A bill that would have allowed California insurers to track motorists driving habits in exchange for potentially lower rates has come to a dead end.
The Consumer Driving Data Protection Act, proposed by Assemblymember Tina S. McKinnor (D-Hawthorne), failed to make it out of the Legislature this week after stiff opposition from consumer and data privacy groups.
The legislation would have permitted insurers to use telematics technology to track speed, braking and other driving habits to establish a motorist’s safety record, a key component in setting individual premiums — as long as a motorist consented.
Currently, the safety record is determined by the Department of Motor Vehicles’ point system, which takes into account moving violations and at-fault accidents.
Telematics had the potential to offer the lowest premiums for drivers with spotty driving records who improved their driving habits, but opponents contended it violated Proposition 103, the 1988 initiative that regulates auto rates. The measure requires that drivers with a good DMV driving record get a minimum 20% discount.
Data privacy groups also feared the data collected by third-party telematics companies on behalf of insurers might be disclosed. There was no guarantee that tracking would lower rates.
A study last year by the Maryland Insurance Administration found that in 2023, 31.2% of drivers in the state who enrolled in telematics-based insurance experienced a rate decrease, 23.6% saw an increase and 45.2% of rates were unchanged due to telematics ratings factors.
“At the end of the day, it worked out for consumers,” said Carmen Balber, executive director of the Los Angeles advocacy group Consumer Watchdog. “It was bad legislation that would have allowed insurance companies and big data to invade people’s cars and privacy, and charge them more for insurance while they were doing it.”
Proponents of the bill, including traffic safety groups and the state’s insurance industry, disputed telematics violated Proposition 103. They also contended it included the nation’s strictest data privacy protections and noted how participation would be voluntary, similar to how it is offered in other states.
The California Department of Insurance, in a June 20 letter to the Senate Insurance Committee, opposed the legislation unless it was amended. It said the bill shifted accountability for regulatory compliance from insurers to telematics vendors, didn’t give the agency sufficient oversight over the vendors and imposed a large regulatory burden on the department.
An analysis for the Senate Committee on Appropriations in July also found it would cost the state tens of millions of dollars annually to implement telematics for the public and the state’s fleet of vehicles.
McKinnor proposed the bill after losing three friends to auto accidents, arguing it would offer incentives for drivers to slow down. She said Wednesday she plans to work with the new insurance commissioner next year to bring forth telematics either through legislation or department regulations.
“I will want to address this problem again. The problem is not solved,” McKinnor said.
Rex Frazier, president of the Personal Insurance Federation of California, an industry trade group that supported the bill, said that there was “no real reason that [telematics] shouldn’t come to California.”
“The remaining issues were highly solvable,” he said.
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