Consumer Watchdog: Senate Insurance Committee Approves Bills to Invade Drivers' Privacy,...

Consumer Watchdog: Senate Insurance Committee Approves Bills to Invade
Drivers' Privacy, Raise Cost of Auto Insurance

Committee Rejects Bill by Mercury Insurance to Block Refunds To Drivers Who
Are Illegally Surcharged

SANTA MONICA, Calif., June 19 /PRNewswire-USNewswire/ -- The Senate Banking,
Finance and Insurance Committee approved two bills yesterday that will allow
insurance companies to spy on Californians' driving habits, increase the cost
of auto insurance and violate the voter-approved consumer protections of
Proposition 103.

The committee passed AB 2800, a bill that would allow insurance companies to
require drivers to install spyware devices in their cars with no limit on the
information - including speed, acceleration, location, time of day and mileage
- the companies could collect. Under the legislation, consumers who refuse to
give up their privacy by allowing the hardware in their cars would pay higher
rates. The legislation, authored by Assembly Member Jared Huffman of San
Rafael, is backed by Environmental Defense Fund, which has aligned itself with
the auto insurance industry, who claim the bill would encourage motorists to
drive less by lowering insurance rates for lower mileage. However, AB 2800
would give discounts to drivers who agree to insurance companies' mileage
verification methods, not those with low mileage. The bill would allow
insurance companies to overcharge motorists based on irrelevant criteria that
Proposition 103 prohibits.

"Proposition 103 already requires insurers to charge people less if they drive
less. Under new regulations that take effect next month after years of delays
by the insurance industry, annual mileage will be much more important than zip
code, as the voters dictated. AB 2800 just lets insurance companies get around
these long-overdue changes by charging drivers more for refusing to let them
spy in their cars," said Carmen Balber, advocate with Consumer Watchdog. "The
insurance industry is cloaking its anti-consumer actions under the guise of
'environmental protection.'"

The cost of insurance would also go up under AB 2956 (Coto), approved by the
committee as well. The bill would undermine a recent court ruling that
protects customers from paying illegal broker fees to insurance agents.
Current law is clear that only insurance brokers who are truly independent of
insurance companies can charge broker fees, but AB 2956 would muddy the
distinction between brokers and agents, who work for insurance companies not
customers. This will authorize "double-dipping" in which insurance customers
will be forced to pay the same person both an agent commission and a broker
fee, even when the person selling insurance is not a truly independent broker.

Illegal Amendments to Voter-Approved Proposition 103
Proposition 103 grants the power to set underwriting and other rating
practices to the Insurance Commissioner, after an extensive and public review
process. AB 2800 would usurp that power. The bill would also allow insurers to
unfairly discriminate against drivers solely because they choose not to put a
tracking device in their car or drive a car too old (pre-1996) to utilize the
technology, which is also illegal under Prop 103. It is unconstitutional for
the legislature to amend the voter approved initiative in such a manner, and
bills similar to Huffman's (and a Calderon bill also considered last night)
have been voided by the courts in recent years in response to legal challenges
brought by Consumer Watchdog and other citizen organizations.

AB 2800 faces immediate legal challenge if approved, and California taxpayers
will pay the legal costs to defend legislation that will ultimately be
rejected by the courts, said Consumer Watchdog.

"Food prices have soared, gas prices have doubled and the state budget is $15
billion in the red. Californians can't afford to fork over any more money to
defend politicians' illegal schemes to amend Proposition 103," said Balber.
"AB 2800 will cost Californians, delay the issue of mileage-based insurance
rates for years, and inevitably be overturned in court."

The committee did reject one bill that targeted consumer protections under
Proposition 103. AB 1051, sponsored by Mercury Insurance, would have prevented
courts from ordering refunds to customers when insurers impose illegal
surcharges on policyholders or delay legally required rate reductions, another
illegal amendment to Proposition 103. The bill was authored by Assemblyman
Charles Calderon, from Whittier, who has also carried insurance industry
legislation in the past that would harm his constituents.

Read Consumer Watchdog's letters of opposition:
AB 2800: http://www.consumerwatchdog.org/resources/Huffman_privacy.pdf
AB 2956: http://www.consumerwatchdog.org/resources/AB2956.pdf
AB 1051: http://www.consumerwatchdog.org/resources/1051_oppose.pdf

SOURCE Consumer Watchdog

Carmen Balber, +1-310-392-0522 ext. 324, or Doug Heller, ext. 309, both of
Consumer Watchdog