UPDATE(01) 11/04/09 THE INSURANCE COMMISSIONER’S OFFICE RESPONDS …
Shortly after publishing my blog entry, I received an e-mail from Darrel Ng, the Press Secretary for the Department of Insurance. Darrel wanted to enter the conversation and I am re-printing his e-mail.
Hi Steve -
I wanted to clarify a couple things in your post on California's Pay As You Drive Program.
1. You bring the specter of the "State of California, the insurance industry, law enforcement and other vested interests access to your vehicle’s on-board computer." I agree that this is something serious and may cause alarm. However, the Pay As You Drive program does not allow that. There are a number of ways to verify mileage. The most simple is to drive your car to your agent's office and show them your odometer. This is something that people do often -- at the mechanic when you get your car serviced, when you get your smog checked, etc. Insurers have the option of offering an electronic device and consumers have the option to choose to allow this device, but the regulations specifically prohibit any other data collection besides mileage. (There is one caveat to this - if you have a a multipurpose device like GM's Onstar, the other functions can continue to operate.) If you have your mileage visually verified by an odometer reading, there is no way that any other information -- such as speed, time of day the vehicle is operated, braking intensity, etc. -- can be collected, and any optional electronic device is prohibited from collecting this data.
2. You say that "California is a big place and many of us drive quite a few miles in order to be able to live in safe areas where we are not faced with the urban decay and crime which so often surrounds industrial and commercial areas in Southern California." People are free to live wherever they want and drive however far they would like. In addition, the Pay As You Drive program is an option. If people like their current type of insurance, they can keep using it.
3. You ask the question "Ask yourself, when has the government ever promoted the interests of consumers over the special interests which provide the politicians with campaign funding, voter support and cushy jobs for their “special” friends?" Since Commissioner Poizner was elected, insurance rates approved by the Department of Insurance have gone down by nearly $2 billion. $1.15 billion of that total is reductions in auto insurance, and homeowners insurance premiums have gone down $661 million.
Please let me know if you have any other questions. I am happy to answer them.
Department of Insurance
I would like to take this opportunity to thank Darrel for replying to my blog post.
Under Point 1, we have seen numerous instances of initial legislative initiatives which served to enable the potential use of technology which either did not currently exist, was not commercially feasible or was not available at the time the bill was written. Considering that no legislation is ever complete, in and of itself, any bill signed by the Governor or implemented Administratively can be modified at a later time, sometimes by attaching an innocuous sounding amendment to another “must pass” bill which will be signed into law. The thought that insurers have the option of offering electronic monitoring options and the consumer has the right to accept these options is somewhat meaningless – especially if the insurer initially discounts your premiums in return for electronic access. Options seem to have a way of becoming requirements in subsequent legislation.
Of course, my vehicle is equipped with OnStar and as a technology geek I am intimately familiar with OBD II (OnBoard Diagnostics) and the functioning of OnStar. I might note that we have the AQMD (Air Quality Management District) to thank for this functionality as it was not designed as a consumer aid, but a way to insure that a car met pollution requirements. The system is intrusive and it is beyond the control of the consumer who does not have the “option” of disabling it under law.
Under Point 2, this sounds exactly like Obamacare – another political initiative involving the insurance industry. “If people like their current type of insurance, they can keep using it.” And like Obamacare, the legislation is not so much about consumer protections as it is about consumer behavior modification and pursuing a political agenda. To think any hyper-politicized regulatory agency headed by an elected official is not cognizant of the need to promote the industry they regulate is to be politically naive. It is a parasitic relationship, where the parties may fight, but the end result is almost always beneficial for both parties. As for the motives of the insurance industry, who do you think supports most of the politicians seeking to implement red light camera systems? Here it appears to be not so much about safety (80% of red light camera tickets are given for rolling right turns – and actually increase the probability of rear-end collisions) as it is about the increase in premiums when one is ticketed.
Under Point 3, the thought that any Insurance Commissioner simply enters office and says to the insurance industry “lower your rates” is not a credible scenario. There are numerous market forces at play, mostly in the manner by which insurance premiums may be calculated and the least of which is competition among the large companies.
