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home / insurance / in the media

Long Beach Press Telegram
Mar 14, 2001

by Will Shuck

Rates tied to ZIPs blasted

SACRAMENTO - It's not fair that an East Long Beach resident should pay less for auto insurance than a comparable driver one mile to the west, said consumer advocates and lawmakers who called on the state Supreme Court on Tuesday to stop insurers from basing rates on ZIP codes.

"Only the justices of the Supreme Court can stop this travesty," said Doug Heller of the Santa Monica-based Foundation for Taxpayer and Consumer Rights, the group that wrote a 1988 insurance reform measure.

Heller and a group of lawmakers, including Assemblywoman Jenny Oropeza, D-Long Beach, and Sen. Richard Alarcon, D-Van Nuys, have asked the state justices to determine whether the ZIP code-based rates violate the law under Proposition 103.

"We need to stop this unfairness," Oropeza said, citing the broad disparity of rates between urban Los Angeles County and rural counties in central and northern California.

The legislators say people of color and the working poor are hit hardest by the geography-based rate system.

But insurance executives say it costs more to cover a driver in South Central Los Angeles than it does to cover someone in San Luis Obispo.

What Alarcon calls "an incredible cycle of unfairness," insurers call "rates that cover the potential for loss."

"They act like the insurance companies are a bunch of racists," said Jeffrey Fuller, vice president of the Association of California Insurance Companies. "They act like we sit around drawing circles around portions of Los Angeles saying we don't want to do business there because there are a lot of black people there. That's just not true, race has nothing to do with it."

Heller notes that not all companies charge significantly more in Long Beach's urban 90813 ZIP code than they do in relatively suburban 90808. Some, however, charge nearly 40 percent more in the urban area.

"That says that some companies' actuarials didn't find a big difference between those areas," he said. "The others are charging discriminatory prices. "You don't have to be quote-unquote racist to have policies that discriminate against people of color who live in poor communities," Heller said.

Consumer advocates filed a brief with the Supreme Court on Friday, and the justices have until May to decide whether to hear the case.


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