Superior Court Orders Commissioner Quackenbush to Stop Allowing Insurers to Use Zip Code-Based Auto Rates; Court of Appeal Strikes Down Legislation That Illegal
In a lawsuit brought by the Project (Proposition 103 Enforcement Project v. Quackenbush), an Oakland Superior Court ruled that the state’s largest insurance companies, Allstate, State Farm, and Farmers had violated 103’s requirement that auto insurance premiums be based primarily on a motorist’s driving safety record rather than arbitrary factors, such as ZIP code, gender, marital status and persistency. The Court ruled that Insurance Commissioner Quackenbush broke the law in allowing the companies to continue to base rates on ZIP code, rather than on motorists driving habits and experience. The Court struck down the Quackenbush regulation that made ZIP code more important than driving experience, and ordered the Commissioner to enforce the law as soon as possible. The Project said the rules could be rewritten in a matter of days. The Project was joined by other major consumer and civil rights group and the cities of Los Angeles, Oakland, and San Francisco, who filed a companion lawsuit.
And in a separate lawsuit brought by the Project (Proposition 103 Enforcement Project v. Quackenbush), the California Second District Court of Appeal ruled that 1993 legislation sponsored by insurance agents to let them keep Prop. 103 rollback money that they owed to policyholders did not “further the purposes” of Prop. 103 and was therefore an invalid action by the Legislature. The court nullified the law. Commissioner Quackenbush defended the industry’s position. The cost to consumers of the legislation is difficult to estimate, but in State Farm‘s case, it amounts to about $4 million (before interest.)
“These court decisions mean money back in people’s pockets,” said Harvey Rosenfield, the author of 103 and Executive Director of the Proposition 103 Enforcement Project. “But they’re also a vindication of the power of the people’s initiative process and the will of the voters in enacting Proposition 103. These decisions send a message to the insurance industry and the Sacramento politicians that try as they might to ignore it ten years later, Proposition 103 is the law of the land and they have to obey it. These double victories mark a banner day for California consumers and voters.”