BILL NUMBER: S5342
SPONSOR: COMRIE
 
TITLE OF BILL:
An act to amend the insurance law, in relation to the use of telematics
systems by insurers
 
PURPOSE GENERAL IDEA OF BILL:
To define telematics and usage-based insurance and to provide for a
consent-based framework for the use of telematics or usage-based insur-
ance for automobile insurance coverage in New York, including to permit
insurers to offer incentives to both insureds and prospective insureds
for participating in certain risk management programs through the use of
telematics devices.
 
SUMMARY OF PROVISIONS:
Section 1 amends insurance law to create a new section 2354 to define
"telematics or usage-based insurance" and to establish a consent-based
framework for the use of telematics or usage-based insurance for automo-
bile insurance coverage in New York.
Section 2 grants the Superintendent powers to carry out the provisions
of this article.
Section 3 amends the insurance law to clarify that telematics rewards
programs do not violate the anti-rebate provisions of Section 2324 of
the insurance law.
Section 4 provides for an effective date.
 
JUSTIFICATION:
Telematics or usage-based insurance, are voluntary risk management
programs that allow insurance companies to track the individual driving
habits of motorists. Telematic programs can provide drivers with
detailed information about their individual driving behavior and offer
suggestions for safer driving. Consequently, these programs may help
drivers improve their driving habits, and the roadway safety gains from
such programs can thereby reduce accidents and auto fatalities.
For example, Insurance Journal (a leading national property and casualty
insurance publication) noted that "when Southern Farm Bureau Casualty
Insurance Co. (SFBCIC) launched its new  
TELEMATICS program in several
states, the rate of distracted driving fell by nearly 10% overall - and
almost a quarter of those considered most distracted reduced their
distracted driving by more than 50% after 30 days of telematics running
in the background on their phones. Leveraging telematics data to reduce
risks on the road works. This is just one carrier's results of many
we've seen where making these insights available to
theircustomerscanhelpimprovetheirdrivingbehavior."
(https://www.insurancejournal.com
/magazines/magfeatures/2022/03/07/656824
Additionally, telematics programs allow for auto insurance to be offered
in new product offerings or discounts. For example, drivers whose driv-
ing behavior are safer (i.e. as defined by factors such as maintaining a
safe driving speed, or avoidance of hard breaking) allow such motorists
to qualify for a greater discount in their auto insurance than less safe
drivers.
Furthermore, motorists who drive significantly less may be able to
payper-mile of actual driving as recorded by a telematic device rather
than annual estimates of how many miles they drive. Conversely, motor-
ists with unsafe driving habits, such as texting and driving, would see
premium increases as a means of incentivizing them to adopt safer driv-
ing habits. New York is one of the few states remaining that does not
allow for the full use of the pricing sophistication of telematics in
not allowing an up/down pricing approach to telematics. Broader pricing
sophistication allows for more expansive product offerings, which is
consistent with the desire of many consumers to have a wide array of
consumer choices available to them.
In addition to combating distracted driving telematics can also help
deter auto theft as the location of vehicles are more readily traceable,
and thus recoverable. Furthermore, telematics can help fight against
insurance fraud. For example, Insurance Business Magazine recounts an
instance where plaintiffs tried to submit a bodily injury claim for
whiplash caused by impact with the defendant's vehicle. However, the
telematics data from the defendant's vehicle indicated that the vehicle
was traveling at less than one mile per hour - a speed at which it is
medically impossible to suffer the injuries claimed. As a result of the
evidence derived from telematics data, the frivolous claim was
dropped.(See,http://www.insurancebusinessmag.com /us/new/auto-
motor/three
auto-claim-exmaples-that-prove-telematics-is-a-must-228964.aspx).
 
PRIOR LEGISLATIVE HISTORY:
S7129- 2024
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
To be determined.
 
EFFECTIVE DATE:
This act shall take effect on the ninetieth day after it shall have
become law.

Statutes affected:
S5342: 2324 insurance law