Opinion ID: 2604151
Heading Depth: 1
Heading Rank: 3

Heading: The California Automobile Assigned Risk Plan

Text: Insurance Code section 11620, provides simply that the Commissioner shall approve or issue a reasonable plan for the equitable apportionment, among insurers admitted to transact liability insurance, of those applicants for automobile bodily injury and property damages liability insurance who are in good faith entitled to but unable to procure such insurance though ordinary methods. Rates are set by the Commissioner after public hearing. Current rates are based on the driver's age, sex, use of the car, and place of residence. Drivers with good records receive a small reduction in rates; those with bad records a somewhat larger increase in rates. Although assigned risk rates also use territorial classifications, the impact of such classifications is much less than in private rates. Assigned risk rates for South Central Los Angeles run about 15 percent above the average assigned risk rates. The record does not contain equally exact information about private rates, but comments in declarations and briefs suggest that the comparable figure for private rates would exceed 100 percent. It is clear that for many drivers in South Central Los Angeles, including many with clean driving records, assigned risk rates are substantially less than available private rates. [17] The assigned risk program does overcome some of the objections to private insurance regulation: assigned risk rates are set by the state after public hearing, are available for public scrutiny, and subject to judicial review. It does not, however, eliminate the fundamental problems faced by residents of South Central Los Angeles. Assigned risk rates, like private rates, are established on a basis of weighing revenue against expected loss, with no consideration of affordability. [18] There appears to be no sense that driving record should be entitled to greater weight, or residence to lesser weight, than the actuarial computations would indicate. As a result, assigned risk rates remain prohibitively high for many residents of urban areas. Such rates, however, are not properly subject to review in the present case, but should be challenged at the rate determination hearing before the Commissioner, or upon judicial review of his determination. [19]