BILL ANALYSIS Ó
SENATE COMMITTEE ON INSURANCE
Senator Richard Roth, Chair
2015 - 2016 Regular
Bill No: AB 933 Hearing Date: June 24,
2015
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|Author: |Frazier |
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|Version: |June 16, 2015 Amended |
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|Urgency: |No |Fiscal: |No |
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|Consultant:|Erin Ryan |
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Subject: Vehicles: DMV records.
SUMMARY Provides that a person who provides his or her
driver's license number to an insurance agent or broker,
insurance licensee, employer or prospective employer for the
purpose of eligibility, underwriting, and rating of personal or
commercial insurance coverage or eligibility for employment or
continued employment involving the use of a motor vehicle, is
presumed to have consented to provide access to Department of
Motor Vehicle (DMV) records or information, as specified; allows
an insurance agent or broker to transmit a person's motor
vehicle record (MVR) for those purposes; and provides that the
agent or broker is not responsible for the subsequent handling
of the record if the recipient is otherwise authorized to
receive the record by the DMV.
DIGEST
Existing law
1) Provides certain information of a person's MVR held by the DMV,
including abstracts of convictions and accidents, is to be
available for public inspection, as specified. (Vehicle Code
§1808(a)
2) Prohibits the DMV from furnishing to any person information
from an MVR that would be in violation of disclosure
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requirements detailed in the federal Fair Credit Reporting Act.
(Vehicle Code §1806.5)
3) Allows for disclosure of MVR information to courts, law
enforcement agencies, and other governmental agencies, and
allows for limited disclosure to financial institutions,
insurance companies, attorneys, vehicle manufacturers, and
persons doing statistical research, as specified.
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,
and prohibits using any confidential or restricted information
for any purpose other than the reason the information was
requested, as specified.
5) Provides that if anyone violates the confidentiality provisions
or distributes restricted or confidential information to any
non-authorized person is liable for civil penalties up to
$100,000 and revocation of privileges to receive MVR information
or suspension for up to 5 years.
6) Defines an insurance broker as a person who, for compensation
and on behalf of another person, transacts insurance, other than
life, disability or health insurance, but not on behalf of, an
insurer.
7) Defines an insurance agent as a person who transacts insurance,
other than life, disability or health insurance, on behalf of an
admitted insurance company.
8) Requires automobile insurance rates and premiums to be
determined by the application of three mandatory factors in
decreasing order of importance: the insured's driving safety
record, the number of miles driven annually, and the number of
years of driving experience
This bill
1) Provides that a person who provides his or her driver's
license number to an insurance agent or broker, insurance
licensee, employer or prospective employer for the purpose
of eligibility, underwriting, and rating of personal or
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commercial insurance coverage or eligibility for employment
or continued employment involving the use of a motor
vehicle, is presumed to have consented to provide access to
DMV records or information, as specified.
2) Allows an insurance agent or broker to transmit a MVR for
the purpose of eligibility, underwriting, and rating of
personal or commercial insurance coverage or eligibility for
employment or continued employment involving the use of a
motor vehicle.
3) Provides than an insurance agent or broker who has lawfully
transmitted a MVR to a recipient otherwise entitled to
receive the record is not responsible for the subsequent
handling of the record by the authorized recipient.
COMMENTS
1. Purpose of the bill To resolve a dispute between DMV and
independent insurance agents and brokers and ensure that
independent insurance agents and brokers, if they sell
automobile insurance to individuals and businesses in
California, have quick access to motor vehicle records, and
be able to submit those records to the insurance companies
that actually underwrite the policies and pay claims.
