California Insurance Commissioner John Garamendi's proposal to base rates on a driver's record rather than his or her location is meeting strong opposition by one insurance broker association in the state.

The regulations, which have been posted on the California Department of Insurance's website, do not specifically mention ZIP codes but instead mandate that no optional rating factor, which includes ZIP codes, marital status or persistency (the number of policies a customer has with a carrier), can outweigh the three main factors for determining rates. The three main factors are a consumer's driving record, annual number of miles driven and years of driving experience. A department spokesman, Norman Williams, acknowledged, however, that the "biggest thing they'll do is affect how ZIP codes are used in California."

In announcing his intent to introduce the new regulations late last week, Commissioner Garamendi said the new rules are intended to fulfill what he believes is the intent of California's Proposition 103, a massive reform proposal approved by voters in the state in 1988.

"For 17 years there have been competing interests fighting over the use of ZIP codes in the pricing of auto insurance in our state," he said. "I want to end the unfairness and the confusion. Auto insurers in California must base their rates primarily on how you drive and not where you live."

Some in the insurance industry have voiced concern over the proposals, believing that they may, in fact, do more harm than good.

"If this proposal takes effect, 60 percent of California's drivers in 52 counties will see rate increases," said Ken Nigohosian, executive director of the Alliance of Insurance Agents and Brokers.

Effectively, the Alliance argued that carriers will have to increase rates for consumers living outside urban areas to offset the decrease in rates they will have to make to drivers living in more densely populated areas.

"A proper rating scheme should not be based on subsidization by any geographic area," said Roger Hogeboom, an attorney with the law firm of Barger & Wolen, LLP and outside counsel for the Alliance. "If the frequency and severity of accidents are more likely to occur in one area, they should not be artificially lowered and paid for by other drivers."

Mr. Hogeboom also said that the proposed regulations "will be scrutinized very carefully to determine whether they discriminate against non-inner-city drivers."

Additionally, Mr. Nigohosian said that the commissioner's political aspirations may have played a role, noting that Mr. Garamendi has announced his candidacy for Lieutenant Governor in the 2006 election.

"We cannot see any legitimate reason for the commissioner to promote regulations that have not even been introduced yet," he said. "This clearly reflects the commissioner's intent to pander to consumer groups that would advocate a subsidization method for rate making in California."

The California Department of Insurance has scheduled an informal workshop on the issue for Jan. 12 and a formal hearing on Feb. 24. It also said that the regulations should be completed in July 2006.