Pay-As-You-Drive Vehicle Insurance
Converting Vehicle Insurance Premiums Into Use-Based Charges
~~~~~~~~~~~~~~
Victoria Transport Policy Institute
~~~~~~~~~~~~~~~~~~~~
Updated
24 November 2008
This chapter describes
Pay-As-You-Drive (PAYD) vehicle insurance and its potential impacts on vehicle
travel and safety. PAYD means that a vehicle’s insurance premiums are
based directly on how much it is driven during the policy term, providing additional
savings when motorists reduce their annual mileage.
Description
Pay-As-You-Drive (PAYD) Vehicle Insurance (also
called Distance-Based Vehicle Insurance, Mileage-Based Insurance,
Per-Mile Premiums and Insurance Variabilization) means that a
vehicle’s insurance premiums are based directly on how much it is driven during
the policy term. The more you drive the more you pay and the less you drive the
more you save. This can be done by changing the unit of exposure (i.e., how
premiums are calculated) from the vehicle-year to the vehicle-mile,
vehicle-kilometer or vehicle-minute. Existing rating factors are incorporated
so higher-risk motorists pay more per unit than lower-risk drivers. For
example, a $375 annual premium becomes 3¢ per mile, and a $1,250 annual premium
becomes 10¢ per mile. An average
Pay-As-You-Drive can be optional, so motorists choose the unit of exposure they want, just as consumers now choose differ rate structures for telephone and Internet service.
Justifications for Pay-As-You-Drive Insurance
Vehicle insurance is a significant portion of total vehicle
costs, averaging about $800 per vehicle-year in the
Pay-As-You-Drive insurance reflects the Market Principle that prices (what consumers pay) should be based on costs (the costs of providing a good or service). Research indicates that within existing price categories, annual claims increase with annual vehicle mileage, as illustrated in Figure 1. Mileage is just one of several factors that affect crash rates. It would not improve actuarial accuracy (i.e., how well premiums reflect insurance costs for a particular vehicle) to use mileage instead of other rating factors, for example, to charge all motorists the same per-mile insurance fee, but accuracy improves significantly if annual mileage is incorporated in addition to existing rating factors. Any other price structure overcharges low-mileage motorists and undercharges high-mileage motorists within a rate class.
Figure 1 Crash
Rates by Annual Vehicle Mileage (Litman, 2001)
Crashes per vehicle tend to increase with annual mileage.
Pay-As-You-Drive pricing can help achieve several public policy goals including fairness, affordability, road safety, consumer savings and choice, and reduced traffic problems. PAYD gives consumers a new way to save money by returning to individual motorists the insurance cost savings that result when they drive less. Motorists who continue their current mileage would be no worse off on average then they are now, while those who reduce their mileage save money. As a result, consumers benefit overall.
It helps reduce traffic congestion, road and parking facility costs, and environmental impacts. It reduces the need for cross-subsidies currently required to provide “affordable” unlimited-mileage coverage to high-risk drivers. It can particularly benefit lower-income communities that currently pay excessive premiums (see discussion by NOW below).
How It Is Implemented
Pay-As-You-Drive pricing is implemented by individual insurance companies, although legal or administrative changes may be needed to remove regulatory barriers. Governments can implement incentives or regulations to encourage insurers to offer Pay-As-You-Drive pricing, and public-private projects can help pilot and promote this pricing option, as described in the case studies section below.
Several methods can be used to calculate and collect premiums. One is to have motorists prepay for the miles they expect to drive during the term of coverage (typically a year), either in a lump sum or in several payments. For example, some motorists might pay for 12,000 miles at the start of the term, while others might pay for just 5,000 miles at first and make additional payments as needed. The total premium is calculated at the end of the term based on recorded mileage. Vehicle owners are credited for unused miles or pay any outstanding balance. Other insurance companies charge for insurance as they do now, but provide a rebate if, at the end of the policy term, a vehicle’s mileage is below certain limits. Another approach is for insurance companies to bill motorists based on their monthly or bi-monthly vehicle mileage, similar to other utilities. This requires more frequent mileage data collection.
Pay-As-You-Drive pricing requires verified mileage data. This can be collected in various ways. The simplest approach is to have brokers or vehicle owners report odometer readings, by email or mail, with random verification spot checks. More sophisticated systems use electronic devices which automatically send mileage data, or even track when and where a vehicle is driven. The cost of automated data collection is declining since most newer cars have odometer data recorded in the engine computer, and many have wireless communication systems or GPS transponders. Two insurance companies use mileage data that is automatically transferred each time a vehicle is refueled. Another approach is to require odometer audits as described below. This could provide data as accurate as other metered goods (such as electricity) at little extra cost.
|
Odometer
Audits Odometer
audits
involve the collection of odometer data by a certified business. An odometer
audit requires five steps: 1.
