STATE OF CALIFORNIA Dave Jones, Insurance Commissioner DEPARTMENT OF INSURANCE KEN ALLEN, DEPUTY COMMISSIONER RATE REGULATION BRANCH 300 S. SPRING STREET, SOUTH TOWER LOS ANGELEs, CALIFORNIA 90013 (213) 346-6783; (213) 897-6181 (FAX) ken.allen@insurance.ca. gov April 28, 2017 Ms. Christina Tetreault Staff Attorney Consumer Union West Coast Office 1535 Mission Street San Francisco, California 94103 RE: Request for Investigation into Auto InSurance Pricing in California Dear Ms. Tetreault: The California Department of Insurance (Department) is in receipt of your letter requesting an investigation be held with respect to the auto insurance pricing practices of insurers in California as a result of the recent auto insurance pricing article and analysis published by ProPublica. We want you to know that we have taken these pricing allegations very seriously. Commissioner Dave Jones has directed the Rate Regulation Branch tO require the eight California insurance companies identified in ProPublica?s article to submit ?lings of their auto class plans and rating methodologies for review of discriminatory rating practices. ProPublica contends these eight insurers have signi?cantly different estimated average ZIP code premiums between minority and nonminority ZIP codes of similar average loss risk. While ProPublica concedes that their ?averaging? analysis does not take into account the actual risk that each carrier is taking on in these ZIP codes or the actual experience of the drivers insured, and therefore differences in ?average? estimates of rates between ZIP codes may not mean there is actual discrimination, the Commissioner nonetheless has directed that the Department review the rating of each Of the eight carriers. To investigate this contention, all necessary information to complete a thorough analysis on a file-by??le basis has already been or will be Obtained from the eight insurers. The Department?s analysis will determine if there are inequities with respect to the pricing and treatment of any ZIP codes by these insurers. In accordance with Commissioner Jones? instructions, the Department will require the reassignment of any ZIP codes that were not already placed in actuarially supported rating bands with similar experience for frequency and severity of loss. The ultimate Consumer Hotline (800) 927-HELP . Producer Licensing (800) 967-9331 Staff Attorney, Christina Tetreault April 28, 2017 Page 2 goal of each analysis will be to ensure that rates are neither excessive nor unfairly discriminatory. The Department will continue this focus on ZIP code treatment in all subsequent class plan filings made by any insurer. The results of the Department?s review into these eight insurers pricing practices will be made public. Thank you for your letter. Sincerely, 1 Ken Allen, CPCU, AIE Deputy Commissioner, Rate Regulation Branch Consumer Hotline (800) 927-HELP I Producer Licensing (800) 967-9331