California Proposes Major Change on Auto Insurance Group Discounts

The California Department of Insurance on Monday released proposed regulations to reform how insurance companies offer group discounts based on occupation, education, and other arbitrary factors. If adopted, this would be the first major change to the use of so-called “affinity group” discounts since California voters approved Proposition 103 in 1988, outlawing “redlining” and other major reforms in insurance. The CDI drafted the new regulations after Insurance Commissioner Ricardo Lara ordered an investigation of group discounts. A survey of insured vehicles reportedly found that one-fourth of Californians receive an affinity group premium reduction ranging from 1.5% to 25.9% depending on the insurer and group. The data shows that participation in group discount programs decreases with income and education level, with those living in ZIP Codes with average income above $49,000 more than twice as likely to receive discounts as those in ZIP Codes with average income of $22,500 or below, according to the CDI.