2. Background Information collected by the DMV is generally
considered public information and is subject to inspection
by the public. Exceptions to this public disclosure
obligation include personal Information and confidential
Information. Personal information is defined as information
that identifies or describes an individual, including, but
not limited to, his or her name, social security number,
physical description, home address, home telephone number,
education, financial matters, and medical or employment
history. Confidential information includes, but may not be
limited to, an individual's home address, home telephone
number, physical/mental information, social security number,
and photograph. The DMV allows businesses, for example
insurance agents/brokers to underwrite insurance, background
check/pre-employment companies, registration services,
dealers/manufacturers, etc. that rely on DMV records to
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apply for commercial requester accounts to access MVRs
directly from the DMV. DMV also has a separate "service
provider" account for persons or entities that provide
pass-through/reformat service to another approved requester,
or a person or entity that is authorized by another approved
end user to access, receive and use DMV record information.
For example, the Website DMV.org, not affiliated with the
DMV, offers to provide a non-certified MVR for $39.95 once
you provide name, address, driver's license number and date
of birth.
Proposition 103, approved by the voters in 1988, requires
insurers to file and adhere to underwriting rules and rates
that are approved by the Department of Insurance. Under
Prop 103, automobile insurance rates and premiums are to be
determined by the application of three mandatory factors in
decreasing order of importance: the insured's driving
safety record, the number of miles driven annually, and the
number of years of driving experience. As a result, a
person's MVR is critical to determining eligibility and
pricing of automobile insurance. The type of MVR used for
this purpose does not include personal information, but only
the following information relative to the applicant's
driving history:
a. Suspensions, revocations, and cancellations of a
driver's license;
b. Driver's license class;
c. Special driver's license endorsements;
d. Any driver's license restrictions;
e. Traffic citations;
f. Vehicular crimes;
g. Accident reports;
h. Driving record points; and
i. DUI convictions.
Some insurers access MVRs directly. These companies as a
general rule do not do business with independent brokers,
and may employ agents who work exclusively for them. When
one of these insurers needs a MVR for underwriting a policy,
the driving record is sent directly to the insurer by the
DMV. Independent agents and brokers typically represent a
number of insurance companies, and sell insurance products
that most appropriately meet the needs of their clients.
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Commercial insurance is frequently purchased through
independent agents and brokers. In order to obtain quotes
and sell a personal or commercial auto insurance policy, an
independent insurance agent or broker will obtain a copy of
the client's MVR and provide it to an insurance company, or
multiple companies for the purpose of getting a quote or
placing insurance. This information is essential to the
underwriting process, and is required under Proposition 103
to procure an insurance policy covering the driver.
The DMV has historically provided this information to both
insurance companies and independent agents and brokers. Last
year, however, the DMV concluded that while licensed
independent agents and brokers had the authority to obtain
an applicant's MVR, they did not have authority to then
submit the MVR to insurers or insurance underwriters under
the applicant's original implied consent. Generally
speaking, an insurance agent or broker cannot obtain a quote
or place insurance without access to, and ability to
transmit, this information.
A person's MVR is a public record. When a person has
voluntarily provided his or her driver's license number to
an insurance company, an insurance agent or broker or their
employer so that insurance can be obtained, consent to
obtain a MVR has been implied, without a requirement for a
written consent. Generally speaking, a commercial employer
has authorized the MVR to be pulled for each driver seeking
employment. An independent agent or broker in many cases
never has any interaction or relationship with individual
drivers on a commercial policy-because the "client" is the
commercial employer.
Last October, the DMV issued an addendum to the Commercial
Requester Account Agreement that imposed new conditions on
independent agents and brokers. The requirements in the
addendum include:
a. The agent or broker must obtain the written
consent of the client specifically allowing the sharing
of the MVR with insurers. A written consent would be
required for each person to be covered by the policy,
for example in a multi-driver household, or on a
commercial employer policy.
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b. The agent or broker must maintain a log for at
least two years identifying the date, purpose and each
insurance company to which DMV information was
disclosed.
c. The agent or broker must notify each insurance
company that the MVR information provided may only be
used for the purposes of providing insurance services
to the agent or broker's client, and use of the
information must be in accordance with state and
federal law.
d. Holds the agent or broker responsible for the
negligent, improper, or unauthorized use or
dissemination of DMV information by any party to whom
it has disclosed the information.
e. The agent or broker must provide notice to, and
bear all costs of, California residents potentially
affected by a breach of the security system, database
or files of any party to whom the agent or broker has
disclosed the DMV information.
