OUR VIEW

A recent California appeals court decision may be the beginning of the end of "ZIP code profiling" by auto insurers.

State Farm, California's largest auto insurer, announced it will follow new "good driver" regulations and eliminate use of ZIP codes to set rates. The new rules require insurers to base premiums primarily on policyholders' driving records.

But State Farm is not acting entirely voluntarily. A week ago, the 3rd District Court of Appeals rejected an attempt by insurers to block the rules from going into effect. They argued California's insurance commissioner wrongly interpreted the law.

On Wednesday, Delaware lobbyist John Flaherty, of Common Cause, mailed a letter to State Farm's Illinois headquarters asking for similar treatment of Delaware clients.

He rightfully argued that "using a person's ZIP code to set auto rates is not reflective of a person's driving record." But it is a reflection of how companies unfairly single out low-income and minority policyholders for higher rates.

Delaware Insurance Commissioner Matthew Denn is among the 60 signers of the letter, along with seven state representatives and a bevy of municipal politicians and civil rights activists.

Denn recommends that other insurers follow State Farm's decision to include an overall rate reduction with the elimination of the ZIP code standard. Ninety-three percent of California policyholders are getting an 8 percent cut in rates.

But unlike California, our insurance commissioner has no influence over such decisions. Delaware requires passage of new legislation to get such a change. Delaware's insurance lobby has been effective in either killing or crippling reforms of rate structures.

Still, fairness to all the state's residents is a good reason for a fight.

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Copyright © 2006, The News Journal.