CA Court of Appeal Upholds Quackenbush Rules Allowing Zip-Code Based Auto Rates;

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Consumer Group Decries Reasoning, Vows Appeal

The California Court of Appeal has reinstated rules issued by former Insurance Commissioner Chuck Quackenbush which permit insurers to charge motorists premiums based on where they live rather than how they drive. The regulations were previously thrown out by a lower court as a violation of Proposition 103. The Foundation for Taxpayer and Consumer Rights, whose president Harvey Rosenfield authored Proposition 103, vowed to appeal to the California Supreme Court.

Proposition 103 stated that ZIP-code should count less in determining auto insurance premiums than a motorist’s driving safety record, years of driving experience and the number of miles driven annually. Quackenbush‘s regulations on the topic gave insurers tremendous latitude to, through statistical manipulation, use “territory” or ZIP-code as the primary rating factor. A lower court threw out those regulations noting they were a violation of Proposition 103‘s mandate. The Court of Appeal today stated that the regulations were valid, even while acknowledging that they defeated the voter’s purpose in enacting Proposition 103, to reduce the influence of territory as a primary rating factor.

“The Court has ignored the will of the voters by backing the insurance industry’s flawed reasoning that good drivers should pay more simply because they live in a ZIP-code where there are more accidents, even if those drivers have never caused an accident,” said FTCR president Harvey Rosenfield. “The Court strayed from the law approved by voters and made its judgement based on endorsing an economic scheme that insurers have used for decades to discriminate against good drivers in bad ZIP-codes. The voters ordered the insurers to use a different approach. The insurers got Quackenbush to ignore 103 and now the Court has sided with the disgraced Commissioner. We hope the new Commissioner Low will join with us in an appeal to the Supreme Court to finally put in place what the voters enacted twelve years ago. All the major Prop103 courts were lost in the lower courts only to be won by unanimous vote in the Supreme Court. Prop 103 has delivered $1.2 billion in refunds and prevented over $20 billion in rate increases.”

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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