Proposed Regulations Will Lead to Increased Redlining & Discrimination

The Proposition 103 Enforcement Project today denounced proposed changes to existing regulations which will lead to increased redlining and discrimination by insurers. Proposition 103 prohibits insurance companies from discriminating based on one’s gender, race, color, religion, ancestry or national origin. However, Insurance Commissioner Chuck Quackenbush has drafted altered regulations that create large loopholes and will enable insurers to circumvent the law.

The Department of Insurance will hold a public hearing tomorrow, October 22, in San Francisco on the loophole-ridden regulations.

“Commissioner Quackenbush‘s proposals will lead to widespread redlining and discrimination by insurance companies,” said Sabrina Kim, staff counsel for the Proposition 103 Enforcement Project. “These ‘Jim Crow’ laws have no place in today’s society.”

Quackenbush‘s proposed regulations offer hidden, but significant changes to the current guidelines insurance companies must follow when offering insurance. For example:

• Currently, insurers must charge a consumer the lowest possible premium. Quackenbush proposes changing the regulations to allow companies merely to offer the lowest possible premium. This change will lead to discrimination, particularly against consumers not proficient in English, who could be easily confused into accepting a higher-priced policy. Furthermore, insurance agents will have a financial incentive to not properly explain the offer, thereby duping consumers into paying a higher premium than they qualify for (as agents are paid on a commission basis).
  
  >li>Current regulations require that insurance companies charge the lowest possible insurance premium that a consumer qualifies for, even if that policy is with a preferred, affiliated insurer who serves a limited clientele. Quackenbush, instead, proposes changing the requirement so that insurers can merely offer the lower rate, and only if the affiliated companies have “common management or control.” The result will be that thousands of consumers will pay more for insurance, as they will be “steered” away from the preferred company and placed into a higher-priced affiliate which would have a different set of executives. The only purpose of this proposed change to current regulations would be to allow insurers to discriminate by playing with the definition of ‘common operating management.’

“These proposed regulations couldn’t have been written more beneficial to the insurers than if the industry wrote them themselves,” concluded Kim.

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