P&CCaliforniamedium
A California auto insurer files a class plan that uses ZIP code as the single largest rating factor — weighted more heavily than driving record. Under Prop 103, what is the regulatory outcome?
AApproved — ZIP code is a permitted optional rating factor that may be assigned unlimited weight relative to the mandatory factors
BApproved, provided the insurer supports the territory weighting with garaging-based loss-experience and telematics analytics
CRejected — ZIP code is categorically prohibited as a rating factor for private passenger auto insurance in California
Rejected — ZIP code may only be an optional factor and cannot outweigh any of the three mandatory factors
Why this is the answer
Under Ins. Code § 1861.02(a) the three mandatory factors (driving record, mileage, experience) must be applied in decreasing order of importance, and 10 CCR § 2632.5 confirms that no optional factor — including ZIP-code-based territory — may carry greater weight than the third mandatory factor. A class plan that weights ZIP code above driving record violates the statutory ordering and will be denied. ZIP code is not entirely banned (territory is permitted as an optional factor), but its weight is capped. See Ins. Code § 1861.02 and 10 CCR § 2632.5.
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