Maryland Considers Stricter Telematics Regulations for Auto Insurance
Maryland’s Acting Insurance Commissioner, Marie Grant, has voiced her support for a bill that would increase the regulation of telematics programs in the state’s auto insurance market. The proposed legislation focuses on enhancing disclosure requirements and refining data collection practices. Grant’s comments came during a meeting of the Maryland Senate Finance Committee, as reported by AM Best.
One key provision highlighted by Grant is a mechanism allowing policyholders to contest or correct data collected through telematics programs. “We actually see a lot of complaints on this issue in particular,” Grant stated. “Folks who are enrolled in telematics programs often have pretty limited ability to appeal or challenge data with their carrier.” She emphasized that this would improve consumer protection. Typically, policyholders currently have limited recourse, often only able to dispute whether they were driving at a specific time, not the accuracy of the recorded measurements.
The proposed legislation includes several other protective measures. These include preventing telematics data from being used to justify substantial rate hikes, establishing clear guidelines for data collection, and bolstering privacy safeguards. Furthermore, the bill would mandate increased disclosure requirements for insurance providers, granting the commissioner the authority to perform routine audits of telematics programs.
Senator Alonzo Washington, who introduced the bill, explained its intent to prevent potentially discriminatory practices and safeguard consumer privacy. He cited a Consumer Federation of America report indicating that 60% of U.S. policyholders decline telematics programs due to privacy concerns. Washington also noted that he himself has opted out of such programs.
The insurance industry generally favors voluntary telematics program participation, as highlighted by Jon Ward, the American Property Casualty Insurance Association’s department vice president of public affairs. Ward explained that telematics can benefit both policyholders and the public because “Telematics have been shown to help drivers reduce their insurance premiums by incentivizing safer driving,” adding that this reduces the likelihood of accidents.
The Maryland Insurance Administration declined to offer further comment beyond Grant’s testimony. A spokesperson indicated that the administration is currently analyzing the issue and preparing a report that will assess telematics programs’ impact on the state’s insurance market.
A draft bulletin by the Maryland Insurance Administration, released in November, mandated comprehensive disclosures about factors affecting automobile insurance premiums tied to telematics programs. This draft faced criticism from insurance industry players, including State Farm Mutual Automobile Insurance and various trade associations. The criticism centered on claims that the new rules would duplicate existing disclosures provided to policyholders upon enrollment in telematics programs. Nancy Egan, the American Property Casualty Insurance Association’s vice president of state government relations for the mid-Atlantic, stated that “[t]he requirement that the insurer must be ‘able to provide all relevant data about the insured that was measured through the telematics program’ could threaten the viability of many companies’ telematics programs and the discounts they offer to consumers.”
