California Insurance Commissioner Ricardo Lara is under fire for his secretive speech to a convention of industry executives where he expressed support for revamping consumer protection laws in their favor.
The speech in San Francisco to the Western Regional General Counsel Conference was not on Lara’s official schedule but POLITICO obtained video of it.
“I’m ready to get creative, just like all of you have been for so many years — and now you have somebody who’s receptive to that in the department,’’ he told industry lawyers, the website reports.
In another dollop to insurance companies Lara suggested he would like to gut the pro-consumer law on standards for how insurance rates are determined.
Under the 1988 ballot initiative Proposition 103, moving violations, mileage and length of time driving largely set rates. This pro-consumer formula has saved Californians $4.29 billion per year since the measure was approved, according to the Consumer Federation of America.
The industry wants to use “telematics”–such as driver’s acceleration and braking–to determine rates, which could push them upward.
“Obviously, I think, if you know that somebody is … monitoring the way you’re breaking or how you’re driving … you better believe that’s going to change your driving behavior,’’ Lara said to the barristers. And “I’m excited about the prospects of breathing new life into the way we use rating factors in California.”
He added, “I look forward to working with you as we work towards modernizing California’s automobile rating factors,’’ he told the group. “You can agree that is a major shift — and a way we can start engaging the industry like we have never before.”
However because the “telematics” would be obtained online, consumer advocates say this threatens driver safety because the internet connection could be used by hackers to take over their cars.
In a report issued last month the Los Angeles-based Consumer Watchdog group said that, “Experts agree that connecting safety-critical components to the Internet through a complex information and entertainment device is a security flaw. This design allows hackers to control a vehicle’s operations and take it over from across the Internet.
Consumer Watchdog head Jamie Court told the California Globe that Lara’s newfound position is “dangerous.”
“It’s scary. I hope [our] report opens his eyes. His position was obviously not based on hearing about these dangers. If he is reasonable he will listen learn and buck the insurance companies on this.”
The consumer activist called Lara’s newfound position “a classic case of not looking before you leap. Now he should realize he is diving in a memory pool and it is dangerous.”
Additionally Court said that insurance companies could benefit economically if the WHAT instead of driver safety is used to calculate rates.
“Insurance companies want to watch how you accelerate, brake and where you go to charge you based on tracking your driving of a car. CA requires driving safety record to be prime determinant of auto insurance,” Lara explained. “Now that is defined as accidents record and at fault determinations — points on your license. They want to change the game to determine themselves how you drive by tapping into never center of your car. Plus that data is very valuable and they will want to mine it and sell it if possible.
The speech, coming after revelations that Lara took oodles of money from the industry prior to making decisions in their favor, gave critics more ammunition to claim that he is an industry shill.
POLITICO anonymously quoted “a former top elected official” bristling at Lara’s secretive speech to the industry shindig.
“To parachute in behind closed doors to an industry event, and essentially say, ‘You have a receptive insurance commissioner’” is basically telling them that “‘‘I’m on your side’” and “that’s really inappropriate.’’
And former Los Angeles Ethics Commission Jessica Levinson said that the “optics are so terrible even if you put on rose-colored glasses, it looks like a bomb went off.’’
After the embarrassing POLITICO report was published Lara started spinning to counteract charges that he shouldn’t be paling around with the industry bigwigs that he oversees.
He said his job is to “meet with insurers, consumers, legislators, local government leaders, and all those affected by the industry.”
“The proper use of telematics could have the potential to enhance driver safety and control premiums, and we will be engaging consumer groups and privacy experts to protect Californians’ data,” he contended.