California Insurance Commissioner To Investigate Inequity In Auto Premiums

Published on


May 10, 2019

If some California motorists pay reduced auto insurance premiums because they’re part of a group plan, does that hike rates for other low-income drivers?

That’s what California Insurance Commissioner Ricardo Lara wants to know. Spurred by complaints his department has received from consumer organizations, Laura has scheduled an investigatory hearing for later this year in Los Angeles to get to the bottom of the issue.

The session is set for Sept.17 at the Ronald Reagan State Building in L.A.

“We’ve been hearing complaints for a couple of years now,” Lara said. “Consumer groups are leery of this. They’re saying it impacts rates for low-income drivers, so I decided to get the facts.”

Affinity groups

Lara wants to find out if insurers who reduce auto rates for people in group plans end up hiking premiums for lower-income drivers.

California law allows insurers to issue coverage on a group plan which lowers auto rates for certain “affinity groups,” including professional organizations and alumni associations.

“It tends to be professional folks who are discounted,” Lara said. “Working class people may not have access to those same discounts.”

In February, Santa Monica-based Consumer Watchdog and a host of community organizations petitioned Lara to ban the use of occupation and education to set auto insurance premiums. The petition describes that criteria as “thinly veiled surrogates for wealth, ethnicity and race.”

Lara said affordable auto insurance can increase a person’s economic mobility through access to employment and higher-paying jobs. Yet roughly half of Californians can’t afford it even though it’s required by law.

The California Department of Insurance is responsible for the review and approval of auto insurance premiums in the state to ensure they are fair and based on objective factors. The 1988 voter-enacted Proposition 103 established the mandatory criteria to include a driver’s driving safety record, miles driven and years of driving experience, followed by optional factors the commissioner may allow.

Carmen Balber, Consumer Watchdog’s executive director, offered her thoughts on Lara’s upcoming hearing:

“We’re glad the department is investigating this,” she said. “It’s long overdue because it impacts low-income minority communities so unfairly. But we don’t think it needs to take until September for the hearing. And it’s scheduled for 10 a.m. on a Tuesday morning … that’s when all of the people who are getting harmed have to be at work.”

Lara said he will initially ask insurers to voluntarily provide their rate information. If they fail to do so, he will issue subpoenas to get the data.

California among the most expensive states

A recent report from shows California is the nation’s sixth most expensive state for car insurance, with an average annual premium of $1,846.

That’s $389, or 27% higher than the national average of $1,457.

The list was topped by Michigan, where the average annual rate is $2,611, followed by Louisiana ($2,298), Florida ($2,219), Oklahoma ($1,966) and the District of Columbia rounding out the top five with $1,876.

On the flip-side, Maine boasts the lowest annual premium of just $845.

“In most cases, a high number of uninsured drivers combined with less than stellar weather and high population density led these states onto the most expensive states for car insurance list,” reported.


Kevin Smith handles business news and editing for the Southern California News Group, which includes 11 newspapers, websites and social media channels. He covers everything from employment, technology and housing to retail, corporate mergers and business-based apps. Kevin often writes stories that highlight the local impact of trends occurring nationwide. And the focus is always to shed light on why those issues matter to readers in Southern California.

Follow Kevin Smith @sgvnbiz

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