The rising cost of auto insurance in California has fueled a strong public antipathy to the present system, generating mounting pressure on the Legislature and other state political leaders to do something to change it.
But because of political and economic considerations, the chances for substantially altering it appear slight.
It is not unusual for urban drivers--particularly in Central Los Angeles and the Westside--to pay more than $2,000 a year to insure an automobile. If they have traffic violations or accidents on their record, the cost rises still higher.
In Orange County, however, very rarely would a motorist with a good driving record pay more than $1,000 a year, according to a study completed early last month.
At the same time, sharply differing rates and shifting territorial rating boundaries among the hundreds of companies selling auto insurance have caused confusion and bitterness. The rate structure is so complicated as to defy understanding, and efforts on the part of state insurance authorities earlier this year to publicize some comparisons seem to have only compounded the confusion.
As many as 70% of all drivers in certain East and South Los Angeles neighborhoods have chosen to ignore legal requirements that they carry insurance, and the problem of uninsured motorists extends to a lesser degree to every part of the state. About 2.5 million California drivers are believed to be uninsured--no one knows for sure.
But even as public anger mounts and the insurance laws are increasingly flouted, the political leadership has been failing to act decisively. Powerful insurance and legal lobbies stymied most attempts at legislative reform this year. Some candidates in the recent election talked about insurance issues, but hardly made them a central theme.
So the paradox is that while many agree that California's auto insurance system is failing, the political odds for changing it appear to be slim.
A recent Los Angeles Times Poll of 2,022 California residents 18 years of age and over found that 65% of those responding considered the pricing of auto insurance by neighborhood to be unfair and 85% felt that the rates overall are too high.
A plurality of those surveyed supported radical reform of the system. Asked if they favored a state-operated auto insurance company that would attempt to make all rates equitable in place of the present system that allows rates to be determined by the marketplace, 44% supported the state-operated system, 38% the private enterprise system and 17% said they were not sure.
Greater Unhappiness in L.A.
The unhappiness was even greater in congested Los Angeles County, where auto insurance rates are the highest in the state. There, 77% said territorial differentials in pricing are unfair, 91% said the rates are too high and 52% would support state insurance.
The basis of the discontent is clear:
- Although auto insurance costs have not been going up as fast as commercial liability rates, recent increases have still been much higher than the rate of inflation. According to the authoritative Best's Review, auto insurance premiums nationwide were up 17% in 1985. In California, rates went up nearly 40% in the last three years.
- California's newly tightened mandatory insurance law, under legal attack for allegedly discriminating against the poor, has been suspended by the state Supreme Court. The suspension, already nearly a year old, has put the number of uninsured motorists back on the rise.
- The territorial system of pricing forces the poor who do buy insurance to usually pay far more for equivalent coverage than the rich. The same coverage that costs $2,000 or more a year in the inner city in Los Angeles may cost only $350 in many localities in Northern and Central California. As paying auto premiums hurts more and more, particularly in the populous urban areas, numerous reforms have been introduced in the Legislature. Most of these, however, represent more a tinkering with the present system than an attempt to overhaul it. In the last year, there have been some minor adjustments adopted but no fundamental ones.
Key legislative leaders say they think fundamental reform is in order.
"I think we have reached a point where there has to be dramatic change in the way auto insurance is handled in California," state Sen. Alan Robbins (D-Van Nuys), chairman of the Senate Insurance Committee, said recently. "If there isn't, the system is going to collapse on its own."
The affordability problem, Robbins declared, is "creeping from one where it's a problem for people at the poverty level to where it's a problem for the person who's lower-middle-income working class."
If the trend continues, he said, "you'll have pockets of the state where virtually no one will have insurance, which will create a situation where people from other areas would be afraid to drive into those sections. . . ."