Committee continues debate on telematics in auto insurance; MIA outlines consumer protections and monitoring
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Summary
Senators discussed SB 984, which addresses insurers’ use of telematics data in auto insurance. The Maryland Insurance Administration (MIA) proposed amendments on disclosure, appeals and oversight; the committee deferred final action until Monday to review complex amendments and a market-conduct survey.
The Finance Committee on March 14 heard extensive discussion of Senate Bill 984, which would regulate insurers’ use of telematics data in private-passenger auto insurance and require consumer protections including disclosures, an appeals process and MIA oversight. Committee members did not vote on the bill and agreed to continue the discussion on Monday.
David, who worked on the bill, described two parts of the proposal: disclosure to policyholders that telematics programs collect driving data, and a prohibition on using telematics to cancel a policy or move an insured into a higher-premium classification without required notice. The Maryland Insurance Administration (MIA) worked with the sponsor on several amendments and proposed additional language to place certain provisions in the sections of law the MIA said were the appropriate location.
MIA amendments discussed by staff would clarify disclosure language, establish an internal appeals or correction process for policyholders to challenge telematics data they believe are erroneous, create MIA duties to monitor telematics programs for unfair discrimination or actuarial justification issues, and require reporting to the MIA. Some amendments move existing bill language into code sections the MIA said were the proper place for rating and underwriting rules.
Committee members asked whether telematics participation is optional (it is) and whether insurers may increase rates monthly based on telematics readings. The MIA said an insurer can adjust rates subject to existing notice-of-premium-increase rules, and the MIA has an outstanding market-conduct survey on telematics due back from carriers the week following the hearing.
Because the bill drew numerous technical and MIA-proposed amendments, and because members requested additional review, the committee deferred further action until Monday and asked the MIA to provide a clearer consolidated draft and the administration’s report to the committee.