The proposal would also allow insurers to verify the actual number of miles driven when establishing auto rates, instead of estimating as they do now.

Also, the new program would allow insurers to price policies on a mile-to-mile basis, allowing drivers to purchase a fixed number of insured miles, ACIC noted.

ACIC said it supports the majority of the regulations but expressed concern with some of the specifics of the proposal, saying the new regulations should be more flexible in regards to allowing insurers to offer verification and pricing methods attractive to consumers.

The American Insurance Association also put the majority of its support behind the Department of Insurance's proposals but was concerned that only the number of miles driven would be recorded.

It stressed the importance of other factors, specifically areas where the miles are driven, whether it's on an open road or in traffic congestion, which AIA believes should be considered during policy pricing as well.

Dorothy Clancy, a law professor at Santa Clara University, and Andrew J. Blumberg, a fellow in the Department of Mathematics at Stanford University, both said in separate written testimonies that the proposed plan would lead to dangers in privacy through the techniques used to record miles driven.

"The 2009 mileage-verification proposal from the Department of Insurance has not responded to warnings about the potential for invasions of privacy that are likely to arise out of allowing insurance companies to use technological devices to access the types of sensing and diagnostic driver-behavior data," Ms. Clancy noted in her testimony sent to the Department of Insurance.

Mr. Blumberg echoed similar sentiments in his testimony. "Many possible implementations of this technology could pose serious threats to the 'location privacy' of drivers, and we believe it is essential to impose careful and serious protections in the amended regulations," he said.

Lauren Navarro, an attorney at the Environmental Defense Fund, Bob Epstein, founder of the organization Environmental Entrepreneurs, and Robert Fisher, a member of Environmental Entrepreneurs, do not support the voluntary implementation of the pay-as-you-drive aspect.

"Experts on the economics of pay-as-you-drive (PAYD) have indicated that its being voluntary for insurers is a strong barrier to its widespread adoption," Ms. Navarro said in her written testimony.

"Reduced accident payouts mean insurance companies save huge amounts of money for reductions in driving, but these savings go up and the programs become more attractive the more widely PAYD programs are adopted," she added.

"The regulations continue to leave it up to voluntarily offer PAYD policies…We support a 'mandatory offer' requirement," Mr. Epstein and Mr. Fisher noted in their testimony.

The Department of Insurance is expected to enact new regulations within the next three months, ACIC said.