"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
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
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
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: