California bill would let insurers monitor driving data for discounts

A California bill would let insurers monitor customers' driving data in exchange for discounted premiums.

Assemblymember Tina McKinnor, the author of AB 311, said the digital monitoring, known as telematics, rewards good driving and would improve safety. In real time, telematics technology would track data such as speed, location and how a vehicle is being driven.

"We have to slow people down," McKinnor said. "That is the whole purpose for this bill, is driver safety."

A voter-approved law from 1988, Prop 103, required insurance rates to be based mainly on driving record, miles driven and experience. It made California the only state in the country to prohibit telematics. 

McKinnor believes the law is outdated. She argued that her bill would also help good drivers who pay higher rates because of where they live. 

"Where I live definitely brings my insurance up," McKinnor said. "If we both drive the same way, we'll get charged the same way, instead of by our ZIP code."

California's Department of Insurance and consumer groups oppose the bill, citing privacy concerns. 

"We can't look behind the algorithm and see what weight it's giving to different criteria, which is a big problem," said Jamie Court, president of Consumer Watchdog. "Auto insurance, otherwise, is transparent. This is why the Department of Insurance is opposed, because of the lack of transparency in the algorithm."

The proposed savings in exchange for good driving might not be guaranteed. Telematics data from the Maryland Insurance Administration showed that 31% of drivers who opted into the program saw a drop in rates, 24% saw an increase and 45% saw no change to their premiums. 

"This collects an awful lot of data about people, more than they know, and it's like having Big Brother in your back seat," Court said. 

McKinnor insisted that drivers will not be forced to enroll in the program. 

"It's still opt-in in the other 49 states," she said. "We're not going to make this mandatory. It'll be a per-volunteer situation."

McKinnor's bill passed through the legislature's insurance committee. It's expected to be presented to the full Senate in August.