Three Insurance Bills Will Raise Drivers’ Rates, Put Spyware in Californians’ Cars

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Bills Violate Voter-Approved Prop. 103, Could Cost Taxpayers Millions For Legal Defense
Santa Monica, CA — Three anti-consumer pieces of legislation that will raise auto insurance rates, invade drivers’ privacy and violate the voter-approved consumer protections of Proposition 103 will be heard in the Senate Banking, Finance and Insurance committee on Wednesday.
“The insurance industry would pick drivers’ pockets and peer into their cars with three bills headed to the Senate Insurance committee this week,” said Carmen Balber of Consumer Watchdog.

Assemblyman Jared Huffman’s AB 2800 would allow insurance companies to require drivers to install spyware in their cars that tracks speed, acceleration, location, time of day, mileage and other data. Under the legislation, consumers who refuse to give up their privacy would pay higher rates. Sponsors say the bill would encourage motorists to drive less by lowering insurance rates for lower mileage. However, AB 2800 would give discounts to drivers who put black box technology in their cars, not those with low mileage.
“Insurers want to know where we drive, when we drive and how long it takes us to get there, but they shouldn’t get to charge more to Californians who won’t accept their spying,” said Balber. “Under new regulations that take effect next month, Proposition 103 already requires insurers to charge people less if they drive less. AB 2800 just lets insurance companies charge drivers more for refusing to let them pry in their cars.”
AB 1051, by Assemblyman Charles Calderon, would lead to higher insurance rates for drivers, homeowners and businesses by changing how the Insurance Commissioner can review rates. The legislation would prevent refunds to customers when insurers impose illegal surcharges on policyholders or delay legally required rate reductions. The bill would also apply the ratemaking standards used to deregulate workers’ compensation insurance to policies regulated by Proposition 103, a change that means the Commissioner would be powerless to review rates for reasonableness or fairness or establish standards prohibiting unfair practices.
Assemblyman Joe Coto’s AB 2956 would increase the cost of insurance by undermining a recent court ruling that protects customers from paying deceptive and 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 the customers.  This will authorize a “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

AB 2800 and AB 1051 would illegally amend Proposition 103, which can only be amended by the Legislature to further its purposes.
Proposition 103 grants the power to set new rating factors to the Insurance Commissioner, but AB 2800 would usurp that power for the Legislature. The bill would also allow insurers to unfairly discriminate against drivers solely because they choose not to put a tracking device in their car, which is also illegal under Prop 103.  
AB 1051 would eliminate the Insurance Commissioner’s power under Proposition 103 to order refunds when insurers are charging an excessive or illegal rate. The bill would also limit Proposition 103’s broad prohibition on unfairly discriminatory rates for auto, homeowners and business insurance to the narrow, insurer-defined terms that currently rule the deregulated workers compensation market.
Both bills will face 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.
Insurers’ Push for Changes Comes With Large Campaign Contributions

Assembly Members Coto and Calderon have taken substantial campaign contributions from the insurance industry: $96,700 went to Coto and $55,681 to Calderon since 2007. Assemblyman Huffman has taken $5,675.
“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. “These bills may please insurance industry donors or deliver a pyrrhic victory for the environment, but they will cost Californians and inevitably be overturned in court.”
AB 2800 and 2956 passed the Assembly last month. AB 1051 was “gut and amended” in the Senate after it passed the Assembly last year; it must return to the Assembly for approval.
Read Consumer Watchdog’s letters of opposition to
AB 2800,
AB 1051, and
AB 2956.
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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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