Assemblymembers John J. Benoit, R-Palm Desert, Joe Canciamilla, D-Pittsburg, Nicole Parra, D-Hanford, Doug LaMalfa, R-Richvale, and Lois Wolk, D-Davis, are coauthors. The bill is supported by the Regional Council of Rural Counties, California Farm Bureau Federation, local elected officials and the three insurance trade associations. Imperial County Supervisor Gary Wyatt and Dixon City Councilmember Mike Smith came to Sacramento to participate in the news conference. Tulare County Supervisor Phillip Cox, Inyo County Supervisor Linda Arcularius and Kings County Supervisor Jon Rachford, also support AB 2840 but were unable to make it to Sacramento.

AB 2840 requires that before any changes can be made to the way auto rates are calculated, a statewide study must be done to ensure the changes will result in rates that are fair and are based on the actual costs to provide insurance to each driver so that certain drivers are not forced to subsidize others.

The bill is in response to regulations proposed by Insurance Commissioner John Garamendi in December 2005. Under Commissioner Garamendi's proposal, big city drivers would get arbitrary rate cuts, but other drivers would have to pay higher rates to subsidize those cuts, the group said.Under the proposed regulations, insurance companies would be forced to charge rates that are no longer substantially related to the risk of loss as required by current law, and instead give drivers arbitrary discounts based solely on where they live.

Two separate studies, including one commissioned by the Department of Insurance, concluded that implementing the regulations as currently proposed could result in rate increases as high as 30 percent for some drivers, mostly in the rural and suburban areas, they said.

"Its just plain common sense that it costs more to insure drivers in more populated, more congested regions of the state," said Assemblymember Benoit. "This legislation will simply assure that rates continue to be based on actual costs and risks to insure drivers -- rather than on arbitrary or political desires to reduce rates for certain geographic regions of the state. The changes proposed by Commissioner Garamendi lead us down a slippery slope that I don't think we should be traveling."

"AB 2840 will help us ensure that some drivers aren't unfairly forced to subsidize arbitrary auto insurance rate decreases for other drivers," said Assemblymember Canciamilla. "It's a straightforward bill which will verify that auto regulations are fair, non-discriminatory, and reflect the actual costs to provide insurance to every driver."

"Preliminary analysis has indicated that this proposed regulation could result in significant auto insurance rate increases for millions of drivers throughout the state," said Assemblymember Parra. "Clearly more study is needed before implementing this regulation to determine whether these rate increases are fair and justified."

"I've been opposed to these changes since they were first proposed two years ago," said Assemblymember La Malfa. "I have a problem with Insurance Commissioner Garamendi's proposal because rates for my constituents will go up if it takes effect. I don't believe that's fair since my constituents live in areas where the cost of providing insurance is less for them than for a driver in Beverly Hills, Santa Monica or San Francisco. AB 2840 will establish that any rate changes must be fair to all drivers, not just benefit drivers in certain areas of the state."

"While I appreciate the Commissioner's desire to reduce rates in urban areas, I remain concerned the proposed changes could come at the expense of auto insurance ratepayers in rural and suburban areas, many of them with low incomes who have no alternative means of transportation," said Assemblymember Wolk. "I believe more study is needed so we can be sure no unfair negative impacts on drivers who can least afford it."

The group claims that hundreds of local elected officials, chambers of commerce and businesses have written letters and spoken out in opposition to Commissioner Garamendi's proposed changes. They don't think it's fair for drivers in less populated regions of the state, where there is less likelihood of being in an accident or filing a claim, to pay more for auto insurance so that rates can be arbitrarily decreased for drivers in more populated, more congested areas of the state like Los Angeles, San Francisco, Beverly Hills and Santa Monica.

But the Insurance Commissioner has not given any indication he plans to abandon his misguided plan. Nor has he articulated how it is possible to provide artificial rate decreases for some drivers without shifting cost to other drivers.