Let us consider the recent appearance of the Commissioner with the State Farm people …
Automobile insurance rates are going down for about 3.3 million drivers who do business with California's biggest insurer, State Farm.
Rates will drop by 8% for a total savings of $219 million, said Rand Harbert, the company's senior vice president for California, and state Insurance Commissioner Steve Poizner at an event in Los Angeles this morning
Customers will see the drop in rates when new policies are purchased or when current ones are renewed starting July 6.
State Farm spokesman Bill Sirola cited a number of factors for the decline that is expected to save 665,000 Los Angeles customers of State Farm Mutual Automobile Insurance Co. approximately $75 a year each. "There are fewer accidents," Sirola said. A slowing economy and concern about high fuel prices are causing people to drive less, while safer cars and stricter law enforcement have reduced losses from damage claims.
State Farm's rate cut comes at a good time for consumers, Poizner said. "It is encouraging that in these tough economic times, the largest auto insurer in the state is passing company savings along to policyholders," he said. <Source:LA Times>
It appears that market factors, including competitive pressures, are responsible for the decline in premium rates. Let’s see what Darrel had to say …
Starting about three years ago, many auto insurers in California have lowered their rates, setting the stage for drivers to shop around.
Fewer accidents, industry competition, a cutback on driving due to higher gas prices and a slowing economy along with a regulatory push are among the reasons for lower rates, observers say.
"We believe the auto insurance market is very competitive and insurers know that people can shop around to find lower rates," said Darrel Ng, a spokesman for the state Department of Insurance, which requires auto insurers to obtain prior approval for rate changes or leaving them unchanged.
Another factor is fewer accidents, due to higher gas prices and a slowing economy, he added.
Proposition 103, the landmark auto insurance reform initiative passed by voters in 1988, has also played a significant role, said Doug Heller, executive director of Consumer Watchdog.
Prop. 103's best-known provision — that insurers base premiums more on motorists' driving records as opposed to where they live — began to be rolled out two years after a long fight between consumer groups and department officials that supported that provision and insurers that fought it.
That provision may result in lower or higher premiums for some drivers but it has not had a significant impact on overall rates sought by insurers, Ng added.
Auto insurance rates in California were reduced a total of $832.1 million over a two-year period ending in 2008, with about two-thirds of those savings resulting from the review process. Savings are measured as the amount insurers initially sought to collect in rates from all policyholders statewide at the start of the review process and the overall rate amount that was approved.
To read the entire article in context, click here.
There is no doubt that the California Department of Insurance Commissioner does serve a valuable and useful purpose, but it is mostly the hard work of the employees rather than its political leadership that is responsible for much of the consumer benefits that may accrue to the consumer. It should also be noted that Steve Poizner assumed office on January 8, 2007 and that most of the transformative legislative reforms were made prior to his assumption of office.
Pardon my cynical viewpoint, but it did occur to me that the insurance companies could somewhat game the system. By submitting artificially high rates, the insurers could reap the financial benefits if the rates were allowed to stand, and if they were reduced by the department review process, would still get what they probably wanted while handing the Department of Insurance a big public relations win due to the fact that the savings are a calculation between what the insurers sought and the rate that was approved. The actual savings by the consumer do not seem to enter into the calculation. (Pun intended)
Again, thanks to Darrel Ng for his input and a chance for further exploration of the issue.
Original Blog Entry …
Once again a California politician has placed Californians in further jeopardy of losing their privacy and curtailing their freedoms. California Insurance Commissioner Steve Poizner, a Republican, appears to be pushing an insurance initiative that is not only self-serving, but dangerous to liberty-loving Californians.
Lest us not forget that Steve Poizner made his multi- millions in tracking and mapping technology, founding both SnapTrack, Inc. and Strategic Mapping, Inc.
So it is no surprise, when I see that he wants to enable the insurance company to charge premiums for every mile driven and monitor your driving behavior.
As reported in the Sacramento Bee …
“Pay-by-the-mile auto insurance advances in California”
“Car insurance by the tankful?”
“Not quite, but California moved a step closer last month to pay-as-you-drive policies that could allow motorists to buy insurance like they do gasoline – a little at a time.”
“Insurance Commissioner Steve Poizner released regulations permitting and authorizing mileage verification for pay-as-you-drive, without dictating what form such plans must take.”
