The "Farmers Insurance News-Alert" website is dedicated to providing the consumer and general public with detailed information concerning the Farmers Insurance Group. This includes fraud reports, consumer complaints, lawsuit's and other legal actions taken against this company. All information contained herein is for educational purposes only. Original sources, when known are sited.
|Saturday, December 2, 1995
Auto Insurers Warn of 175% Rate
Increases; Regulation: They decry proposed changes in ZIP code-based premiums. Consumer
groups call system unfair.;
By: THOMAS S. MULLIGAN
"We show no dislocations like that, even if you completely eliminate territory as a factor--and we're not doing that," he said.
Quackenbush unveiled the regulations in September in an effort to implement one of the last unfinished reforms of Proposition 103, the 1988 insurance initiative. The rules require insurers to weigh three factors above all others in calculating rates: driving safety record, miles driven annually and years of driving experience.
The regulations allow other factors--including ZIP code, marital status, age and gender--to be considered as well, but they must be subordinated to the top three. Quackenbush has said he expects rates for "safe, low-mileage, experienced drivers" to decline while those for younger drivers or people with poor driving records or high mileage would rise.
Irene K. Bass, an actuary representing Farmers Insurance Group, California's third-largest auto insurer, said the goal should be to find the factors most closely associated with risk of claims loss. Artificially suppressing some factors or boosting others results in rates that aren't truly cost-based and thus are arbitrary, she said.
Farmers, in a separate statement on how the regulations might affect its 2 million California customers, said drivers in Beverly Hills might see their rates drop 28%, while those in Eureka could see a 122% increase. Another result could be rate increases for older drivers and decreases for younger ones, Farmers said.
However, Diane de Kervor, staff attorney for the Proposition 103 Enforcement Project, said insurers only pretend that their rates are completely cost-based. In fact, she said, the companies "tweak" their prices to attract a particular mix of customers for reasons that have less to do with claims risk than with marketing strategies.
After considering Friday's testimony, Quackenbush will implement a final set of regulations, probably early next year, Wiebe said.
Expecting an adverse result, the industry has a backup
plan: A bill that failed in the Legislature this year but is being revived for the next
session would negate Quackenbush's regulations by writing into law a set of rules the
|Attention! All information contained herein is for educational purposes only. No copyright infringement is intended by any material on these pages. The copyrights of the whole multimedia content on these pages are belonging to their originators, authors, creators... etc. All original content is the property of it's originators. Copyrighted material has been used for non-commercial purposes only. This website is best viewed with your monitor resolution set to 800x600 and your video mode set to true color.|