BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 933|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
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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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Page 3
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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