Commr. Low Supports Quackenbush Regulations Allowing Discriminatory, ZIP Code-Based Insurance Rates
In his first major public policy action since assuming the office vacated by disgraced Insurance Commissioner Chuck Quackenbush, Commissioner Harry Low has filed a brief with the California Supreme Court endorsing Quackenbush regulations allowing ZIP code to continue to determine automobile premiums, in violation of voter-approved Proposition 103.
Proposition 103, the 1988 insurance reform initiative, requires that premiums be based primarily on driving safety record, number of miles driven annually, and years driving experience.
Last month, citizen and community organizations asked the Cal. Supreme Court to overturn an appellate decision upholding the Quackenbush regulations. Commissioner Low has joined the insurance industry in opposing review.
“The Court of Appeal’s decision rewrote Proposition 103 to suit the insurance industry, an exercise in judicial activism that must be reversed by the California Supreme Court,” said Harvey Rosenfield, president of the Santa Monica-based Foundation for Taxpayer and Consumer Rights and author of Proposition 103. “Twelve years after the passage of Proposition 103, insurers’ discriminatory ZIP code rating practices persist,” stated Rosenfield. “Faced with the first major test of his commitment to consumer protection and the rule of law, Commissioner Low has sided with insurers, endorsing the Quackenbush approach that blatantly violates the will of the voters.”
1987 Supreme Court Decision Led to 103’s Reform
Territorial rating — the use of zip codes to set insurance premiums — forces good drivers everywhere to subsidize bad drivers. While all motorists suffer from territorial rating, it particularly harms residents of low-income, urban areas. The California Supreme Court first recognized the pernicious practice of territorial rating in a 1987 case, King v. Meese, upholding the state’s mandatory insurance laws. The Court then ruled that the issue should be addressed by the Legislature. Voters took matters into their own hands the following year, after the Legislature failed to act, and passed the landmark insurance reform initiative, Proposition 103.
In 1996, Insurance Commissioner Quackenbush issued the regulations which allow insurers to evade the voter-enacted law requiring premiums to be based primarily on how one drives rather than on where one lives. FTCR’s Prop 103 Enforcement Project and other citizen groups successfully challenged the regulations in the Alameda Superior Court, which struck down the defective portion of the regulations. The insurers and Quackenbush appealed. The Court of Appeal, in a decision issued December 29, 2000, ruled in favor of the Department of Insurance and the insurers, upholding the defective Quackenbush regulation. A decision from the California Supreme Court as to whether to hear the case will be made by early May.