Statement by Barry Carmody, President, Association of California Insurance Companies, Regarding Court Ruling On Auto Insurance Rating Factors

    SACRAMENTO, Calif.--March 13, 2001--First a little history. Former Insurance Commissioner John Garamendi established temporary, emergency auto insurance rating factors that he failed to finalize as permanent regulations during his entire term. Our members priced their products utilizing those regulations.
    After Insurance Commissioner Chuck Quackenbush took office, he rewrote the rating process in order to comply, he said, with Proposition 103. The Association of California Insurance Companies (ACIC) opposed the Quackenbush regulations because they required the industry to completely retool its rating system. Now, the petitioners in this lawsuit would again like us to completely retool our rating system.
    Insurance companies are tired of being whipsawed in the rate-making process because of what the court called contradictory and confusing provisions of Proposition 103.
    In the Spanish Speaking Citizens' Foundation case, the state's First Appellate District Court has written a thorough, well-reasoned and unanimous decision which analyzes all of Proposition 103's vagaries. The court concluded that one of the factors -- not all, but one -- should be where a driver garages his or her car. The court said failure to consider this factor would create arbitrary and discriminatory rates.
    Before the passage of Proposition 103, California had the most competitive insurance market in the United States. We urge you to read the court's conclusions.