According to the independent agents and brokers, the DMV has
now threatened them, but not insurers or agents working for
an insurance company, with revocation of their authority to
obtain MVRs if they do not now comply with the requirements
of the new addendum, including obtaining express written
client consent for forwarding the information to insurers
for purposes of underwriting a policy.
In addition, as a result of DMV's stated concerns about
confidentiality of the information and responsibility for
data breaches, the addendum now holds independent agent and
brokers responsible for how the insurer uses the
information, even if the insurer has its own authorization
to obtain records from the DMV (and has agreed to DMV's
confidentiality requirements). The agent or broker could now
be found liable if the insurer illegally disclosed
information in an MVR. The agent/broker would also be held
liable for data breach notifications, even though they have
no control over the insurer's information security systems
and would have no access to the details of the breach.
This bill aims to recognize the commercial realities of how
agents and brokers operate by ensuring an independent
insurance agent or broker seeking personal or commercial
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insurance on behalf of a client has the ability to provide
the applicant client's MVR to insurance companies for
underwriting purposes.
1. Support According to the author, AB 933 is intended to
respond to the recent shift in DMV policy that places
independent insurance and brokers, as well as the insurance
companies with whom they do business and the consumers they
serve, at a competitive disadvantage because it singles them
out, in practical effect, for discriminatory treatment.
Because other types of insurance companies receive MVRs
directly, they are not impacted by DMV's action. Only
independent agents and brokers, who have already been
saddled with the contractual obligation to obtain these
records and forward them to their insurers, are impacted.
The Independent Insurance Agents & Brokers sponsored AB 933
because it codifies the expectation of every person who
supplies a driver's license number to an agent or broker to
receive an insurance quote or to an employer when applying
for a position that involves operation of a motor vehicle.
Most commercial auto insurance in California is sold through
independent agents and brokers, who have the contractual
freedom and expertise to sell insurance through a multitude
of competing companies, and are thus better able to "shop
the market" and find the most suitable combination of
coverage and price for their customers. With only a few
exceptions, the insurers that elect to transact insurance
through independent insurance agents and brokers explicitly
require the agent or broker to obtain the driving record and
submit it to the insurer as a condition for coverage to be
bound.
2. Opposition None received.
3. Questions Although it has not taken an official position
on the bill, the DMV has indicated it has concerns about the
confidentiality of DMV information and liability for data
breaches among the various parties. Under the language in AB
822, the agent/broker would have no liability for the
violations of the confidentiality of the data by the insurer
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or underwriter, or for providing notifications of a breach,
as long as they are also authorized by the DMV to receive
records. Nothing in this bill appears to interfere with the
DMV requirement that the agent or broker maintain a log of
each entity to which it has provided the MVR information.
Is this sufficient? Is there more the agent/broker could or
should do to ensure the proper handling of the information?
Should the agent/broker be required to have an express
agreement with the transferor insurer regarding
confidentiality and breach handling requirements.
4. Suggested Amendments
a) On page 3, add a new sub-paragraph to paragraph
(h) as follows:
"Prior to transmitting records to any insurer with whom
the insurance broker or agent does not have a written
agreement, or to a third party authorized by this
section to receive such records, the broker or agent
shall obtain written agreement from the insurer or
other third party that all such records shall be
treated by them in accordance with state and federal
fair credit and privacy statutes."
b) This bill and SB 491 (Committee on
Transportation and Housing) amend Vehicle Code §1808.
SB 491 is the Committee's omnibus bill and makes
technical changes to §1808. To prevent chaptering out
one of the bills, amend AB 933 to include the following
technical changes from SB 491: On page 2 line 28 and
page 3 lines 1-2 amend as follows: "Sections 13202.6
and 13202.7, Section 17520 of the Family Code, or
Section 256 or former Section 11350.6 of the Welfare
and Institutions Code"
POSITIONS
Support
Independent Insurance Agents & Brokers of California (sponsor)
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Oppose
None received
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