Lodi News-Sentinel

California­ns are in for another bill increase: car insurance

- Ronald D. White

Some California drivers will be getting a nasty surprise when they open their car insurance bills this year.

That’s because California Insurance Commission­er Ricardo Lara approved some big rate hikes in the last six months, ending a long COVID break after insurance companies complained they were losing money and cutting back in the nation’s largest vehicle market. Higher rates for Geico, Mercury and others are just now showing up in insurance renewal letters that customers receive.

And more increases are in the pipeline, consumer advocates say, even as some insurers have yet to refund customers for premium overcharge­s during the early months of the pandemic when people were driving less and getting into fewer accidents.

“These insurance companies still owe consumers from the COVID era,” said Jamie Court, president of Consumer Watchdog, the Santa Monica nonprofit that sponsored Propositio­n 103, the 1988 voter initiative that limited how much insurers can charge for auto, home and casualty insurance. “The commission­er should not be granting rate hikes when he still hasn’t been able to compel them to give rebates for the times when we weren’t driving,” Court said.

California­ns are paying an average of $2,291 in car insurance premiums this year, up $101 from 2022, according to a Bankrate analysis that found premiums rising nationwide as people drive more miles, drive less safely and wreck increasing­ly expensive cars.

Rate increase approvals, which gathered steam in December and January, have been granted to insurers representi­ng more than 20% of the market, according to Consumer Watchdog’s tally. Geico, Mercury and Allstate received 6.9% increases, while some smaller insurers got larger hikes.

Another 97 premium rate increases have been requested, the consumer group said, ranging from a 4.5% hike to nearly 20%. The most common ask is 6.9% because anything larger than that can trigger a public hearing. Some of the biggest names on the pending list include State Farm, Progressiv­e, Farmers and AAA.

Geico, the state’s second-largest auto insurer after State Farm, got a 6.9% rate increase in December, which will mean a premium boost averaging $125 a year for the company’s 2.1 million policyhold­ers.

Some drivers will be hit harder than others, said Consumer Watchdog attorney Daniel L. Sternberg, particular­ly those insured by companies that are using a driver’s job and educationa­l background in determinin­g that person’s rate.

Consumer Watchdog in recent years has challenged rate increase filings by Geico, Mercury, AAA and Allstate for charging higher base rates for lower-income workers than for profession­als with a college degree.

Using Mercury as an example, Sternberg said the January approval of a 6.9% increase allows “unfairly discrimina­tory rates using five separate education- and occupation-based rating tiers which working-class California­ns without a profession­al occupation and advanced degree will pay up to 18% higher premiums.”

The insurance industry says rate increases are overdue.

Insurers in September said California’s auto insurance market was on the brink of crisis because they were paying out more in claims than they were collecting through premiums in 2022. Geico last year closed California sales storefront­s in favor of online sales, and others have talked about slowing growth in the state.

California waited longer than any other state to raise auto premiums after the pandemic eased, said Denni Ritter, a vice president with American Property Casualty Insurance Assn.

In their return to the roads, California drivers have been driving faster and, increasing­ly, while intoxicate­d, Ritter said, leading to accident injuries that are more severe and wrecking cars that have higher repair costs than in the past.

“So unfortunat­ely, those are causing costs to really skyrocket in the auto insurance realm,” Ritter said, causing a 25% increase in insurance costs in 2022 while premiums grew 4.5%.

 ?? MYUNG J. CHUN/LOS ANGELES TIMES/TNS ?? Insurers said costs have risen because California­ns are driving more miles, driving less safely and wrecking cars that are increasing­ly expensive to repair.
MYUNG J. CHUN/LOS ANGELES TIMES/TNS Insurers said costs have risen because California­ns are driving more miles, driving less safely and wrecking cars that are increasing­ly expensive to repair.

Newspapers in English

Newspapers from United States