Check speedometer and instrument cluster for indications of
tampering. 2.
Record tire size and check that it is within the specified range. 3.
Attach a small seal to the ends of mechanical odometer cables to
indicate if it has been removed. This is unnecessary on most newer vehicles
with electronic speedometers. 4.
Check odometer accuracy and calibrate with a dynamometer (this step
is optional, or could be performed on a spot-check basis). 5.
Record odometer reading and forward results to the vehicle licensing
agency. Odometer
audits would be performed when a vehicle’s insurance is renewed, in most
cases once a year. Odometer audits typically require 5 to 10 minutes, and
less if performed with other vehicle servicing (tune ups, emission
inspections, etc.), with an incremental cost of $5 to $10 (assuming chargeout
rates of $60 per hour). Existing vehicle service businesses and emission
inspection stations could be certified as auditors, and some insurance
agencies might offer free audits as a marketing strategy. Auditors could be
certified by a government agency, as with other types of public services, or
by individual insurance companies or insurance professional organizations. There
are concerns that odometer fraud could be a problem, but odometer audits
should provide data as accurate as that used in other common commercial
transactions and more accurate than self-reported information now used for
insurance pricing. Most tampering can be detected during audits and crash
investigations, and fraud would void insurance coverage. Vehicle manufactures
produce increasingly tamper-resistant odometers since leases, warranties and
used-vehicle sales all rely on odometer readings. Audits would provide
additional benefits, including accurate mileage information for used-vehicle
buyers, and more accurate information for transportation planning. Other systems could be used to measure vehicle use, including special on-board electronic meters and GPS-Based Pricing, but these add significant costs and raise privacy issues (Distance-Based Pricing). Several new technologies being proposed or implemented which could automate some or all of the data collection processes, including: www.paygo-system.com |
Travel Impacts
Pay-As-You-Drive insurance averages about 6¢ per mile. The table below shows the vehicle travel reductions predicted from mileage-based fees. The Transport Elasticities chapter provides additional information on the travel impacts of various price changes.
Table 1 Travel Reductions Estimates (2001 dollars)
|
Mileage Fee |
Travel Reduction |
|
1¢ |
-1.8% |
|
2¢ |
-3.5% |
|
3¢ |
-5.1% |
|
4¢ |
-6.7% |
|
5¢ |
-8.2% |
|
6¢ |
-9.7% |
|
7¢ |
-11.2% |
|
8¢ |
-12.5% |
|
9¢ |
-13.8% |
|
10¢ |
-15.2% |
(Deakin
and Harvey, 1997, Table B-21, updated to account for 30% inflation from 1991 to
2001)
This indicates that PAYD pricing should reduce affected vehicles’ annual mileage by 8-10%, with larger reductions by higher-risk motorists, since they pay higher per-mile premiums (Litman, 1997; Bordoff and Noel, 2008). Optional odometer-based PAYD would probably attract 20-40% of total policies, representing a significant portion of motorists who expect to drive less than 80% of average annual mileage in their rate class, representing 10-20% of total mileage, and GPS-based pricing would probably attract 2-4% of motorists, representing 1-2% of total mileage, due to its significantly higher financial costs and privacy concerns. These portions should increase over time as fixed-rate premiums increase, since they will lose the cross-subsidy from lower-annual-mileage motorists, eventually causing the market to shift to PAYD pricing, although this would probably take a decade or so.
Table 2 Travel Impact Summary
|
Travel
Impact |
Rating |
Comments |
|
Reduces total traffic. |
3 |
Provides an incentive to
reduce vehicle use. |
|
Reduces peak period
traffic. |
2 |
Provides an incentive to
reduce vehicle use. |
|
Shifts peak to off-peak
periods. |
0 |
|
|
Shifts automobile travel to
alternative modes. |
3 |
Provides an incentive to
reduce vehicle use. |
|
Improves access, reduces
the need for travel. |
0 |
|
|
Increased ridesharing. |
2 |
Provides an incentive to
reduce vehicle use. |
|
Increased public transit. |
2 |
Provides an incentive to
reduce vehicle use. |
|
Increased cycling. |
2 |
Provides an incentive to
reduce vehicle use. |
|
Increased walking. |
2 |
Provides an incentive to
reduce vehicle use. |
|
Increased Telework. |
2 |
Provides an incentive to
reduce vehicle use. |
|
Reduced freight traffic. |
0 |
Would not generally apply
to freight vehicles. |
Rating from 3 (very beneficial) to –3 (very harmful). A 0 indicates no impact or mixed impacts.
