CFA supports Maryland proposed bulletin on insurer telematics transparency, asks for more regulation

The Consumer Federation of America (CFA) recently submitted comments in support of a proposed bulletin from the Maryland Insurance Administration (MIA), which clarifies requirements that insurance companies must follow when utilizing telematics programs. 

MIA says that the intent of the proposed bulletin is to address several questions that have arisen during complaint investigations related to requirements for telematics programs. It notes that the administration previously issued a bulletin in 2024 as guidance for insurers using telematics programs. 

CFA noted that it specifically appreciated clarifications regarding requirements that insurance companies should send out notices of premium increases (NOPI), and whether telematics programs were the cause of these notices. 

“At a time of rising auto insurance costs and increasing use of technology, transparency is essential for telematics to help consumers and more accurately price coverage,” the CFA letter says. “However, transparency is not enough on its own. We urge the MIA to take a holistic approach, collect additional information on these programs, and adopt broader telematics regulations intended to protect policyholders, their data, and overall consumer privacy.” 

The proposed bulletin clarifies that consumers have the right to protest the increase. It also states that notice must be given if telematics-based discounts are removed or if a third-party vendor operates the telematics. 

“Many insurers give new enrollees in telematics programs discounts as an incentive to participate, and later they may remove those discounts and increase the prices that the enrollees must pay,” CFA’s letter says. 

The bulletin also notes that any insurance company not issuing NOPIs can expect to be the subject of market conduct actions by MIA. 

“We urge MIA to use its enforcement authority if companies fail to comply with the NOPI rules,” CFA says. 

CFA also asks that MIA further develop its regulations and regularly collect and issue information about these programs in reports. It notes that Maryland issued a report on the telematics market in July. 

The report found that about 13% of the state’s auto insurance policies were enrolled in telematics and that insurer claims of consumers benefiting from telematics were incomplete. 

“The report determined that only 31% of Maryland drivers enrolled in telematics saw their premiums decrease, while 24% of drivers enrolled in telematics saw their premiums increase, and 45% of drivers enrolled saw no premium change,” CFA says about the report. 

CFA asks that additional data points be collected, including: 

• • The average premium increase for policyholders experiencing premium increases and the average premium decrease for policyholders experiencing premium decreases.
  • Data reflecting the income distribution of policyholders who participate in the telematics program, broken out by policies that provide liability only coverage and by policies that also include physical damage coverage.
  • Whether the insurers use telematics data for underwriting decisions, and if so, the number and percentage of customers and applicants who were deemed ineligible, non-renewed, or cancelled.
  • The average premium increase or decrease for participants in telematics programs by census tract or ZIP code. 

The letter also asks that MIA adopt regulations to prohibit insurance companies from collecting data not specifically used in insurance underwriting, rating, or claims review and from using the data for any purpose beyond these practices. 

It notes that MIA can review an outline of telematics consumer protections in CFA’s paper on telematics.

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