Pay-As-You-Drive Insurance Bill Called ‘Big Brother’ by Consumers

A consumer group is sniping at a bill in the state Legislature widely supported by environmentalists as a way to provide an incentive for Californians to drive less and cut greenhouse gas emissions by authorizing pay-as-you-drive car insurance. Cutting greenhouse gases from motorists is seen as a way to make equitable the enforcement of California’s climate change law AB 32, which heavily regulates the power industry. In an August 8 letter to bill author Assemblymember Jared Huffman (D-San Rafael), Consumer Watchdog executive director Harvey Rosenfeld threatened a lawsuit to overturn the measure, AB 2800, if it ultimately is enacted. The bill passed the Assembly and is awaiting a vote in the Senate, according to an aide to the Senate Appropriations Committee, the last panel to approve it. Rosenfeld said it would “allow insurance companies to unfairly raise auto insurance rates and invade the privacy of California’s over 21 million auto insurance policy holders.” He and other consumer advocates are pressing Huffman to amend the measure to clarify that the only information insurance companies could collect would be mileage driven. As the bill stands now, Rosenfeld maintains it would let insurance companies install “black boxes” on cars that track how heavy motorists step on the gas, whether they fully halt at stop signs, and where they drive. To do that, the black boxes would be outfitted with radio communications devices that would transmit data from a vehicle’s onboard computer, as well as location information based on global positioning technology, to insurance companies by radio. Rosenfeld said that charging drivers more for insurance based on such information would violate Proposition 103, which requires insurance companies to charge based on three primary criteria: driving record, miles driven, and years of driving experience. Environmental groups back the bill, noting that it would provide an incentive for motorists to drive and emit less because they would save on insurance by doing so. Other states and countries have put pay-as-you-drive insurance policies in place. An aide to Huffman said AB 2800 seeks only to allow insurers to verify miles driven and to provide an incentive for motorists to drive less and cut greenhouse gas emissions. The aide noted that pay-as-you-drive insurance would remain voluntary under the bill. Meanwhile, as Huffman’s bill progresses, state Insurance Commissioner Steve Poizner has opened a proceeding that could lead to administrative implementation of pay-as-you-drive insurance. Huffman’s aide said that whether AB 2800 passes or not, the commissioner could potentially authorize insurance companies to install black boxes on vehicles as part of a pay-as-you-drive plan. Editors’ note: For a more detailed version of this story, please see our sister publication E=MC2 – Energy Meets Climate Challenge. You can find it at www.energymeetsclimate.com

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Pay-As-You-Drive Insurance Bill Called ‘Big Brother’ by Consumers

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