Maryland Acting Insurance Administration (MIA) Commissioner Marie Grant told a Senate committee Wednesday that the administration stands behind a bill to regulate how auto insurers use private passenger vehicle telematic systems, including prohibiting data as a basis to set premiums.

Under SB 984 the MIA would also adopt regulations to limit the types and amounts of data collected through the systems.

Grant said the MIA receives a lot of complaints about limited options to challenge or appeal collected telematics data that the policyholder believes is erroneous.

“Often it is limited to whether the person was driving, not what the car or the device was measuring was accurate,” Grant said.

She added that MIA will work with bill sponsor Sen. Alonzo T. Washington (D-District 22) on amendments to provisions that conflict with current law, which authorizes the use of telematics programs subject to certain requirements.

Washington told the Finance Committee he will file an amendment that would only allow telematics data to be used by insurers if it decreases rates based on policyholder driving records.

‘Telematics systems including GPS tracking and vehicle diagnostics have gained traction in the insurance industry,” Washington said. “These systems collect extensive data on driver’s behavior ranging from mileage and speed to braking patterns… This bill aims to address the critical concerns associated with telematics-based insurance pricing by ensuring consumer protections, preventing rate hikes based on collected data, and upholding privacy rights.

“A major concern surrounding the telematics devices is data privacy. Insurance companies can track consumers’ locations and driving patterns even while they’re not driving. The Consumer Federation of America found that 68% of Americans refuse to install this device due to privacy concerns… If this bill is enacted, insurance companies need to be more transparent, give consumers control over their data, and regular disclosures about how telematics influence their insurance rates.”

Marta Harding, on behalf of State Farm, testified that the carrier is already transparent about its data usage with consent from users and full disclosure on how it will benefit them.

“As we read it and as I think it’s drafted, it would prohibit the use of telematics,” she said. “I don’t think that’s the sponsor’s intent from what I understand and we appreciate that. …We do think that this information is highly predictive. It is information about somebody’s driving record. There’s very little that is as predictive of future loss as somebody’s driving habits, so it is important information that we think insurance companies should be able to take into account.”

Washington asked Harding to share in what circumstances State Farm uses telematics technology to increase or decrease rates.

“Drive Safe & Save program is a voluntary program that a policyholder can opt into with, again, full disclosures about what we collect, how we use it, et cetera. And that can only benefit their rate. Whether that’s by a discount or an actual rate decrease, I would have to check on the specifics. We continue to think that it’s appropriate to use it going either direction but certainly to benefit the insured.”

Nancy Egan, American Property Casualty Insurance Association state government relations counsel and vice president, said some insurance companies will surcharge policies at renewal because of driving habits.

“Our companies do provide an opt-in, and they do provide a disclosure,” she said.

She added that insurance apps also offer the ability for policyholders to inform their companies when they’re sitting in passenger seats at certain times rather than driving.

Results of a Consumer Reports (CR) investigation, released earlier this week, found that while some automakers may obtain permission to collect driving data, drivers may agree without knowing they’ve done so. Then, the data is shared with other companies, which can be used to influence insurance premiums and auto loan terms offered online.

CR says it dug through thousands of pages of automakers’ privacy policies and asked questions of 15 automakers — BMW, Ford, General Motors, Honda, Hyundai, Kia, Mazda, Mercedes-Benz, Mitsubishi, Nissan, Stellantis, Subaru, Tesla, Toyota, and Volkswagen.

“We also reviewed corporate, regulatory, and legal filings from data brokers operating in the ‘insurtech’ industry — the technology companies and data brokers that help insurance companies set their rates,” CR wrote. “And we spoke to several car privacy experts, who, at industry conferences and in market reports, have described the profit potential of individual driving data as the ‘new oil.'”

Low driver scores can result in higher costs, according to CR’s research.

“The Consumer Federation of America, which researches car insurance telematics programs, says driver scores could, for example, unfairly increase rates for lower-income workers who work night shifts — a phenomenon that often disproportionately affects Black and Latino consumers. Similarly, data about the neighborhood you live in and where you drive can also be used against you. Just a few states —California, North Carolina, and Rhode Island — prohibit the use of most or all driver data to raise drivers’ insurance premiums.”

Michael DeLong, a telematics researcher with the Consumer Federation of America, told CR, “There’s just a sea of data floating around, and there are very few safeguards about how and where it’s shared.”

Justin Brookman, CR’s director of technology policy, added, “Data about how and where you drive your car is very personal and sensitive, and companies should only be collecting and sharing that data when it’s necessary for a service a consumer has requested. Burying something in a legal agreement or where they’re not likely to notice isn’t real consent, and automakers should knock it off.”

Images

Featured image: Maryland Acting Insurance Administrator Marie Grant and Sen. Alonzo T. Washington (D-District 22) testify on SB 984 during a March 5, 2025 Senate Finance Committee meeting. (Video screenshot)