April 
  5, 
  2017 
  
 
  
Insurance 
  Commissioner 
  Dave 
  Jones 
  
California 
  Department 
  of 
  Insurance 
   
  
300 
  Capitol 
  Mall, 
  17th 
  Floor 
  
Sacramento, 
  CA 
  95814 
  
 
  
 
  
Re: 
  Petition 
  for 
  Investigation 
  
 
  
Dear 
  Commissioner 
  Jones: 
  
 
  
An 
  analysis 
  by 
  ProPublica 
  published 
  today 
  concludes 
  that 
  some 
  auto 
  insurance 
  companies 
  
doing 
  business 
  in 
  California 
  are 
  overcharging 
  some 
  motorists 
  by 
  10% 
  or 
  more 
  solely 
  
because 
  they 
  live 
  in 
  predominantly 
  minority 
  neighborhoods. 
   
  
 
  
As 
  you 
  know, 
  Proposition 
  103 
  bars 
  insurance 
  companies 
  from 
  basing 
  a 
  motorist’s 
  
premiums 
  primarily 
  upon 
  geographic 
  location. 
  Finding 
  that 
  “the 
  existing 
  laws 
  inadequately 
  
protect 
  consumers 
  and 
  allow 
  insurance 
  companies 
  to 
  charge 
  excessive, 
  unjustified 
  and 
  
arbitrary 
  rates,” 
  California 
  voters 
  established 
  a 
  process 
  under 
  which 
  the 
  formula 
  used 
  by 
  
insurance 
  companies 
  to 
  set 
  auto 
  insurance 
  premiums 
  is 
  strictly 
  regulated. 
  Insurance 
  Code 
  
section 
  1861.02(a) 
  requires 
  that 
  premiums 
  be 
  determined 
  principally 
  by 
  three 
  specified 
  
rating 
  factors 
  – 
  the 
  insured’s 
  driving 
  safety 
  record, 
  annual 
  mileage, 
  and 
  years 
  of 
  driving 
  
experience 
  – 
  and, 
  to 
  a 
  lesser 
  extent, 
  by 
  any 
  optional 
  rating 
  factors 
  that 
  “the 
  commissioner 
  
may 
  adopt 
  by 
  regulation 
  and 
  that 
  have 
  a 
  substantial 
  relationship 
  to 
  the 
  risk 
  of 
  loss.” 
  (Ins. 
  
Code 
  § 
  1861.02(a)(4).) 
  The 
  use 
  of 
  any 
  rating 
  factor 
  that 
  has 
  not 
  been 
  adopted 
  by 
  the 
  
Commissioner 
  by 
  regulation 
  “shall 
  constitute 
  unfair 
  discrimination,” 
  which 
  is 
  a 
  violation 
  of 
  
section 
  1861.05(a). 
  
 
  
California’s 
  results 
  are 
  better 
  than 
  the 
  other 
  states 
  ProPublica 
  reviewed. 
  Still, 
  if 
  
ProPublica’s 
  analysis 
  is 
  correct, 
  some 
  insurance 
  companies 
  – 
  notably 
  Liberty 
  Mutual, 
  
Farmers, 
  Nationwide 
  and 
  USAA 
  – 
  are 
  overcharging 
  motorists 
  in 
  violation 
  of 
  Proposition 
  
103, 
  the 
  Unruh 
  Civil 
  Rights 
  Act 
  and 
  other 
  California 
  laws. 
  
 
  
While 
  objections 
  have 
  been 
  raised 
  to 
  the 
  methodology 
  used 
  in 
  ProPublica’s 
  analysis, 
  the 
  
study 
  itself 
  explains 
  that 
  ProPublica 
  was 
  unable 
  to 
  obtain 
  all 
  the 
  data 
  necessary 
  to 
  precisely 
  
confirm 
  its 
  conclusions 
  because 
  insurance 
  companies 
  are 
  not 
  required 
  to 
  disclose 
  their 
  
actual 
  loss 
  data 
  by 
  zip 
  code. 
  Absent 
  that 
  information, 
  there 
  is 
  no 
  way 
  to 
  determine 
  whether 
  
insurance 
  companies 
  are 
  complying 
  with 
  California 
  law. 
   
  
 
  
Pursuant 
  to 
  Insurance 
  Code 
  sections 
  1861.02, 
  1861.05 
  and 
  12921, 
  we 
  therefore 
  request 
  
that 
  you 
  immediately 
  convene 
  a 
  formal 
  public 
  inquiry 
  to 
  investigate 
  this 
  matter. 
  The 
  first 
  

 
  

 step 
  should 
  be 
  to 
  require 
  auto 
  insurance 
  companies 
  to 
  submit 
  the 
  required 
  data 
  for 
  each 
  
zip 
  code 
  in 
  California. 
  
 
  
Sincerely, 
  

Harvey 
  Rosenfield 
   
    
  
 
   
  
 
  

 
  

 
  

Carmen 
  Balber