State Farm Seeks Rate Changes : Car insurance: Policies would be based on driving records. A Gillespie spokesman hints that new structure may be approved.

State Farm, the largest seller of auto insurance in California, told its agents at a series of closed briefings Tuesday that it intends to shake up rates for its 3.3 million state policyholders beginning Jan. 1--lowering most good drivers’ premiums slightly and raising almost all bad drivers’ premiums by a third or more.

Good drivers are generally those with no more than one minor traffic violation and no at-fault accidents in the last three years. Bad drivers have two or more violations or one or more at-fault accidents.

State Farm officials who conducted the briefings said the company will act after approval--expected “any day”--by outgoing Insurance Commissioner Roxani Gillespie.

The new pricing plan submitted to Gillespie and the subject of a formal rate hearing, was prompted by Proposition 103. It does away with the territorial rating, or neighborhood pricing, system, in auto insurance and replaces it with pricing zones based on the costs and frequency of claims.

A spokesman for Gillespie, Karl Rubinstein, said the insurance commissioner has not promised State Farm and other companies that she will approve their plans. He said because no objections were raised in recent rate proceedings, it is fair for State Farm to surmise that she will give her approval.

Newly elected Commissioner John Garamendi declined comment except to say that he has not been told of Gillespie’s plans.

A State Farm counsel, Judith Mintel, said from company headquarters in Bloomington, Ill., that State Farm is confident enough of Gillespie’s decision that it has decided to train agents to handle the new rate structure.

With about 18% of California’s auto insurance business, State Farm has often led the way in the industry.

Mintel said State Farm will not disclose rates under the new structure, but that they will be “revenue neutral,” meaning that for every new dollar collected from one customer, another customer will get a dollar decrease.

Mintel said that Ina Becraft, the State Farm actuary who drafted the new California pricing plan, estimated that overall rates for good drivers in Central and South Los Angeles will decrease 7%, while rates for most bad drivers throughout the state will rise more than 33%.

Mintel said there would be “limited areas,” such as the San Gabriel Valley, where all drivers, including good drivers, would get an increase. She said this would be based on the cost and frequency of claims to the company from that area.

An agent who attended a State Farm meeting said they had been shown a chart indicating that average rates for all drivers would mount 35% in the San Gabriel Valley, while declining 3.5% in Pomona and rising 3.4% in Ontario and Montclair.

At Tuesday’s briefings, according to agents who attended, State Farm also announced that it will no longer charge previously uninsured drivers with good driving records any more for insurance than previously insured drivers in the same areas with the same records. In the past, State Farm has been placing uninsured drivers with good records in a less preferred status and often charging them 60% more.

Under the new system, the previously uninsured drivers will not be able to secure State Farm coverage immediately, the agents were told. They were instructed to take no money and to submit the uninsured drivers’ applications for a monthlong company review of the drivers’ records.

The agents were told not to discuss the new rate schedule outside the company, but two agents informed The Times on condition they not be identified.

One of these said he was disappointed in the plan. Names for pricing zones have changed from “territory” and “ZIP codes” to “rating zones” and “experience factors” covering about the same areas, he said, but real change has been small.

“Take a horse, paint it brown, and call it a cow,” he said, contending that basing prices on where a policyholder lives will not really change.

Mintel and State Farm senior Vice President Roger Joslin said the changes will be real and are an attempt to comply with Proposition 103.