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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