BILL ANALYSIS Ó
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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