The American Property Casualty Insurance Association testified in opposition to draft regulations they say could eliminate many affinity group insurance discount programs during a pre-notice workshop held by the California Department of Insurance in Los Angeles.
The workshop was intended to foster a dialogue about the regulations, which have not been formally introduced in the regulatory process subject to the Administrative Procedures Act.
The CDI in December released proposed regulations to reform how insurance companies offer group discounts based on occupation, education, and other arbitrary factors.
If adopted, this would be the first major change to the use of so-called “affinity group” discounts since California voters approved Proposition 103 in 1988, outlawing “redlining” and other major reforms in insurance.
The CDI drafted the new regulations after Insurance Commissioner Ricardo Lara ordered an investigation of group discounts.
A survey of insured vehicles reportedly found that one-fourth of Californians receive an affinity group premium reduction ranging from 1.5 percent to 25.9 percent depending on the insurer and group. The data shows that participation in group discount programs decreases with income and education level, with those living in ZIP Codes with average income above $49,000 more than twice as likely to receive discounts as those in ZIP Codes with average income of $22,500 or below, according to the CDI.
The APCIA argued that the proposed regulations as drafted would have the unintended consequence of taking away discount programs from millions of drivers.
“We share CDI’s goal of helping low-income Californians have access to lower auto insurance rates, but the regulations, as drafted, will not benefit these communities,” said Mark Sektnan, APCIA vice president for state government relations, stated. “These regulations would have the unintended consequence of taking away discount programs from millions of drivers who are childcare workers, food technicians, electricians, music teachers and sanitation workers.”
He continued: “These regulations will not just eliminate discounts for auto insurance customers, they will also impact homeowners – and that includes homeowners struggling in the Wildland Urban Interface where higher risks are driving up costs and limiting the availability of homeowners’ coverage. Adding pressure on insurance rates will only make matters worse for these homeowners.”
The APCIA is the primary national trade association for home, auto, and business insurers.
*This story ran previously in our sister publication Insurance Journal.