Privacy threat of insurance bill far from ‘nonsense’

Published on

“Silly,” “extravagant,”
a “phantom issue,” and “nonsensical.”

That’s what Assemblyman Jared Huffman had to say about consumer and privacy advocates’ concerns that he’s pushing legislation that will compromise Californians’ privacy and raise insurance rates.

The Assemblyman claims his bill has nothing to do with insurers getting spyware into our cars. Unfortunately for him, the insurance industry is undercutting his argument.

The Department of Insurance held a workshop last week on “pay-as-you-drive” insurance
to talk about how to more closely tie auto insurance premiums to how far people drive. Every insurer and industry lobbyist who submitted comments talked about placing tracking devices in Californians’ cars.

Here’s what they said:

Association of California Insurance Companies: “PAYD [pay-as-you-drive] should allow consideration of the “quality” of miles driven…”

“Quality” of miles driven is the insurance industry’s way of saying that they should be allowed to track everything from the neighborhoods we drive in to how fast we drive them. The only way for insurance companies to know how we drive is by placing high-tech tracking devices in cars.

AAA: “
The only truly viable system going forward is one where data is collected from an on-board device.”

An ‘on-board device’ doesn’t mean an insurance agent to ride along and watch the odometer.

Insurance Services Office: “
Telematics or GPS based technology (wireless vehicle data) collection is superior to manual collection of odometers readings, for security and consistency.”


Personal Insurance Federation of California: “. could play a part in a PAYD program…” and “We do believe that carriers should be able to collect more information than what is actually used for rating purposes in hopes of learning, over time, what other variables could be predictive of the risk of loss.”

Only technology can track data above and beyond mileage.

State Farm: “
Ways to get this actual mileage would include the use of OEM telemetric devices such as OnStar as well as non-OEM telemetric devices. …Additionally, any proposed regulation should allow insurers to vary the mileage factor based on various characteristics about the miles driven.”

State Farm’s list of info that insurers should be allowed to collect in addition to mileage runs the gamut: “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’s actions make its preference for technology clear: The company sells “MyRate” in at least three states, a program that offers insurance discounts to people who place tracking devices in their cars that measure mileage, time of day and “how aggressively you drive.”

(Download the companies’ comment letters, and read Consumer Watchdog’s comments, here.)

In fact, the only insurance company that said it was not interested in tracking devices was MileMeter, a company that sells insurance by the mile in Texas and does not use technology to obtain odometer readings from consumers.

This company, however, doesn’t sell insurance here. California insurers have made it clear that spyware in our cars – to track every turn and tap on the gas pedal – is part and parcel of their interest in verifying mileage. Assemblyman Huffman can’t close his eyes to it forever.

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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