A California bill would allow auto insurers to use GPS data and artificial intelligence to predict driving risk and adjust premiums, a shift that could reshape how rates are determined in the state's strictly regulated market.
How AB 311 would change rate setting
Currently, California bases auto insurance rates on three factors: a driver's safety record, annual mileage, and years of driving experience. Assembly Bill 311 would let insurers install GPS tracking to monitor driving behavior. That data would feed into an AI-powered system that produces a predictive risk score, which insurers could then use to raise or lower premiums.
Carmen Balber, executive director of Consumer Watchdog, said the approach could create opaque rating systems. "So, we're essentially talking about a score that would rate you on factors you might not even be aware of and change your auto insurance premium," Balber said.
Privacy and data monetization concerns
Insurers are offering discounts to encourage drivers to opt into the tracking programs. Balber warned that the data collected could be sold to third-party vendors. "Insurance companies want a piece of the data broker action. And that's part of the reason why they're pushing this legislation that would allow them to collect so much information in your car," she said.
Residents raised privacy objections. Anderson Ortiz, a Bakersfield local, said, "Yeah, it's just that thing where it's like it's creeping. Our privacy just keeps getting taken and taken and taken. I don't think it's something that should keep moving forward." Another resident added, "It's a privacy issue. I don't want them having access to all my information."
Regulatory and fairness questions
Balber emphasized that California's current system is designed to be fair and transparent. "And we have real problems turning over your insurance rate, which is supposed to be fair and currently is in California, to an unregulated algorithm or AI prediction," she said. The use of AI for Insurance is growing, but the bill raises questions about how regulators will handle algorithmic underwriting.
Why this matters for insurance professionals
For insurers, AB 311 opens a path to usage-based pricing models, but also introduces compliance risks around data privacy and algorithmic transparency. If the bill passes, companies will need to navigate California's strict consumer protection laws while building AI systems that drivers can trust. The potential for data monetization adds a revenue stream, but mishandling it could provoke regulatory scrutiny and consumer pushback.
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