Benefits and Costs
Pay-As-You-Drive Insurance can provide the following benefits (Edlin, 2003; Litman, 2001; Parry, 2004; Greenberg, 2007):
· Consumer savings. The average motorist is predicted to save $50-100 per vehicle. These savings represent the reductions in insurance compensation costs that are returned to individual motorists who reduce their driving, and therefore reduce their chance of having a crash. These are true cost savings, not just economic transfers.
· Economic Efficiency. Pay-As-You-Drive Insurance conveys to drivers the true costs they impose and allows motorists a chance to save money by reducing these costs. It reflects the principle that prices should reflect costs.
· Increased fairness. Current insurance pricing overcharges motorists who drive less than average and undercharge those who drive more than average each year in a price category.
· Progressive With Respect To Income. Since lower-income motorists tend to drive less than average, current insurance pricing is regressive. It forces lower-income motorists on average to subsidize the insurance costs of higher-income motorists. Butler (2000) argues that current insurance pricing results in extremely high premiums in lower-income areas (since a greater portion of low-mileage motorists drive uninsured which reduces funds to cross-subsidize higher-mileage motorists), a problem that can be corrected by PAYD pricing.
· Increased affordability. Pay-As-You-Drive pricing vehicle insurance more affordable (Litman, 2004). It allows more lower-income households to insure a vehicle, and makes it more cost effective for households of any income class to insure an extra vehicle that is seldom driven, such as an old truck used for errands or a recreational vehicle.
· Reduced Uninsured Driving. In some jurisdictions, a significant portion of vehicles is uninsured because of high premium costs, and because owners do not consider it cost effective to insure a low annual mileage vehicle. PAYD pricing makes insurance more affordable, which can help reduce this problem.
· Reduced Need for Cross-Subsidies. Pay-As-You-Drive pricing reduces the need to overcharge low-risk drivers in order to provide “affordable” unlimited-mileage insurance coverage to higher-risk motorists.
· Reduced vehicle travel. Pay-As-You-Drive Insurance is predicted to reduce vehicle travel by more than 10%, making this one of the most effective TDM strategies currently proposed. As a result it reduces:
o Traffic crashes.
o Traffic congestion.
o Road and parking facility costs.
o Energy consumption and pollution emissions.
o Consumer costs.
o Urban sprawl.
·
Increased safety. Vehicle crashes should
decline even more than mileage (a 10% mileage reduction is predicted to reduce
crashes by 12-15%) because higher-risk motorists (who currently pay high
premiums per vehicle-year) would pay higher per-mile fees, and would therefore
have the greatest incentive to reduce their driving. If implemented at
throughout the
Pay-As-You-Drive Insurance can provide significant Congestion and Emission reduction
benefits. Table 3 summarizes the results of a comprehensive traffic modeling
exercise which indicates, for example, that a 2¢ per mile vehicle fee applied
to all vehicle travel in the
Table 3 Impacts
of 2¢ Per Mile Fee, Year 2010 (Harvey and Deakin, 1997, Table B.9)
|
Region |
VMT |
Trips |
Delay |
Fuel |
ROG |
|
Bay Area |
-3.9% |
-3.7% |
-9.0% |
-4.1% |
-3.8% |
|
|
-4.4% |
-4.1% |
-7.5% |
-4.4% |
-4.3% |
|
|
-4.2% |
-4.0% |
-8.5% |
-4.2% |
-4.1% |
|
|
-4.3% |
-4.1% |
-10.5% |
-5.2% |
-4.2% |
VMT = change in total vehicle
mileage. Trips = change in total vehicle trips. Delay = change in congestion
delay. Fuel = change in fuel consumption. ROG = a criteria air pollutant.
Revenue = annual revenue in millions of 1991 U.S. dollars. See original report
for additional notes.
Costs include transition costs to insurance companies and vehicle registration agencies of implementing a new pricing system, and the costs of “odometer audits,” which are estimated to have incremental costs averaging $5-10 per vehicle year.
Table 4 Benefit Summary
|
Objective |
Rating |
Comments |
|
Congestion Reduction |
2 |
Reduces total automobile
travel. |
|
Road & Parking Savings |
3 |
Reduces total automobile
travel. |
|
Consumer Savings |
3 |
Provides consumer savings. |
|
Transport Choice |
3 |
Improves automobile
affordability. |
|
Road Safety |
3 |
Reduces automobile travel. |
|
Environmental Protection |
3 |
Reduces automobile travel. |
|
Efficient Land Use |
3 |
Reduces automobile travel,
particularly benefits urban residents. |
|
Community Livability |
2 |
Reduces automobile travel. |
Rating from 3 (very beneficial) to –3 (very harmful). A 0 indicates no impact or mixed impacts.
