Maryland Proposes Enhanced Telematics Regulations for Auto Insurers

The Maryland Insurance Administration (MIA) has proposed a new bulletin to clarify insurance companies' requirements when utilizing telematics programs, following increasing inquiries and complaints. This bulletin aims to provide clearer guidelines on notification obligations, specifically about premium increases linked to telematics data. The Consumer Federation of America (CFA) expressed support for the proposal, emphasizing the need for transparency and additional consumer protections. The bulletin mandates that insurers must send Notices of Premium Increases (NOPI) when telematics-based discounts are removed or adjusted. It also requires disclosure if a third-party vendor manages the telematics data. Consumers retain the right to protest premium increases, and non-compliance with NOPI issuance may result in market conduct actions by MIA. CFA has called on MIA to expand its regulatory oversight by regularly collecting data on telematics programs and issuing detailed reports. A recent report by Maryland highlighted that only 31% of drivers enrolled in telematics programs experienced premium decreases, whereas 24% saw increases, and 45% had no change, raising questions about the overall effectiveness and impact of telematics on consumer premiums. The CFA also advocates for stricter limits on data collection and use by insurers, suggesting that telematics data collection should be confined strictly to underwriting, rating, and claims-related functions. They recommend prohibiting insurers from collecting or utilizing data beyond these purposes to safeguard consumer privacy. The MIA's proposal and the CFA's recommendations reflect a growing focus on regulatory clarity and consumer data protection amid rising auto insurance costs and the evolving use of technology. Enhanced oversight of telematics programs aims to align pricing transparency with consumer rights in Maryland’s auto insurance market. These developments underscore the increased regulatory attention on telematics usage within auto insurance underwriting and pricing. Market participants, including insurers and regulators, are expected to monitor the bulletin's implementation and potential adjustments to ensure compliance and adequate consumer protection.