Thanking consumer groups and the local governments who petitioned to help bring about the change, the Commissioner said the new enhancements will create a more fair system that complies with the intent of Prop. 103 while also appropriately considering the risk of loss for each given driver.

"I promised to make the spirit of Prop. 103 a reality," said Commissioner Garamendi. "Good drivers deserve to be judged more according to how they drive, and not be arbitrarily penalized because of where they live."

The proposed regulations will require insurers to comply with the mandate of Prop. 103, which called for them to assign more importance to a person's driving safety record, miles driven, and driving experience than to any other factors when setting premium rates. Until now, a system put into place by former Commissioner Chuck Quackenbush allowed insurers to give greater weight to non-mandatory factors, such as marital status, gender, and most frequently zip code.

Recognizing the concerns of some drivers in the state, the Commissioner has revised the regulations, which were introduced last year. These changes contain measures to strengthen provisions of the regulations that relate to the risk of loss. Specifically, they will permit insurers to tie certain types of coverage that have a greater relationship to the risk of loss to other types of coverage that bear less of a relationship. For example, while driving record may be less important in evaluating comprehensive coverage, it is very important in considering a driver's collision coverage. Therefore the revisions permit comprehensive and collision coverage to be evaluated together.

Additionally, the changes provide insurers with the flexibility they will need to increase or decrease the importance of any rating factor in order to comply with the mandate of Proposition 103. This flexibility will help insurers devise a system that allows rates to have the strongest relationship to the risk of loss possible, while at the same time ensuring that how you drive is a more important factor than where you live.

The revised rules also give insurers two years to fully comply with the new standards, but require that they demonstrate significant progress toward meeting the goal during the first year after implementation of the regulations. This provision, as well as the relatively high level of profitability currently enjoyed by auto insurers, should allow implementation without considerable negative economic impact on policyholders regardless of where they live.

To view the current proposed regulations on the Department's web site, visit: http://www20.insurance.ca.gov/epubacc/REG/82309.htm.

(Article from Insurance Journal)