Equity Impacts
Current vehicle insurance pricing significantly overcharges motorists who drive their vehicles less than average each year, and undercharges those who drive more than average within each price class (Edlin, 2003; Litman, 2001). Since lower-income motorists drive their vehicles significantly less on average than higher-income motorists, this is regressive. Distance-based insurance is fairer than current pricing because prices more accurately reflect insurance costs.
Distance-based pricing benefits lower-income drivers who otherwise might be unable to afford vehicle insurance, and who place a high value on the opportunity to save money by reducing vehicle mileage. It benefits lower income communities that currently have unaffordably high insurance rates, as described below. Distance-based insurance would provide significant savings to workers during periods of unemployment, when they no longer need to commute.
Figure 2 Current and Per-Mile Premiums Annual Costs Compared
This figure compares the costs of Usage-Based Premiums for Low, Average and High mileage vehicles. “Current” refers to vehicles with fixed-price insurance. “Same Mileage” refers to vehicles with Usage-Based Premiums that do not reduce annual mileage. “Reduced Mileage” assumes a 10% reduction.
Figure 2 illustrates the financial impacts of Pay-As-You-Drive pricing on different types of motorists. A low-cost, low-mile vehicle such as might be owned by a low-income motorist saves $225, an 8.4% reduction in total vehicle expenses. An average motorist saves $64 annually in insurance costs if vehicle travel declines 10% as expected. A high-mileage motorist pays $331 more per year, a 4.7% increase in total vehicle expenses.
Some people raise concerns that particular groups (such as rural residents) will be disadvantaged by distance-based price structure. This is not true of Pay-As-You-Drive pricing that is based on the average mileage of each rate class, as described here. Under such a system, only rural residents who drive more than average among rural residents would pay more, and about half of all rural residents would pay less. For example, if rural vehicles are driven an average of 18,000 miles a year, a rural motorist who drives their car “only” 15,000 miles annually would save money.
Table 5 Equity Summary
|
Criteria |
Rating |
Comments |
|
Treats everybody equally. |
2 |
Most groups benefit,
although some more than others. |
|
Individuals bear the costs
they impose. |
3 |
Makes insurance pricing
more actuarially accurate. |
|
Progressive with respect to
income. |
3 |
Provides savings to
lower-income motorists. |
|
Benefits transportation
disadvantaged. |
3 |
Makes automobile ownership
more affordable. |
|
Improves basic mobility. |
3 |
Makes automobile ownership
more affordable. |
Rating from 3 (very
beneficial) to –3 (very harmful). A 0 indicates no impact or mixed impacts.
Applications
Pay-As-You-Drive Insurance is suitable for implementation in any geographic region, and is particularly appropriate where insurance affordability, uninsured driving, traffic congestion, crashes or pollution are considered significant problems. It is implemented by individual insurance companies. Federal, state or provincial governments can require it or provide incentives to encourage it.
Table 6 Application Summary
|
Geographic |
Rating |
Organization |
Rating |
|
Large urban region. |
3 |
Federal government. |
1 |
|
High-density, urban. |
3 |
State/provincial
government. |
3 |
|
Medium-density,
urban/suburban. |
3 |
Regional government. |
1 |
|
Town. |
3 |
Municipal/local government. |
1 |
|
Low-density, rural. |
3 |
Business Associations/TMA. |
0 |
|
Commercial center. |
3 |
Individual business. |
1 |
|
Residential neighborhood. |
3 |
Developer. |
0 |
|
Resort/recreation area. |
3 |
Neighborhood association. |
0 |
|
|
|
School/college/university. |
0 |
Ratings range from 0 (not
appropriate) to 3 (very appropriate).
Category
Incentive to Reduce Driving
Relationships With Other TDM Strategies
Pay-As-You-Drive Insurance is a type of Distance-Based Pricing and Market Reform. It supports and is supported by TDM strategies that improve the availability of alternative modes, or increase motorists’ incentive to reduce mileage. It encourages use of transportation alternatives such as Ridesharing, Public Transit, Nonmotorized Transport and Telework, and supports Smart Growth.
Stakeholders
Pay-As-You-Drive Insurance involves insurance companies, insurance regulators, state or provincial legislators, and transportation agencies. Motorists, transportation professionals, public safety officials, environmentalists, consumer groups and organizations concerned with poverty all have reasons to support PAYD pricing. The National Motorist Association and the Oregon/Idaho chapter of the American Automobile Association support Pay-As-You-Drive pricing as a way to make insurance more affordable and fair (NMA, 1998).
