BILL ANALYSIS                                                                                                                                                                                                    



                                                                     AB 933


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          Date of Hearing:  May 6, 2015


                           ASSEMBLY COMMITTEE ON INSURANCE


                                   Tom Daly, Chair


          AB 933  
          (Frazier) - As Amended April 7, 2015


          SUBJECT:  Motor vehicle insurance:  DMV records


          SUMMARY:  Clarifies that a person who provides their driver's  
          license number in order to obtain employment or automobile  
          insurance is presumed to have consented to sharing the person's  
          motor vehicle record (MVR) with an insurer for purposes of  
          obtaining insurance or determining insurability.   


          EXISTING LAW:  


          1)Provides certain information contained in a person's MVR held  
            by the Department of Motor Vehicles (DMV), including abstracts  
            of convictions and accidents, is to be available for public  
            inspection.  


          2)Prohibits DMV from furnishing to any person information from  
            an MVR that would be in violation of disclosure requirements  
            detailed in the federal Fair Credit Reporting Act.  


          3)Prohibits DMV from sharing the home addresses of all  
            individuals contained within DMV records.  These provisions  








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            allow for disclosure of home addresses to courts, law  
            enforcement agencies, and other governmental agencies, and  
            also allow for limited disclosure to financial institutions,  
            insurance companies, attorneys, vehicle manufacturers, and  
            persons doing statistical research.  

          4)Requires any person or agent of a person who has access to  
            DMV-related confidential or restricted information to  
            establish procedures to protect the confidentiality of that  
            information.   


          5)Defines an insurance agent as a person who transacts  
            insurance, other than life, disability, or health insurance,  
            on behalf of an admitted insurance company.

          6)Defines an insurance broker as a person who transacts  
            insurance with an insurance company on behalf of the  
            applicant/policyholder.
          


          FISCAL EFFECT:  Unknown 





          COMMENTS:  


          1)Purpose.  AB 933 was introduced to resolve a dispute between  
            DMV and independent insurance agents and brokers concerning  
            the use of MVRs.  After routine audits of some of insurance  
            agencies that have a contractual relationship with DMV to  
            obtain MVRs, DMV concluded that the agencies' transmittal of  
            the MVR information to insurers in the process of obtaining  
            the insurance violated the agencies' duty to maintain the  
            confidentiality of DMV records.  The auditors found that the  








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            insurance agencies' use of the information to shop for  
            insurance for individual policyholders, to determine  
            insurability for commercial policyholders who hire drivers,  
            and related uses, could lead to suspension of the agencies'  
            right to access MVRs.  DMV issued post-audit enforcement  
            letters advising the insurance agencies that this necessary  
            use of the information must cease, or a suspension of the  
            right to access the MVR information would be issued.  The  
            author believes that the agencies' use of the information is  
            reasonable, what the customers expect, and therefore should be  
            expressly authorized.  The author notes, "this is a common  
            sense measure to provide the necessary clarification in  
            existing law to allow the insurance industry to carry on with  
            their standard industry practices and also ensure an applicant  
            is not burdened with signing multiple and redundant disclosure  
            forms."  


          2)Background.  Independent insurance agents typically represent  
            a number of insurance companies, or "carriers", and sell  
            insurance products that most appropriately meet the needs of  
            their clients.  Independent insurance agents are independent  
            contractors for the insurance companies they represent.  Thus,  
            several companies may authorize the agent to sell for them,  
            but the agent remains an independent businessperson. This  
            business model allows the independent insurance agent to  
            review many quotes and offer their clients the best policy  
            options available.



          In order to obtain a personal or commercial insurance policy, an  
            independent agent will provide an insurance company's  
            underwriters with a copy of an applicant's MVR.  For both  
            normal underwriting purposes, and to satisfy the legal  
            requirements imposed by Proposition 103, the driver's MVR is  
            not only appropriate, it is mandatory information required in  
            order to procure an insurance policy covering the driver.









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          Historically, DMV had not questioned the use by independent  
            agents of MVRs in this manner.  However, last year, upon a  
            re-evaluation of the applicable rules and contractual  
            provisions in force, DMV concluded this rather standard use  
            was not authorized.  But rather than seek clarification, via  
            legislation or otherwise, of what uses might be appropriate,  
            the DMV issued enforcement letters to a number of agencies.   
            Subsequent discussions among the stakeholders have led to  
            progress, but not sufficient progress to render legislation  
            unnecessary.
          3)Implied consent.  This bill aims to provide the necessary  
            clarification to existing law to ensure an independent  
            insurance agent seeking personal or commercial insurance on  
            behalf of an applicant has the ability to provide the  
            applicant's MVR to the appropriate insurance companies.  It  
            does so by stating that when the person seeking insurance or a  
            driving job submits his or her driver's license information to  
            the employer or insurance agent, for the purposes of obtaining  
            a driving job or vehicle insurance, it is presumed that the  
            person consented to the normal use of that information  
            necessary to accomplished the goal of the transaction -  
            obtaining insurance.  The proponents argue that this is  
            precisely what the person expects to happen when they seek a  
            driving job or vehicle insurance, and further formalities like  
            specific written authorizations are unwieldy, costly,  
            burdensome, and unnecessary.  In short, the uses to which the  
            MVR information will be used are precisely what the person is  
            expecting, and further disclosures are not needed to protect  
            that person's interest in their driving record.


















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          REGISTERED SUPPORT / OPPOSITION:




          Support


          Independent Insurance Agents & Brokers of California




          Opposition


          None received




          Analysis Prepared by:Mark Rakich / INS. / (916) 319-2086



















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