1997 Commissioner's Report on Underserved Communities
Introduction
In accordance with California Code of Regulations (CCR), Section 2646.6, the Commissioner shall report those communities within California by ZIP code that the California Department of Insurance finds to be underserved by the insurance industry. There are many reasons why individuals do not have insurance. This report does not catalogue the possible explanations. Rather, the goal of this report is to identify the underserved communities and to begin the process of asking the tough questions about why communities are underserved. It is the Commissioner's hope that this report will be an aid in increasing carriers' presence in underserved communities. Moreover, it is the Commissioner's belief that this report provides further evidence of the need to commence a comprehensive inclusion effort aimed at underserved communities through the combined efforts of the insurance industry, community organizations, and the Commissioner's office.
About This Report
This report consists of eight tables (Tables A-H) with one appendix table:
Table A - Underserved Communities
This table lists the communities in the state of California, by ZIP code, that fall within the definition of underserved pursuant to Section 2646.6(c)(1)(A) of the CCR (see below). Keep in mind that all three criteria must be met for a ZIP code to be deemed underserved.
Per Section (c) of CCR code 2646.6, a community shall be deemed to be underserved by the insurance industry if the Commissioner finds:
- the proportion of uninsured motorists is ten percentage points above the statewide average as reflected in the most recent Department of Insurance statistics regarding the statewide average of uninsured motorists; and
- the per capita income of the community, as measured in the most recent U.S. Census, is below the fiftieth (50th) percentile for California; and
- the community, as measured in the most recent U.S. Census, is predominantly minority. Predominantly minority community can be qualified as any community that is composed of two-thirds or more minorities as those groups are defined in subsection (b)(6)(A) through (D) of CCR Code 2646.6.
Table B - New and Removed ZIP Codes
This table lists those ZIP codes that have been added to this year's Commissioner's Report of Underserved Communities and those that have been removed from the 1996 Commissioner's Report of Underserved Communities. The shaded data indicates which criteria did not meet Section 2646.6(c)(1)(A) of the CCR (see definition above).
Table C - Comparison of Earned Exposure Data Between 1995 to 1996
The purpose of this table is to summarize each company's percentage point changes in earned exposures, for the underserved communities, between 1995 to 1996. The comparison was made for the following lines of business: 4 (homeowners), 19.2 (private passenger auto liability), and 5.1 (commercial multiple peril - non-liability). These lines were selected because they represent the classes of insurance that are most likely to be demanded from residents and businesses in the underserved communities. Table C is comprised of three sections: Line 4, Line 19.2, and Line 5.1.
Table D - Statewide and Underserved Community Summary
The purpose of this table is to summarize the number of earned exposures, number of agents and/or agencies, and number of service offices statewide and in the underserved communities. The table also includes the following information for reference:
- the number and percentage of registered vehicles in the underserved communities;
- the population size and its percentage that is in the underserved communities.
Note that the statewide uninsured motorist rate for 1996 approached 29% for private passenger automobile and that the 50th percentile (median) for per capita income for the state of California was $17,776. Thus, the uninsured motorist rate must be above 10 percentage points of the statewide uninsured motorist rate to trigger one of the criteria. The other two criteria are per capita income below the statewide median of $17,776 and a minority percentage above two-thirds. All three must be met to label a ZIP code underserved.
Table E - Total Earned Exposures
The purpose of this table is to provide a detailed, company by company, report of total earned exposures, statewide and in the underserved communities, and their percentage of total earned exposures in the underserved communities. This table is comprised of 10 sections, one section for each category of business (e.g. - dwelling fire non-commercial, homeowners, private passenger auto liability, private passenger auto physical damage, etc).
In each section, the companies are sorted by their percentage of total earned exposures in the underserved communities. Companies with the highest percentage of exposures in the underserved communities are at the top of each section. An aggregate count, basically the sum of the companies in each section, is provided at the top of each page. Additionally, the aggregate percentage of total earned exposures in the underserved communities is provided. The aggregate percentage represents the average percentage of earned exposures, for all reported companies, in the underserved communities. In each section a thick-bold line separates companies that fall above or below the aggregate percentage.
Important Terms And Descriptions of Line of Business
Table F - Agent and Servicing Office Data
The purpose of this table is to provide a detailed, company by company, report of total agents/agencies and servicing offices, statewide and in the underserved communities, and their percentage of agents/agencies and service offices in the underserved communities. This table is comprised of 10 sections, one section for each category of business (e.g. - dwelling fire non-commercial, homeowners, private passenger auto liability, private passenger auto physical damage, etc.).
In each section, the companies are sorted by their percentage of agents/agencies in the underserved communities. Companies with the highest percentage in the underserved communities are at the top of each section. An aggregate count, basically the sum of the companies in each section, is provided at the top of each page. Additionally, the aggregate percentage of total agents/agencies or service offices in the underserved communities is provided. The aggregate percentage represents the average percentage of agents/agencies or service offices, for all reported companies, in the underserved communities. In each section a thick-bold line separates companies that fall above or below the aggregate percentage of agents/agencies in the underserved communities.
It is important to note that, the number of agents or agencies will differ greatly between companies due to the different marketing techniques that each company incorporates. The three major marketing techniques are: captive, independent, and direct. Also, some companies provided the number of agents, whereas, others provided the number of agencies. And those that write using the direct approach are not included.
Table G - Direct Mail
The table shows the number of direct mail solicitations for the state of California and in the underserved communities, and the percentage of the total that was mailed in the underserved communities for private passenger automobile.
Table H - Percentage and Index of Applicants Denied
The purpose of this section is to provide a table that highlights the percentage of personal and commercial lines applicants denied statewide and in the underserved communities. In addition, this table provides an index of applications denied in underserved communities versus applications denied statewide. The index serves as an indicator of a company's experience in declining applications.
Methodology
The attached table is sorted by index ranking.
The index is calculated by the percentage of applications declined in underserved communities divided by the percentage of applications declined statewide.
An index score of greater than 1 indicates that the company declined more applications statewide than in underserved ZIP codes.
An index score of less than 1 indicates that the company declined less applications statewide than in underserved communities.
Basically, the higher the index score, the more likely the insurer will approve an application in an underserved community.
An asterisk (*) indicates there were no applicants denied in the underserved communities. Two asterisks (**) indicate there were no applicants denied in the state of California.
Appendix A - Companies Submitting Under 2646.7 and 2646.8
The purpose of this appendix section is to provide additional information on the companies that submitted data under California Code of Regulations 2646.7 and 2646.8. In addition to the statistical plan submissions (CCR 2646.6), companies were also given the option to provide a strategic plan for underserved communities (CCR 2646.7) or the option to provide evidence of an existing presence in the underserved communities (CCR 2646.8).
List of Tables
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