BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                        AB 933|
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                                    THIRD READING


          Bill No:  AB 933
          Author:   Frazier (D)
          Amended:  6/30/15 in Senate
          Vote:     21  

           SENATE INSURANCE COMMITTEE:  8-0, 6/24/15
           AYES:  Roth, Gaines, Berryhill, Glazer, Hernandez, Liu,  
            Mitchell, Wieckowski
           NO VOTE RECORDED:  Hall

           ASSEMBLY FLOOR:  78-0, 5/14/15 (Consent) - See last page for  
            vote

           SUBJECT:   Vehicles:  DMV records


          SOURCE:    Independent Insurance Agents & Brokers of California

          DIGEST:  This bill specifies 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.

          ANALYSIS: 








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          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.  

          2)Prohibits the 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)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 anyone who 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  







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            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  
            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.

          4)Provides that 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 must  
            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.

          5)Makes other technical and clarifying amendments.

          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  







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          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 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.  

          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 Proposition  
          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:

          1)Suspensions, revocations, and cancellations of a driver's  
            license;
          2)Driver's license class;
          3)Special driver's license endorsements;
          4)Any driver's license restrictions;
          5)Traffic citations;
          6)Vehicular crimes;
          7)Accident reports;
          8)Driving record points; and
          9)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  







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          brokers typically represent a number of insurance companies, and  
          sell insurance products that most appropriately meet the needs  
          of their clients. 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:

          1)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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          2)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.

          3)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.

          4)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.

          5)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. 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.
          
          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:NoLocal:    No








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          SUPPORT:   (Verified6/30/15)




          Independent Insurance Agents & Brokers of California (source)  




           OPPOSITION:   (Verified6/30/15)


          None received


          ARGUMENTS IN SUPPORT:     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.

          ASSEMBLY FLOOR:  78-0, 5/14/15
          AYES:  Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,  
            Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,  
            Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,  
            Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina  
            Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,  
            Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,  
            Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Lopez, Low,  
            Maienschein, Mathis, Mayes, McCarty, Melendez, Mullin,  
            Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,  
            Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,  







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            Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,  
            Wilk, Williams, Wood, Atkins
          NO VOTE RECORDED:  Linder, Medina

          Prepared by:Erin Ryan / INS. / (916) 651-4110
          7/2/15 8:52:40


           


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