Barriers To Implementation
The insurance industry has generally opposed Pay-As-You-Drive pricing because it requires changes in their practices and may reduce long-term profits by reducing total premiums. PAYD insurance requires changes in the way fees are calculated, and a network of odometer auditors, and so it is difficult for an individual insurance company to implement. Higher-mileage motorists tend to oppose Pay-As-You-Drive Insurance because it would increase their costs. Most consumers are unfamiliar with Pay-As-You-Drive Insurance, and many confuse it with Pay-At-The-Pump. Most consumers are unfamiliar with the full benefits of Pay-As-You-Drive Insurance, and many are skeptical of change.
Responses to Concerns About Per-Mile Insurance (Litman, 2001)
This section discusses concerns that have been raised about distance-based pricing by the insurance industry.
Insurance pricing already incorporates mileage.
Although
some insurance companies incorporate mileage-related rate factors such as
commute distance or estimated annual mileage, none begins to approach
actuarially accurate, marginal pricing, and so fail to give motorists accurate
price signals.
Mileage is less important in predicting crashes than
other rating factors.
Whether
mileage is more or less important than other risk factors is irrelevant for
PAYD pricing that incorporate existing rating factors. Until recently insurance
companies had no reliable source of mileage data and so could not accurately
determine the relationship between mileage and claims. Data based on
independent odometer readings shows a strong relationship between mileage and
claims within existing price categories.
Travel foregone could be lower risk than average,
resulting in little crash reduction, and less insurance cost savings than
reduced premium revenue.
This
concern is technically valid, although there is no evidence that it is true.
Available evidence indicates that broad vehicle travel reductions result in
proportionally greater crash reductions and insurance savings. Additional
research and pilot projects that test the effects of distance-based pricing
could address this concern.
Distance-based insurance unfairly increases costs to
high-mileage drivers.
Distance-based
pricing would increase costs for motorists who drive significantly more than
the current average within their price group. This is justified on actuarial
grounds, and so increases fairness. Most motorists save money and experience
net welfare gains with distance-based pricing, and very few would have their
vehicle costs increase more than a few percent. Lower-income motorists tend to
benefit significantly, because they tend to drive their vehicles less than
average, tend to respond to cost saving options, and face the greatest
insurance unaffordability problems.
Automobile insurance reform should focus on equity,
affordability and safety.
Distance-based
pricing helps achieve all of these goals. It increases equity by making
premiums more actuarially accurate and reducing costs for lower income
motorists. It allows motorists to save money and makes vehicle ownership more
affordable. It significantly increases road safety.
Safety advances/congestion reduction/air pollution
reduction/energy conservation can best be pursued in ways other than
mileage-based insurance.
It
is unnecessary to choose between distance-based pricing and other strategies.
Distance-based pricing complements other strategies. Because of its multiple
benefits, distance-based insurance can be one of the most cost-effective ways
to achieve these objectives.
People need their cars too much to give them up.
There will be no travel reduction.
Distance-based
insurance is not expected to cause people to give up cars. In fact, by reducing
fixed costs, vehicle ownership should increase slightly. There is extensive
evidence that vehicle travel is affected by vehicle operating costs. A modest
(5-15%) mileage reduction is predicted.
Consumers will not accept this change.
Market studies indicate
consumer demand for PAYD pricing (Buckeye, et al., 2007). A broad range of
interest groups support distance-based pricing. Support should increase as
consumers and citizens learn more about its benefits.
Odometer fraud will be a major problem.
Although
some odometer fraud may occur, it is expected to be a minor problem overall,
with fraud rates comparable to other common consumer transactions, and far
lower than with current insurance pricing. Odometers are increasingly tamper
resistant, regular odometer auditing should discourage and identify most
tampering, and the financial incentive for fraud is relatively low. Insurers
financial exposure would be minimal since odometer fraud voids coverage.
It would increase administrative costs to insurers
and inconvenience vehicle owners.
Odometer
audits are significantly cheaper than vehicle emission inspections because they
require less equipment and specialized training, can be performed in
conjunction with other vehicle servicing, and can be provided by a large number
of businesses in a competitive market. Total incremental costs are modest
(predicted to be about $6 per vehicle year), and far smaller than direct
benefits to consumers and society.
If distance-based pricing were better, insurance
companies would already use it.
Individual
insurers face several barriers to implementing distance-based pricing. An
individual company faces relatively high administration costs to establish an
odometer auditing system. Insurance regulators are often unsupportive of
pricing innovations. An individual insurance company only captures a small
portion of the total benefits, since most financial savings are passed back to
customers or accrue to competitors. Insurers do not profit from reductions in
uncompensated crash costs, congestion, infrastructure costs, or pollution, or
benefit directly from increased equity.
