The Desert Sun (Palm Springs, California)

Sacramento, CA — Lawmakers have taken the first step to block, at least temporarily, a proposal that could scramble auto insurance rates statewide.

Assembly Bill 2840 by Assemblyman John J. Benoit, R-Palm Desert, would prevent Insurance Commissioner John Garamendi from changing the rules unless a study shows rates would not be arbitrary and unfair.

Benoit argued this step is necessary because the proposed changes would violate the law and shift rates dramatically, cutting them in the six larger urban counties while increasing them in the other 52 counties.

The proposed changes, which are not final, likely would place more emphasis on factors such as driving record and less on those such as where motorists live.

Rates up in the air

Rates are likely to rise in Riverside County based on studies prepared for the insurance industry and Department of Insurance, though the impact on individual drivers is a subject of debate.

“This is a zero sum game,” Benoit said Wednesday. “Insurance rates would be increased for millions of drivers.”

George Stettler, a State Farm insurance agent in Cathedral City, said the proposed changes could skew rates improperly.

“My experience with State Farm has shown me that where you live has a dramatic effect on the frequency of claims,” said Stettler, who has sold insurance for 23 years in Orange County and the Coachella Valley.

But the commissioner’s supporters argued the proposed changes will bring the rate rules more in line with the requirements of Prop. 103, the 1988 ballot auto insurance initiative.

“This issue has been studied to death,” said Doug Heller, a lobbyist for The Foundation for Taxpayer and Consumer Rights, an independent advocacy group. “The purpose of this bill is to throw up another wall (to implementing Prop. 103).”

AB 2840 on Wednesday passed the Assembly Insurance Committee and next goes to the Assembly Appropriations Committee.

The study would be conducted by a branch of the state Library that would set the timeline and would have to complete it with existing funds, Benoit’s staff said.

The law, based on Prop. 103, gives priority to drivers’ records, miles driven and driving experience, but also allows insurers to use 16 other factors, including residency, gender, marital status and type of vehicle.

Garamendi has proposed rules placing more emphasis on the Prop. 103 priorities that he said will bring the rate-setting rules more in line with the initiative.

Glance: HOW MUCH COULD YOU PAY?

Here are results of what two different studies, one prepared for the Department of Insurance and one for the insurance industry, concluded would be the effect of the proposed new rules on the average auto insurance rates for bodily injury and property damage coverage.

Here are some examples:

Riverside County: 4 percent increase.
92258 (Palm Springs): Increase in range of 1 percent to 3 percent.
92270 (Rancho Mirage): Increase 1 percent.
92201 (Indio): 3 percent to 8 percent increase.