Driving Data Could Be Used By Insurers to Discriminate By ZIP-Code
SANTA MONICA, Calif., Aug. 7 /PRNewswire-USNewswire/ -- Legislation that would
allow insurance companies to track when, where and how Californians drive
passed the Senate Appropriations committee today. The bill authorizes
different insurance rates for drivers who choose to protect their privacy and
those who agree to place a "black box" in their cars.
"AB 2800 would force drivers to choose between fair insurance rates and
protecting their privacy. No driver should have to make that choice," said
Carmen Balber with Consumer Watchdog. "Where I drive, when I get there and
whether I stop on the way is not the business of my insurance company, or any
other corporation who wants to place eyes in my car."
Nothing in AB 2800 prohibits insurance companies from tracking whatever
information they choose - including speed, acceleration, location and time of
day - in addition to mileage. The bill allows insurance companies to give
discounts for driver participation in a tracking program, but does not mention
discounts for drivers who actually reduce their mileage, the purported purpose
of the bill.
"Insurance companies fought mileage-based insurance rates for eighteen years
after the voters mandated them in Proposition 103. The industry didn't change
its mind overnight. Insurers back this plan because it will get their spyware
into Californians' cars, while doing nothing to make them more closely tie
insurance rates to how far a motorist drives," said Balber.
Consumer Watchdog last week joined a coalition of consumer and privacy groups
to propose a limit on the information collected by insurance companies to the
actual miles driven. Groups submitting the amendment were: ACLU, Privacy
Rights Clearinghouse, Consumer Action, Electronic Frontier Foundation,
Consumer Federation of California and Consumer Watchdog. The bill was not
amended before the vote. Read Consumer Watchdog's letter:
http://www.consumerwatchdog.org/resources/amendltr.pdf
The information tracked could be abused in a wide variety of ways and create a
host of privacy and fairness concerns:
-- Will an insurance company interpret a driver's quick stop to avoid a child
in the street as bad driving, and try to increase that driver's rates?
-- Will an insurer look to avoid providing coverage to janitors who work the
late shift, if the company decides that nighttime driving is riskier?
-- Will insurance companies sell driving patterns to marketers and other
corporations?
-- Will companies label certain intersections dangerous and seek to alter auto
premiums based on the streets people drive on?
-- Will location and other data be subject to court subpoena, as is currently
the case with other tracking devices that are used? FasTrak transponder
information in the Bay Area has been subpoenaed.
-- How long will insurance companies keep the information, and how will they
protect it from hackers?
-- Will the black box data be used to deny legitimate claims?
-- How long will insurance companies keep the information, and how will they
protect drivers' from criminal invasions of their privacy? Just this week, the
largest-ever identity theft ring was indicted after people hacked into the
wireless networks of retail outlets to steal more than forty million debit and
credit card numbers. Information transmitted wirelessly from cars to insurance
companies could be vulnerable in the same way.
None of these questions are answered in AB 2800.
The insurance industry has made its desire to install technology in cars very
clear, said Consumer Watchdog. State Farm argued to the California Department
of Insurance this summer that insurers should be allowed to collect a broad
range of information including: "time of day," "days of the week," "mileage by
type of road," "where miles are driven," "mileage by speed intervals," and
"aggressive maneuvers (hard stops, starts, or turns)."
Progressive Insurance company is currently tracking "how aggressively" people
drive - including braking and acceleration patterns - in other states. This
driving data could be used by an insurer as a new way to discriminate by
geography. Rules implemented by the Insurance Commissioner last month require
insurers to significantly decrease the impact of ZIP-code on auto insurance
rates. Frequent stops and starts can be presumed more likely of an urban
rather than a rural driver. That data could be used by insurers as a back door
method to place more weight back on ZIP-code.
The bill, by San Rafael Assemblyman Jared Huffman, is also an illegal
amendment to voter-approved Proposition 103. It overrides the voters'
requirement that the Insurance Commissioner, not the legislature, adopt
regulations about insurance prices. As a violation of a voter initiative, the
bill will stall the issue of mileage-based insurance policies by drawing a
lengthy court challenge if enacted.
SOURCE Consumer Watchdog
Carmen Balber of Consumer Watchdog, +1-310-392-0522 ext. 324
