Driving the Point Home
Drivers in the city of Chicago and some of the surrounding suburbs are getting
help when it comes to insurance rates these days.
That's because the Consumer Insurance Board is agitating to bring to light
insurance company practices it says discriminate against Chicagoans and
others living in African American, Latino and blue-collar suburbs.
The CIB, a 3,000-member grass roots group, is fighting what it calls ZIP
code discrimination by insurance companies and has challenged the state's
insurance companies to charge rates based on an individual's driving record,
rather than on where the individual lives.
Currently, insurance companies in Illinois -- and many other states -- are
allowed to use computer profiles that assign certain risks to drivers based
on the ZIP code area in which they live. This has resulted in higher auto
rates for people in Chicago and certain suburbs.
Insurance companies and their supporters say the practice is based on sound
actuarial evidence, that the higher population densities and crime rates
in cities like Chicago mean there is a greater likelihood for accidents
and theft than in the suburbs. This greater risk means that the insurance
companies will have to pay off claims more frequently in the cities and
that city drivers should be responsible for this cost.
But Pat Quinn, president of the CIB, says the practice amounts to little
more than redlining.
"Instead of a red pencil drawing lines around neighborhoods, now they
use ZIP codes to target and stereotype people," he said.
And this has meant drastically higher rates for city drivers. In November,
the Chicago Sun-Times published a study that showed that city residents
-- especially those in low-income or minority communities -- pay as much
as $800 a year more than their suburban counterparts and that the further
drivers lived from the city, the lower their rates tended to be.
The CIB followed with a study of its own that showed Chicago insurance rates
continuing to rise despite falling crime rates -- a trend mirrored in cities
across the country.
Quinn calls the practice of using ZIP codes to set rates unfair and discriminatory
and says it should be outlawed. In its place, the Consumer Insurance Board
is proposing what it calls the "Illinois Good Driver Initiative,"
which would require insurers to base their rates on a driver's record, the
number of miles driven and years of driving experience and not on where
they live. Quinn says something similar was enacted in California in October
and that it has resulted in a $361 million rate cut for California drivers.
"We need to protect drivers who happen to live in urban areas and to
reward careful drivers everywhere," he said.
The group has met hostility from the state's insurance industry and has
found getting legislation through the state legislature difficult. So it
plans to go straight to the people.
The group's approach is simple: Use public mailings to give the public information
it needs to know. Last year, the group prevailed upon the Chicago City Clerk
to include in all vehicle-registration renewal notices a letter from consumer
advocate Ralph Nader that attacked high auto-insurance rates in the city
and called for people to join the CIB. More than 3,000 people answered,
making contributions of $8 or $9 a piece.
Now it hopes to triple its membership, with the help of an assortment of
private groups. Several unions, credit unions and senior citizen groups
have agreed to include the letter in their mailings and it once again will
be included with the city's vehicle-registration renewal notices.
And as the group's numbers grow, Quinn says so will its clout. Which should
help it combat the power of the insurance lobby. Quinn is hoping to follow
up the mailings with public hearings -- not just in the state legislature,
but at the city and neighborhood level, as well -- on the Good Driver Initiative,
the practice of ZIP code discrimination and the general unresponsiveness
of insurance companies to city drivers.
He said the effectiveness of the CIB's precursor, the Consumer Utility Board
is instructive. The Consumer Utility Board formed 15 years ago using similar
tactics and has been successful in forcing Commonwealth Edison, one of Illinois'
largest utility companies, to refund $1.3 billion in overcharges to customers.
"We've been able to pass reforms with or without us being in office,"
says Quinn, who served as an elected state treasurer from 1991 to 1995.
"This concept of check-offs is what Ralph Nader calls the "silicon
chips" of organizing. Mailings, if they are being done by a public
agency, belong to the public."
He said the more people hear about the Good Driver Initiative, the more
they will demand change. And the louder they make their demands, the more
likely they are to get results.
It's what grass roots organizing is all about.
Hank Kalet, a journalist living in South Brunswick, N.J., is news editor
of The Central Post and the Cranbury Press.
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