/applicants would begin to get used to the collection of demographic information related to CCR 2646.6. Unfortunately, after two years, the resulting data does not provide evidence that the reporting companies have been able to see any significant increase in response rates over time.
Appendix B - Percentage and Index of Applicants Denied
The purpose of this handout is to provide a table that highlights the percentage of applicants denied statewide and in the underserved communities. In addition, this table provides an index of applications denied in underserved communities versus applications denied statewide. The index serves as an indicator of a company's experience in declining applications.
The attached table is sorted by index ranking.
The index is calculated by the percentage of applications declined in underserved communities divided by the percentage of applications declined statewide.
An index score of greater than 1 indicates that the company declined more applications statewide than in underserved zip codes.
An index score of less than 1 indicates that the company declined less applications statewide than in underserved communities.
Basically, the higher the index score, the more likely the insurer will approve an application in an underserved community.
An asterisk (*) indicates there were no applicants denied in the underserved communities. Two asterisks (**) indicate there were no applicants denied in the state of California.
List of Tables
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- Table A - Underserved Communities (PDF Format)
- Table B - New and Removed ZIP Codes (PDF Format)
- Table C - Statewide and Underserved Community Summary (PDF Format)
- Table D - Total Earned Exposures (PDF Format)
- Table E - Agent and Servicing Office Data (PDF Format)
- Table F - Direct Mail (PDF Format)
- Appendix A - Percentage of Non-Responding Applicants (PDF Format)
- Appendix B - Percentage and Index of Applicants Denied (PDF Format)