Insurance
companies currently maximize profits by maximizing their gross revenue, because
they are dependent on investment income. A pricing strategy that reduces total
crashes could reduce profits if regulators or market competition required a
comparable reduction in premiums. Although there are potential financial and
marketing benefits, these longer-term saving which would have to offset an
individual insurer’s short-term revenue losses and risks. It is therefore not
surprising that few insurers have implemented distance-based pricing.
This type of pricing has never been used before.
Some
vehicle insurance is already distance-based: rates for fleets and commercial
vehicle coverage are often based on mileage, and mileage is included as a
rating factor by many vehicle insurers. There is nothing unique about pricing
based on use. Prices for most goods are based on some measure of consumption,
such as water and electric meters, and scales used to weigh food. Vehicle
rentals and leases incorporate odometer-based price components. Vehicle
insurance is unusual for having pricing that allows unlimited consumption
(i.e., vehicle mileage).
Odometer auditing would be an invasion of privacy.
Odometer
readings are already collected during vehicle servicing, vehicle sales and
crash investigations. Odometer readings are even sold by private companies to
used vehicle purchasers. Odometer auditing simply standardizes the collection
of this information. Odometer auditing does not identify when or where a
vehicle has been driven, or provide any other information that could be
considered private. Odometer auditing would provide significant additional
consumer benefits.
Table 7 Obstacles and Potential Solutions
|
Obstacle |
Potential Solutions |
|
Uncertainty. Insurance rates are based on claim cost data collected by the vehicle-year. Although there is ample evidence that mileage is an important risk factor, actuaries have insufficient data to know exactly how to calculate mileage-based premiums. |
Begin with a relatively small pilot project, using a basic prorated premium (i.e., current annual premiums divided by average annual mileage for each rate class), with an extra 10-20% margin to account for uncertainty. Adjust this rate as needed as the pilot project provides data. |
|
Misunderstandings. Many objections to PAYD pricing reflect misunderstandings of the concept. Some people believe it refers to Pay-At-The-Pump (insurance coverage funded through a fuel sales surcharge), are unaware of its full potential benefits, or have exaggerated estimates of its costs. |
Educate stakeholders (policy makers, insurance professionals, insurance regulators, consumers) about PAYD, including how it would be implemented, and its real benefits and costs. |
|
Exaggerated number of losers. Some people object to PAYD because they believe it would harm many groups, such as rural drivers (PAYD, as recommended here, would only increase costs for rural motorists who drive more than the average for rural motorists) or businesses (premiums for business vehicles already reflect their relatively high mileage). |
Educate stakeholders about the full distribution of benefits from PAYD. To the degree that it is effective at reducing mileage and crash costs, PAYD should make far more people better off than are made worse off overall. Even high mileage drivers may benefit overall if they prefer owning multiple vehicles, and because they would benefit most from reduced traffic congestion, accident risk and exposure to pollution emissions. |
|
Data accuracy. PAYD requires accurate mileage data. Self-reported data is unreliable. |
Mileage data can be collected in many ways. The cheapest if for motorists to submit odometer readings, verified with occasional spot-checks. The most costly is to install GPS transponders in each participating vehicle. An intermediate approach, which may provide the optimal balance between accuracy and cost, is to certify vehicle service businesses (garages, oil change shops, and perhaps some insurance brokers) to perform odometer audits. Governments can certify these auditors and collect odometer readings in vehicle registration databases. |
|
Regulatory constraints. Some insurance regulations discourage pricing reforms. For example, regulators often require insurers to provide data justifying rates, and some prohibit insurers from offering multiple rate structures. Regulations are complex and rate filings are costly (often costing a million dollars or more in data collection, analysis and paper works), which discourages small, innovative pilot projects. |
Educate insurance regulators concerning the merits of PAYD
with respect to insurance regulatory objectives. Collect data showing the
actuarial basis for PAYD. Work with regulatory agencies to address specific
obstacles to innovation and small pilot projects. Identify jurisdictions that
have suitably supportive regulatory policies. Pass legislation (as in |
|
Lack of incentive. Insurance companies currently perceive little incentive to implement innovative pricing options such as PAYD pricing. |
Educate insurance company officials concerning opportunities
to profit from PAYD pricing (the first companies to offer this product should
attract significant new business). Provide financial incentives, such as tax
breaks (as |
This table lists various obstacles to PAYD pricing, and potential solutions to them.
Best Practices
· Pay-As-You-Drive insurance should be considered as a way to increase consumer fairness and affordability, to reduce uninsured driving, as a traffic safety strategy, and as a way to reduce energy consumption, pollution emissions and traffic congestion.