If his regulations are put into law, millions of California drivers will be forced to pay significantly higher auto insurance premiums. Not because they are a greater risk, but to subsidize arbitrary rate decreases for drivers in large, metropolitan areas, they said.

"The Regional Council of Rural Counties continues to be concerned that residents in rural counties, many of whom are low income residents, will unfairly pay more for auto insurance to subsidize drivers in Los Angeles, San Francisco and other more populated areas of the state," said Brent Harrington, president and CEO, Regional Council of Rural Counties. "It's important that we prevent that unfairness from happening now and anytime in the future."

"It shouldn't matter where drivers live, in the city or in the country. We should all pay fair insurance rates that are based on our risk of having an accident or filing a claim," said California Farm Bureau Federation President Doug Mosebar. "Rural drivers have far fewer auto insurance claims than drivers living in cities. We support AB 2840 because it guarantees a better way to provide a fair system for everyone."

"Current auto insurance rates are based on actual costs and risks associated with providing insurance to each and every driver and that's exactly how it should be," stated Imperial County Supervisor Gary Wyatt. "Commissioner Garamendi's proposal intends to change that and a study by his own department found that rates for my constituents could increase by as much as 36 percent. So far, I've heard a lot of talk that this outcome will not happen, but there's been no proof. I need proof. That's why I'm supporting AB 2840."

"AB 2840 is a simple bill with a simple purpose. It requires that the state conduct a study to determine if changes to auto rates by Commissioner Garamendi, or any future insurance commissioner, are fair to all drivers," said Dixon Councilmember Mike Smith. My constituents should not have to subsidize an arbitrary rate decrease for drivers in major cities where the probability of an accident is greater. That's just unfair. This bill will protect against such cost shifting and guarantee that changes to auto rates are fair and equitable to all consumers."

"I was elected to represent my constituents and to me, that means I should also protect them from what I believe are unfair laws and regulations," said Tulare County Supervisor Phillip Cox. "Under one analysis, Commissioner Garamendi's unfair plan will make drivers in 52 of 58 counties pay more for auto insurance rates so that drivers in the state's largest and most populated urban areas can pay less. This should raise a red flag for all drivers in California. Allowing auto insurance rates to be calculated by arbitrary means creates a dangerous precedent and will lead to the politicizing of rates. We need to make certain we don't start down that road. That's why we need AB 2840."

"I have continued to protest Commissioner Garamendi's changes -- two years ago at the town hall meetings and at the hearing in San Francisco a month ago --and so have dozens of other local elected officials and legislators from regions that will likely get rate increases under his proposal," said Kings County Supervisor Jon Rachford.

"Commissioner Garamendi continues to ignore our concerns," continued Rachford, "and has not given us any indication that he intends to abandon his proposal. That's why I'm supporting AB 2840. I believe that Insurance Commissioner Garamendi's changes arbitrarily and unfairly shift higher costs to drivers in Kings County. While he says that's not the case, a study by his own department tells me otherwise. Clearly, we need more analysis before moving forward."

"The purpose of AB 2840 is to safeguard consumers, particularly my constituents, from unfair auto insurance rate increases," said Inyo County Supervisor Linda Arcularius. "Where a person drives and keeps their vehicle will impact cost, plain and simple. We expressed our concerns at Commissioner Garamendi's hearing in February and asked that he reconsider his changes -- it appears that he isn't listening. AB 2840 makes sense. Before these changes go into effect, or any similar changes by future insurance commissioners, AB 2840 will require a study to make sure no drivers are impacted unfairly. It's a simple bill with a simple purpose."

Below is the text of AB 2840:

"The commissioner shall adopt no regulation that would change the weight given to any factor in determining automobile rates and premiums unless the department finds, based upon a study conducted by the California State Library, California Research Bureau, that the proposed change (1) will not result in rates and premiums which are arbitrary or unfairly discriminatory and (2) will result in rates and premiums which are substantially related to the risk of loss."

(Article taken from The Insurance Journal)