Auto Insurance trade groups vow to fight rate increases

The Associated Press

LOS ANGELES — A trade organization representing some of the state's largest auto insurers said it will keep fighting proposed rate-setting rules despite a decision by the Automobile Club of Southern California to honor them.

"The fact that one company has taken an action doesn't really diminish those arguments" against the rules, Rex Frazier, president of the Personal Insurance Federation of California, said Monday.

The Automobile Club of Southern California _ the state's No. 4 auto insurance carrier _ announced Monday that it will base its rates on safety and driving frequency rather than primarily on where a driver lives.

The plan, to take effect Dec. 1, would cut some $133 million from the annual bills of the club's nearly 1 million California policyholders.

The move would comply with the 18-year-old voter-approved Proposition 103, which required rates primarily be tied to a person's driving record, number of years licensed and total miles driven each year rather than the ZIP code where a vehicle is registered.

Insurance Commissioner John Garamendi announced in December that he would propose regulations to fulfill the aims of the initiative.

Sam Sorich, president of the Association of California Insurance Companies, said his group will still consider suing to block Garamendi's proposed rules if they survive a current state legal review.

The rules violate state insurance law and raise rates for people outside heavily populated cities, Sorich argued. The association represents several insurers, including No.5-ranked Allstate Corp.

The Automobile Club of Northern California said it would follow the lead of its Southern California organization and change its rate-setting procedure once the new rules were in place.