Auto Rates Will Skyrocket for Drivers in 51 California Counties If Territory Rating is Eliminated

    SACRAMENTO, Calif.--March 13, 2001--If the three mandatory factors were all that could be used in rating auto insurance, good drivers in 51 of California's 58 counties would experience a 3 percent to 85 percent increase in their auto insurance rates according to the Personal Insurance Federation of California (PIFC).
    "In a unanimous decision, the California Court of Appeals upheld the current auto rating factor regulations which allow in addition to the three mandatory factors accident frequency and severity in different regions of the state to be taken into account in setting rates," explained Jerry Davies, director of communications for PIFC. "This means that rates can be based on actual cost in each region and good drivers in low-income rural areas of the state would not have to subsidize drivers in high accident, high income urban areas," Davies said.

    If the petitioners (Taxpayers Foundation and Senator Speier) read the Appellate Court ruling, it clearly states:

--	"The current regulations produce lower premiums for more good drivers than other alternatives under consideration." (page 67)
--	Elimination of territory "would produce arbitrary premiums and raise the premiums of most good drivers." (page 68)
--	"Uncontradicted evidence establishes that this rule would produce rates which are individually and collectively arbitrary, undermine the relationship between rating factors and risks of loss, and result in higher premiums for most good drivers." (page 69)

    "It is unfair for those who can least afford to have their auto rates increased, meaning the rural poor, to have to subsidize the wealthy who live in Santa Monica, where the head of the Taxpayers Foundation lives, and Beverly Hills or on Nob Hill in San Francisco. If the Taxpayers Foundation and Senator Speier have their way, that's exactly what would happen," Davies stated.
    "According to documents that are part of the Appellate Court record, good drivers in San Mateo County, part of Senator Speier's district, would experience rate hikes under her proposal to eliminate territory. Basically, everyone who commutes in her district will pay the price of her ill-advised approach," Davies added.
    "If the petitioners have their way, good drivers in counties like Mariposa will experience a +29.5 percent increase and other counties like Fresno and Madera will experience increases as well. For that reason, the counties of Mariposa, Fresno and Madera intervened as amicus in the court proceedings in support of the Department's regulations. The Taxpayers Foundation apparently does not care about drivers in rural areas of the state as long as 30 percent of the drivers living in heavily populated areas will pay lower rates," Davies concluded.