Motor Vehicle Liability Insurance

MOTOR VEHICLE LIABILITY INSURANCE. INITIATIVE STATUTE. Requires motor vehicle liability insurance be issued and rates set solely on basis of insured\u27s driving record and vehicle type. Prohibits rates based on race, color, religion, national origin, ancestry, sex, age, marital status, or geographical location. Prohibits insurance company charging more than its lowest rate as of January 1, 1985. Permits raising rates annually upon Insurance Commissioner approval after proof by substantial evidence at public hearing that increases correspond to increased costs. If insurance companies refuse to issue policies, requires state establish a state owned and operated insurance program funded from premiums paid. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local governments: Rolling back insurance rates to January 1, 1985, for each category of driver and type of vehicle would reduce state insurance tax revenues by about $37 million in 1987. Requiring an insurer to charge its lowest rate would reduce tax revenue by an additional unknown but substantial amount. The ongoing revenue effect would depend upon the magnitude of future rate increases granted by Insurance Commissioner. The Insurance Commissioner would incur ongoing annual administrative costs of several million dollars to hold public hearings and review and approve rate increases. If state is required to establish and operate its own insurance program, the start-up costs could require the state to advance in excess of $100 million. It is unknown when these advances would be repaid. There could be additional annual state revenue loss