STEVE INSKEEP, host:
This next development may affect California's overcrowded highways. Yesterday, the Automobile Club of Southern California promised to change the way that it sets car insurance rates. Drivers will pay, based on their driving records, rather than on the zip codes where they live. And for many, that means a savings. The question now, is whether companies nationwide will do the same.
Here's NPR's Carrie Kahn.
CARRIE KAHN reporting:
Rate payer advocates in California, have been fighting for nearly 20 years, to get auto insurers to set their rates on how and where you drive, rather than where you park your car at night. Back in 1988, voters passed a referendum to get insurers to do just that. Consumer advocate Harvey Rosenfield authored the bill, but years of court fights held up the plan. Yesterday, Rosenfield said, victory felt sweet.
Mr. HARVEY ROSENFIELD (Founder, The Foundation for Taxpayer and Consumer Rights): We have been waiting, 17 and half years, for this headline. This is a great day for good drivers.
KAHN: Rosenfield stood by the side of a busy L.A. freeway, with California's insurance Commissioner John Garamendi, who bashed state insurers for fighting the new rate-basing plan.
Mr. JOHN GARAMENDI (Insurance Commissioner, California): What they're doing is plain and simply, putting up a smoke screen, so that they can maintain their old marketing practices; which clearly, clearly place at a very significant disadvantage, good drivers who live in certain zip codes across the state of California.
KAHN: Garamendi, who's running for lieutenant governor, picked a closed on ramp to the busy 110 Freeway, to highlight what he says is the unfairness of zip code-based rates. He talked about the rates of two neighborhoods, one predominantly white, the other African-American. Commuters from both, take the freeway to get in and out of downtown L.A. Rates for the white community are half of that for the black neighborhood. Garamendi says that's regardless of their driving records.
Mr. GARAMENDI: Good drivers need a break. If your company is not treating you fairly, if you think your prices are too high, phone Triple A of Southern California, and do some shopping. Let your fingers do the walking.
CAMPBELL: Auto Club representatives are happy with all the free publicity, and insist its rate cuts will be offset by current cost-savings. They say there's an upside to L.A.'s congested freeways, people are driving slower and causing fewer accidents. But some of the state's larger insurance providers, insist they'll have to raise rates for their suburban and rural customers, if urban drivers are getting a break.
Sam Sorich, president of the Association of California Insurance Company, says if someone lives in a high crime area or commutes a lot, those risks have to be included in their rates.
Mr. SAM SORICH (President, Association of California Insurance Companies): If we are forced to charge rates that do not reflect an individual driver's risk, then those rates are unfair.
CAMPBELL: Barring any further lawsuits, the new rate plan should be in place soon, but the rate-cuts won't. The new regulations are being phased in, over two years.
Carrie Kahn, NPR News, Los Angeles.
INSKEEP: You're listening to NPR News. Transcript provided by NPR, Copyright NPR.
