California Auto Insurance Rates Defy Upward Trend

W A S H I N G T O N, June 7 -- While Californians are getting squeezed by electricity costs, they're getting the best deal in the country on car insurance because of a unique state law, a new study by a consumer group shows.

Auto insurance prices in California declined 4 percent between1989 and 1998 while jumping an average 38.9 percent nationwide,according to a new survey released by Consumer Federationof America.

Insurance premiums have increased the most in Nebraska, South Dakota, WestVirginia, Kentucky and Arkansas, the survey shows. They have increased the least in New Hampshire, Pennsylvania, Massachusetts, Maine and New Jersey.

Tour a Clickable Map for Your State's Rates

Consumers nationwide spend an annual average of more than $700per vehicle and $1,500 per household, totaling $100 billionnationwide, according to Consumer Federation.

California Bucks Trend

California was the only state that showed a decline. At a newsconference, Ralph Nader and other consumer advocates creditedProposition 103, passed by the state's voters in 1988, whichtightened insurance regulation.

"California stands out," said Robert Hunter, director ofinsurance for Consumer Federation, who prepared the study. He saidProp. 103 brought smaller rate increases, fewer uninsured driversand more insurance companies to the state — as well as fatterprofits for the companies.

State insurance regulators around the country "should look toCalifornia for guidance about how to effectively regulate"insurance, said Hunter, a former Texas insurance commissioner.

Prop. 103, among other things, required insurance companies toopen their books to justify rate increases, gave drivers with cleanrecords a 20 percent discount, allowed banks to sell auto insuranceto stimulate competition and required the state commissioner toprovide consumers with rate comparisons.

Insurance Companies Credit Highway Safety

An insurance industry official denounced Prop. 103 as"government price-fixing" and instead attributed the decline inCalifornia's rates to improved highway safety and greater seat beltuse, a crackdown on insurance fraud and legal changes making itmore difficult and expensive to file lawsuits in car accidents.