Agents balk at promoting state’s low-income car insurance program

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Associated Press

The state’s showcase program to provide low-cost car insurance to poor people is coming under fire from agents who say the policies are too much trouble to write and pay them too little.

The California Automobile Assigned Risk Plan has received nearly two dozen complaints from agents since its July 2 inauguration.

“They’re under no legal obligation to sell this policy. It’s their business decision,” CAARP regional director Richard Manning said Tuesday. “It’s not hurting the plan, but it is affecting the consumers.”

He urged qualified motorists to keep searching for a policy if they run across an agent who won’t sell them a low-cost one.

CAARP, a consortium of insurance companies that run the program, was created by the Legislature last year in a move designed to reduce the number of uninsured motorists.

Supporters say obstinate agents who fail to promote it are preventing poverty-stricken drivers from getting the coverage they need.

“These agents have a moral and economic responsibility to serve their communities,” said Douglas Heller of the Santa Monica-based Foundation for Taxpayer and Consumer Rights. “We’re going to urge any agent unwilling to work with this state-mandated program to start taking part.”

Manning has said officials from Connecticut, Illinois, New Jersey, Washington, Kentucky and Louisiana are watching California’s four-year pilot program to gauge its success.

Nearly 100 people have signed on to the plan since it began two weeks ago, and about 3,300 others are pursuing policies, according to Heller, whose office is also monitoring the project’s success.

The plan offers motorists in Los Angeles and San Francisco low-cost policies that satisfy the minimum amount of auto insurance required by the state. Only the other person’s car, not the policyholder’s, is covered in an accident.

Participants must have clean driving records and meet income and other guidelines.

Agents opposing the program say they have been inundated with inquiries from unqualified people who simply want an insurance break.

They also fear qualified participants will purchase the insurance, then drop it once they register their cars with the state’s Department of Motor Vehicles.

California’s proof-of-insurance law requires owners of the state’s nearly 27 million vehicles to show they have coverage when they register with the DMV.

Nearly 1.8 million vehicles out of 6 million in Los Angeles lack insurance and nearly 80,000 out of 412,000 in San Francisco, according the state Department of Insurance.

“I’m not happy to sell it,” said Herb Jones, an insurance agent in the Crenshaw district of Los Angeles. “I don’t market it, but if people call me for the policy, I’ll tell them the qualifications.”

Many agents object to the hours they have spent setting up policies for people who say they are qualified, only to learn later that they are not, said Jones, who is also president of the American Agents Alliance, a nonprofit organization of independent insurance brokers.

The plan charges $450 annually for a bare-bones auto policy in Los Angeles County and $410 in the San Francisco area. There is a 25 percent surcharge for unmarried, male drivers 19 to 25.

“Ever since it started, I’ve been doing a whole lot of work for nothing,” said Jones, who added that he makes about a $54 commission on each low-cost policy he sells.

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