After experiencing the loss of three friends in auto accidents, Assemblymember Tina McKinnor decided she needed to take action.
She immersed herself in the movement to improve driving safety, and now the Hawthorne Democrat is writing controversial legislation that could revolutionize how auto insurance rates are set for many California drivers.
McKinnor’s Consumer Driving Data Protection Act would allow insurers 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 the motorist agrees to it.
While such tracking has Big Brother overtones, the bill promises lower rates for drivers who might not have the best driving record, but can show they are now going easy on the gas and have stopped weaving in and out of traffic.
Currently, a driver’s safety record is determined by the Department of Motor Vehicles’ point system, which considers a driver’s moving violations and accidents.
That system would remain in place for those who don’t want insurers tracking them and looking over their shoulder every time they get behind the wheel.
The use of so-called telematics, though common in other states, has raised concerns among privacy and consumer groups due to the data collected by insurers and the technology companies that provide the systems. Critics also doubt that the systems do much to reduce collisions.
“This bill forces Californians to choose between their privacy and affordable auto insurance,” said Carmen Balber, executive director of Los Angeles advocacy group Consumer Watchdog.
But insurers and safety advocates argue it’s a more accurate way to determine how likely motorists are to get into a collision — and a method to encourage better driving.
“For me, this is a way to incentivize to slow people down,” McKinnor said. “If 10 people opt in and slow down, and if we could save 10 lives, that will make me extremely happy.”
The data can be collected by smartphone apps, transponders and other technology, with the apps able to detect whether a driver is handling the phone and is distracted — a leading cause of accidents along with speeding.
It’s expected that California insurers probably would collect the data over six months and use them to quote premiums for the next six-month period. The systems provide real-time feedback on driving and drivers would be allowed to dispute it.
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.
With advances in technology, insurers have been accelerating investments in telematics, data and artificial intelligence, including to better predict driver risk and set rates, according to insurer ratings agency A.M. Best.
The effort comes as insurers have been hit with pricier accident claims due to parts inflation; more expensive, complex and heavier vehicles; and increasing highway speeds that lead to more severe collisions — though fatalities decreased last year statewide and nationally, according to government statistics.
“I don’t view it as a moneymaker as much as a money saver, because if there are fewer claims and fewer accidents, that changes the payout structure,” said Allison Adey, a lobbyist for the Personal Insurance Federation of California, an industry trade group in favor of the legislation.
On average, rates for insurance written by the largest California auto insurers have climbed more than 30% since 2022, according to S&P Capital IQ.
Although California is typically at the forefront of technological advances, it is the only state in the nation to bar the use of telematics in the setting of personal auto insurance rates, despite the systems being introduced more than two decades ago. It is voluntary in all other states too.
That is at least least partly due to Proposition 103, which was passed in 1988 in an era of mushrooming auto premiums. It strictly regulates how rates are set and provides for extensive public oversight. The measure cannot be changed without a two-thirds vote of the Legislature, and any amendment must further its purposes.
The law requires rates to primarily be set by an individual’s driving record, as well as by years of driving experience and miles driven annually. The rates must be reviewed and approved by the insurance department, which takes months.
Passage of McKinnor’s bill would open up California’s large personal auto insurance market — with more than 27 million licensed drivers — to the growing telematics industry, which makes the tracking devices and other technology insurers employ and provides the software to crunch all those data.
The global market is expected to top $92 billion in revenue this year and reach $270 billion in 2033, according to consulting and research firm Grand View Research.
The bill has passed through two state Senate committee hearings, helped by testimony from McKinnor and witnesses who have lost loved ones to accidents and offered accounts they had seen of unsafe driving.
But the future of the bill isn’t assured, due to opposition not only by privacy and consumer groups but by the state Department of Insurance.
The department, in a June 20 letter sent to the Senate Insurance Committee, said the bill shifts accountability for regulatory compliance from insurers to telematics vendors, doesn’t give the agency sufficient oversight over the vendors and imposes a large regulatory burden on the department.
A series of amendments adopted by the Senate’s Privacy, Digital Technologies and Consumer Protection Committee sought to address some of those concerns. McKinnor is in talks with the department about other changes it is seeking.
“They gave me, like, 15 or 20 pages of amendments. I believe we will get there. We’re working on those amendments with them because otherwise, I don’t think the bill will pass,” said McKinnor, who has received insurance industry donations but said they have not influenced her telematics advocacy.
Michael Soller, a spokesman for Insurance Commissioner Ricardo Lara, declined to comment on the talks.
Concern over the data collected by telematics and other companies has been driven by breaches, illegal sales and the growing ability to “re-identify” the source of the data even when it has been anonymized.
Just this year, General Motors agreed to pay $12.75 million for violations of California’s Consumer Privacy Act after selling the driving data of California motorists who signed up for the company’s OnStar roadside assistance and navigation service to data brokers without proper notice or consent.
Consumer Watchdog, founded by attorney Harvey Rosenfield, the author of Proposition 103, has been among the most notable opponents of the legislation.
Although the bill bans sale of the collected data, the group contends the legislation includes loopholes that will allow its disclosure. Consumer Watchdog also cites secrecy surrounding the telematics companies’ proprietary algorithms.
“It rips out Prop. 103’s good‑driver protections and replaces your actual driving record with a black‑box score built on sweeping data collection,’’ Balber said.
Ryan McMahon, a senior vice president at Cambridge Mobile Telematics, the country’s largest auto telematics company, said the bill has robust data protections, allows only for driving habits to determine a driving safety score and is misunderstood by critics generally opposed to telematics.
“There’s a number of high-level things that people are opposed to in principle that are not represented in the language,” he said, noting the bill gives state regulators access to the algorithms.
Another issue raised by Consumer Watchdog is that the bill could result in motorists with poor driving records paying less for insurance than excellent drivers who don’t want to be tracked — with those drivers, in essence, paying for tracking discounts. The group alleges that is a violation of Proposition 103.
Adey said she thinks it would be possible to eliminate having good drivers pay for tracking discounts by setting up separate “risk pools” that don’t mix the two populations. Balber disagrees.
There also is the issue of whether telematics actually reduces accidents and deaths. Supporters of the bill have cited two studies that received insurance industry funds that show a reduction of unsafe driving habits, including one in the peer-reviewed JAMA medical journal that also received funding from two government agencies.
McMahon also cites a study that found a 20% crash reduction in commercial fleets using telematics. However, a limitation of consumer programs is that they are voluntary.
“Overall, there are benefits to the use of telematics,” said Chris Draghi, a director at A.M. Best. “One thing that can also factor into this, however, [is] the pool of individuals opting into these programs may also be those who are already ‘safer’ drivers.”
One of the most compelling witnesses in favor of the bill has been Damian Kevitt, who founded a group called Streets Are For Everyone that is co-sponsoring the legislation. He acknowledges it has received insurance industry sponsorships in the past.
Kevitt lost his right leg in a 2013 hit-and-run collision in Griffith Park while riding his bicycle after the car sped off and dragged him down a freeway onramp.
He is uncertain of the cause of the collision but is convinced the legislation will make streets safer.
“We know that texting and driving causes traffic collisions, so having something that’s an incentive as opposed to a penalty to incentivize you to drive safer — that’s a no-brainer,” he said.