· State or provincial governments can certify odometer auditors, to make mileage data easily available.
· PAYD pricing should be carefully planned to insure that implementation is convenient to motorists and that vehicle use data collection is efficient and accurate.
· PAYD Insurance can be implemented as a consumer option, initially as a small pilot project, and if no major problems are encountered the program can expand until it is available to all motorists.
Examples and Case Studies
PAYD In Australia
Real Insurance, a division of
the Holland Insurance Corporation, offers Pay-As-You-Drive vehicle insurance in
Aryeh (www.aryeh.co.il)
Aryeh offers PAYD insurance
in
California
After extensive public consultation the California
Department of Insurance introduced a new, green auto insurance option available
for
"I am thrilled to pave the way for
The Environmental Defense Fund estimates that if 30% of Californians
participate in this voluntary coverage,
Under the new regulations,
consumers could verify mileage by odometer readings, automotive repair records,
or a technological device used to collect mileage data. The regulations
explicitly prohibit insurance companies from requiring policyholders to
participate in a pay-as-you-drive program.
Polis Direct Kilometre Policy (www.kilometerpolis.nl)
Polis
Direct (www.polisdirect.nl), a major
Dutch insurance company, began offering their 'Kilometre Policy' in November
2004. Per-kilometer premiums are calculated by dividing current premiums by the
current policy’s maximum annual kilometers, so a motorist who currently pays
€500 for up to 20,000 kilometers would pay €0.025. Participants pay an “advance
premium,” which is 90% of their current premiums, so those who currently pay
€500s under this system pay an advance premium of €450. At the end of the
policy term motorists can receive a rebate of up to 50% of their premium for
lower mileage, or pay up to 50% higher premiums if they drive more than the
current maximum. Mileage data is collected during annual vehicle inspections,
called the “national car card,” and recorded in the national vehicle
registration database. Participating motorists must be at least 24 years of
age, have a car that sold new for less than €42,000 (Euro), and drive less than
40,000 kms annually.
Norwich-Union PAYD Pilot Project (www.norwichunion.com/pay_as_you_drive/index.htm?plp_ci_payd)
In
2003, Norwich-Union, the largest insurance group in the
In
a survey commissioned by Norwich Union, nine out of ten people say they would
prefer their motor insurance to reflect the usage of their car and the type of
journeys they make - with the majority favouring “pay as you go” systems
similar to those offered by gas and electricity suppliers. As stated by
programme director Robert Ledger, “Customers choosing ‘Pay As You Drive’
insurance will benefit from individual premiums based on how often, when and
where they actually used their cars. Motorists would receive a fairer deal as
this initiative provides them with the opportunity to really be in the driving
seat when it comes to controlling their premiums.”
General Motors and On-Star Offers PAYD Rates (www.onstargm.com/promo/html/promo_mileage.htm)
Since mid-2004 the General Motors Acceptance Corporation (GMAC) Insurance has offered mileage-based discounts to OnStar subscribers located in certain states. The system automatically reports vehicle odometer reading at the beginning and end of the policy term to verify vehicle mileage. Motorist who drive less than specified annual mileage receive insurance premium discounts of up to 40%, as indicated below:
|
1-2,500 miles |
40% discount |
|
2,501-5,000 miles |
33% discount |
|
5,001- 7,500 |
28% discount |
|
7,501-10,000 |
20% discount |
|
10,001-12,500 |
11% discount |
|
12,501-15,000 |
5% discount |
|
15,001-99,999 |
0% discount |
PAY PER K Coverage (www.nedcor.co.za/press_payperK.asp).
Nedbank,
a major South African insurer, offers Pay-Per-K vehicle insurance.
Monthly premiums are based on the distance traveled in the preceding month, and
are debited monthly in arrears. Mileage is automatically recorded each time the
vehicle is refueled using a Nedbank card.
Holland
Holland
Insurance (www.hollard.co.za),
Progressive and Aviva Programs
The Progressive TripSense (https://tripsense.progressive.com) in
Motorists
receive an automatic 5% discount if they choose to upload their driving data,
plus additional discounts of up to 20% based on how much, how fast and when
they drive. Sharing driving data is always
optional.
