I found brief op-ed piece by way of The Desert Sun newspaper (Palm Springs, Calif.) this morning regarding Proposition 103, which more or less proscribes the use of ZIP codes in private auto insurance underwriting guidelines—instead using a policyholder's driving record, the number of miles driven annually, and years of driving experience to determine rates.

Prop. 103 happened onto the scene in 1989 after Californians noticed a sizeable disparity in insurance rates based solely on ZIP code. According to the editorial, in a quick survey of one insurance company, yearly rates in Palm Springs were higher by $326 than in Palm Desert's 92255 delivery area. Conversely, residents in nearby La Quinta saw cheaper rates by over $200.

As a result of Prop. 103, AAA now plans to base its rates on the abovementioned criteria, giving ZIP codes in the back seat.

Insurance companies, not surprisingly, have opposed Prop. 103 from the beginning, saying that ZIP codes are an essential factor in assessing risk and determining cost. The Desert Sun admits that where a policyholder lives can have an affect on their risk, saying, "[...] Where one lives has some bearing on the potential for an accident and auto thefts. Communities with more inexperienced drivers and heavily traveled roads often do see high accident rates. Some communities suffer higher crime rates."

But does a driver's ZIP code really warrant increased car insurance rates?

The Sun contends that ZIP code is pretty irrelevant when compared to other factors.

By far what determines if one will file an insurance claim are other factors. More experienced drivers usually have low accident rates as they are better able to avoid and respond to a road hazard, both state and national transportation statistics show. In addition, those who drive more miles usually have high accident rates as they put themselves in harm's way more frequently.

Indeed, many people go years with out an accident despite living an an area where collisions are frequent. Requiring that good driver to pay a higher rate hardly is fair or equitable.

The editorial ends with a call to action: for other insurance companies to quit fighting Proposition 103 and follow AAA's lead.

I'm inclined to agree with the editorial, much as I've sided with consumers on underwriting issues in the past. It occurred to me this morning that if insurers can tell us that they look at claims on a "case-by-case basis", why can't consumers demand that insurers set rates on a case-by-case basis, rather than lumping drivers into broad categories like ZIP code, occupation and education level?

I'm sure someone has an opposing viewpoint. I'm all ears.