Farm Bureau: auto insurance plan penalizes rural drivers

» February 8, 2006 «

If you live in Beverly Hills 90210, your automobile insurance rates could drop as much as 20 percent, under new rules proposed by the California Department of Insurance. But if you live in Buttonwillow (93206), Bradley (93426) or Brawley (92227), your rates could jump as much as 15 percent, 20 percent or 29 percent, respectively.

In fact, the California Farm Bureau Federation says the plan would raise auto insurance rates for most Californians, and that rural drivers would bear a disproportionate share of the increase. The Farm Bureau calls the new rates unfair to rural Californians, and will oppose the changes during a public hearing later this month.

"The regulation forces rural and suburban drivers to subsidize rate decreases for urban drivers," California Farm Bureau President Doug Mosebar said. "Rural drivers with lower average incomes will bear the burden for urban drivers who would gain sharp rate cuts."

A study by the actuarial consulting firm Mercer Oliver Wyman, commissioned by the insurance department, shows that average auto insurance rates would rise in 52 of California's 58 counties. A detailed analysis of the rate proposal, showing a range of potential impacts in each California ZIP code, may be viewed on the California Farm Bureau Web site at www.cfbf.com/autorates.

Farm Bureau says the department's proposal would require insurers to give artificially high weight to driving record and annual mileage in setting auto insurance premiums, while giving artificially low weight to a driver's place of residence. Rural drivers have far fewer auto insurance claims than drivers living in cities, and the proposed regulation would force rural drivers to pay rates higher than needed to cover the expected cost of their auto accidents.

The Department of Insurance has scheduled a public hearing on the rate proposal on Friday, Feb. 24, at its offices in San Francisco. The department will accept written comments about the proposal through Feb. 27, addressed to Bryant Henley, California Department of Insurance, 45 Fremont St., 21st Floor, San Francisco, CA 94105, or via e-mail to henleyb@insurance.ca.gov.

The California Farm Bureau Federation, the state's largest farm organization, works to protect family farms and rural communities on behalf of more than 88,000 members.

Contact: Dave Kranz
Phone: 916/561-5550
news@cfbf.com

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.