Poizner … acting like a RINO (Republican In Name Only) and promoting policies only democrats and the special interests can love …
“The goal is to use per-mile pricing to entice Californians not to drive so much, thus easing air pollution, relieving traffic congestion and lowering the number of traffic collisions.”
“A first-of-its-kind plan is MileMeter, available only in Texas, which last year began offering six-month policies with chunks of insured miles ranging from 1,000 to 6,000 miles. When the "tank" runs dry, motorists buy more.”
"’We absolutely anticipate coming to California,’ said Chris Gay, MileMeter founder and chief executive officer.
"’Our take is that half the market out there is being overcharged and underserved – and that's who we aim to address.’"
A clear and present danger …
Imagine giving the State of California, the insurance industry, law enforcement and other vested interests access to your vehicle’s on-board computer. Not only could California impose increasing mileage-based taxes to make up for the lost gas tax revenues associated with high-efficiency hybrid and electric vehicles as well as to attempt behavior modification towards using multi-billion dollar public transit systems promoted by politicians and the special interest , but the insurance company could now charge premiums based on your driving behaviors. The number of times you exceeded the speed limit, the number of times you failed to fasten your seat belt. And, in extreme cases, determine that an accident was your fault and deny your claim.
“Under Proposition 103, approved by voters two decades ago, California insurance premiums already are based partly on miles driven, but insurers say they have lacked authority to adequately verify motorists' estimates, thus resulting in an honor system that often is abused.”
“Poizner and other supporters tout pay-as-you-drive as a way to accurately tie insurance cost to accident risk, and to provide an incentive to walk, bike or use public transportation.”
Poizner is running for California Governor in 2010 and should be treated as any other liberal whack job that has ruined the State of California …
It is obvious, at least to me, that Poizner is attempting to mirror the tax and control policies of the socialist democrats in the legislature who are more about controlling your life and pandering to the special interests than they are for improving your life, reducing taxes and promoting a smaller government footprint.
Spinning the “big lie” …
"Economic conditions are tough," Poizner said. "The opportunity to actually get a big discount on your auto insurance by driving less? ... It will be very attractive."
Kiss of death …
As if one needed further proof of the toxicity of Poizner’s actions, one need only consider the support offered by the environmental movement which has been deeply infiltrated by socialists, Marxists, communists and anarchists – with a political agenda of enlarging our government, raising taxes, reducing individual liberties and subverting the American way of life. Much of their environmental policies are based on junk science and that it is power and funding that they seek.
“Pay-as-you-drive policies, available in various forms in numerous states, is supported conceptually by groups ranging from the California Air Resources Board to the Environmental Defense Fund.”
Ken McEldowney of Consumer Action predicted that per-mile policies would succeed in altering habits.
"’They may cut back in terms of leisure driving,’ he said of buyers. ‘They may combine trips to the store in a way they weren't doing before.’"
California is a big place and many of us drive quite a few miles in order to be able to live in safe areas where we are not faced with the urban decay and crime which so often surrounds industrial and commercial areas in Southern California.
“Pay-as-you-drive will not be for everyone, however. The push to cut rates for low-mileage drivers could spark a move to raise rates for high-mileage drivers based on more accurate risk assessment, though no such increase currently is under consideration.”
“A pay-as-you-drive study last year by the Brookings Institution, a public policy research group, concluded that driving would drop by 8 percent nationwide – and oil consumption by 4 percent – if all motorists paid for car insurance by the mile.”
Can you trust the estimates …
“Two-thirds of U.S. households would save money – averaging $270 per car – under pay-as-you-drive policies, which routinely would be adjusted for rural vs. urban driving, the Brookings study concluded.”
You can be damn sure than any cost savings due to sacrifice would eventually be consumed by higher taxes … this time surreptitiously collected by the state a little at a time, mile-by-mile, so that you do not notice the overall effect as you do when you pay lump-sum bills. By using other instrumentalities to collect taxes, such as the utilitiy companies, the service stations and commercial concerns, one does not see the overall impact of State taxes on your declining income.
Is Poizner a closet far-left ideologue or is he simply pandering to the special interests?
