Driving Data Could Be Used By Insurers to Discriminate By ZIP-Code
Santa Monica, CA – 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 here.
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.
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