“But Carmen Balber of Consumer Watchdog, a nonprofit public policy group, said the new regulations cater to the insurance industry by neither requiring firms to offer pay-as-you-drive policies nor requiring premiums to drop as mileage does.”
“Balber said insurers could abuse the new regulations by proposing policies that verify miles driven, something the industry has desired, without offering price breaks.”
‘"I think the regulations were drafted to guarantee that insurers win, because they were left with all of the choice,’ Balber said.”
Poizner on change …
“Poizner said the best way to drive change is to spark competition and encourage innovation, not to dictate policy terms.”
Is Poizner speaking of the type of change that is currently being offered by Barack Obama and his merry band of Marxists? The type of change which promises to bankrupt our nations and subvert our individual freedoms?
Poizner’s big lie …
"’We won't approve products that aren't great for consumers,’ he said.
Ask yourself, when has the government ever promoted the interests of consumers over the special interests which provide the politicians with campaign funding, voter support and cushy jobs for their “special” friends?
More bureaucracy, intrusive behavior and government control …
“The new regulations provide insurers with several options for verifying odometer miles, including using their own agents, smog-check stations, Department of Motor Vehicle records, automotive repair shops or a technological device that could be placed on a policyholder's vehicle.”
Of course, follow-on legislation will probably require any modifications to your car will be reported and tracked. Quite possibly all repairs must be made at state authorized and approved repair facilities. Big Brother once again. More paper shuffling and expenses to burden California businesses.
“Addressing privacy concerns, the regulations prohibit per-mile policies from using technological devices to collect information about the location of a vehicle.”
For now? You must remember that your cell-phone records and GPS information are discoverable in court actions. Any concerns about whether or not such information may be used routinely is waived in a court of law. Lest us not forget CALEA (Communications Assistance for Law Enforcement Act) which mandates that all telecommunications carriers provide the government with the ability to surreptitiously monitor your conversations and Internet sessions – with an appropriate court order. One can see the slippery slope of now obtaining GPS and vehicle information. Perhaps rounding up crime suspects by checking which vehicles are in which area.
And let us not forget that other government policy proposal – congestion pricing to charge higher rates for vehicles operating in congested areas such as downtown areas, freeways, etc. The handwriting is on the wall for all to plainly see – privacy and freedom erosion being enabled by the likes of corrupt or complacent politicians like Steve Poizner.
“In 16 states, Progressive offers pay-as-you-drive policies that track mileage as well as driving habits, such as the hour and the speed that a vehicle is driven.”
“Balber contends that California's new regulations will serve as a springboard for insurers to push for the right to collect similar data.”
"’It's definitely a foot in the door,’ she said.”
Bottom line …
Steve Poizner is just another asshat politician, masquerading as a consumer-oriented Republican – while pushing policies that would make Barack Obama proud. This is one person that should be denied the Governor’s office – or any other office for that matter. Considering what he has just done, he cannot be considered as someone who represents liberty and the preservation of our freedoms.
Be well, be safe and take care of yourself and your family first. Protect your money and your freedom from malignant politicians like Steve Poizner.
“Nullius in verba.”-- take nobody's word for it!
“Beware of false knowledge; it is more dangerous than ignorance.”-- George Bernard Shaw
“Progressive, liberal, Socialist, Marxist, Democratic Socialist -- they are all COMMUNISTS.”
“The key to fighting the craziness of the progressives is to hold them responsible for their actions, not their intentions.” – OCS "The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius “A people that elect corrupt politicians, imposters, thieves, and traitors are not victims... but accomplices” -- George Orwell “Fere libenter homines id quod volunt credunt." (The people gladly believe what they wish to.) ~Julius Caesar “Describing the problem is quite different from knowing the solution. Except in politics." ~ OCS
“The key to fighting the craziness of the progressives is to hold them responsible for their actions, not their intentions.” – OCS
"The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius
“A people that elect corrupt politicians, imposters, thieves, and traitors are not victims... but accomplices” -- George Orwell
“Fere libenter homines id quod volunt credunt." (The people gladly believe what they wish to.) ~Julius Caesar
“Describing the problem is quite different from knowing the solution. Except in politics." ~ OCS