In 2006 Progressive
Insurance began a PAYD insurance pricing test with 3,014 total volunteer
participants who can receive $50 annual savings for every 5% mileage reduction
compared to their expected mileage, representing 8.3¢ per mile savings for
vehicles averaging 12,000 miles per year. The 93 participants with odometer
reading data available from previous years’ emission inspection drove an
average of 1,237 fewer mile during the test’s first year compared with previous
years, a 10% reduction. A similar study in
Oregon
House
Bill 2043, passed by the
Texas
Texas
House Bill 45, passed in 2001, gives insurers permission to offer
cents-per-mile pricing for vehicle insurance. The bill requires insurance
companies to separately track and report the claim losses and premium revenues
for mileage-based and time-based premiums. Various organizations in
National Organization for Women Insurance Reform Program (www.now.org)
The
National Organization for Women has lobbied for per-mile insurance pricing to
create more equitable insurance and avoid current discrimination based on
gender. Female drivers tend to drive their vehicles about 40% less than male
drivers, and have about 40% fewer crashes and claims, yet insurance companies
offer much smaller discounts for women. NOW argues that insurance pricing
should be based on mileage, rather than using gender as a surrogate for
mileage, and that this would provide significant savings to most women drivers.
NOW has successfully lobbied to have per-mile insurance legislation introduced
in
|
Statement
by Deborah Bell, President, September,
2001 New
“cents-per-mile” car insurance law could end overcharging and redlining Texas
National Organization for Women (NOW) congratulates the Texas Legislature for
passing the “cents-per-mile” car insurance bill—House Bill 45—signed into law
by Governor Rick Perry. By adopting
legislation NOW developed, lawmakers have taken a major step toward 1) making
compulsory insurance work, 2) eliminating redlining and the stigma it
creates, and 3) ending overcharging to insure cars driven less than average.
The new option to buy miles of protection as needed (added to the odometer
reading at a cents-per-mile rate) will enable a car owner for the first time
to individually control insurance cost by the amount the car is used. The
law as passed gives insurers permission to offer the cents-per-mile option to
whomever they wish. Texans should now
demand that their insurers make this option available to every one of their
insureds. We need the per-mile
alternative to fixed dollars-per-year prices that are forcing millions of
cars to go uninsured. For example,
owners of cars in a certain insurance price class—based on territory, car use
and type, and driver type—now paying $500 per year in fixed installments
could be offered the option of buying miles as needed at 5.0 cents per mile. Compulsory
insurance seems to work in upper-income zip codes where most people can
afford to keep insurance on cars driven less than average. Because these cars
cost insurers proportionately less in claims, they bring in extra profits and
insurers privately call landing their business “skimming the cream.” Insurers
use extra profits from “cream” customers to compete by holding car insurance
prices down for their preferred customers who have many other insurance
needs. Customers typically skimmed and
overcharged are those who commute by carpool, bus or bicycle, and also women,
older people, and households with more cars than drivers. In
low income zip codes, insurers redline many cars to higher “nonstandard”
prices—not because their drivers are less careful, as insurers encourage
everyone to believe—but because of the scarcity of “cream” to hold prices
down. What really happens is that miles, costs, and insurance prices (per
car) spiral up where high insurance cost and strong enforcement increase the
incentive for ever more drivers to share fewer insured cars. The
new law directs the Insurance Commissioner to adopt by year’s end the few
regulations needed (e.g., adding to the car’s ID card the odometer reading at
which insurance expires unless more miles are bought). Companies may begin
insuring under the option January 1, 2002. But if they then choose to
withhold the option in order to protect their extra profits from insuring
little-used cars, newly informed consumers can step up their demand for
cents-per-mile rates and even turn to the Legislature to compel companies to
offer it. That is only reasonable in view of the fact that the Legislature
compels Texans to buy insurance on motor vehicles regardless of how little
they are driven, if at all. |
Radio Program Supports PAYD (www.marketplace.org/shows/2003/02/25_mpp.html)
Public
Radio’s Marketplace daily magazine covering business and economic
issues featured a story about PAYD insurance 25 February 2003. During the
broadcast,
"Pago Por Uso" (www.jovenesdesiguales.com)
“Pago por Uso” (“Pay For
Use”) is a PAYD insurance policy designed specially for younger drivers, which
bases rates on when and where a vehicle is driven, using on-board telematics.
It is offered by Mapfre (www.mapfre.com), the largest Insurance
Company in
Aioi Insurance (www.ioi-sonpo.co.jp) Introduces “PAYD” Insurance
The Aioi Insurance Company in
In recent years, automobile manufacturers have been
leveraging this technology to create a service in which information is sent and
received via a telematics device installed inside the vehicle. “PAYD” is the
realization of this telematics technology, whereby information on distance
traveled is transmitted automatically to the insurance company.
The revolutionary plan calculates mileage per month,
giving customers the opportunity to pay premiums based upon their own driving
habits, much the same as phone charges, which ultimately provides fairer and
potentially lower insurance rates.
Vancouver City
In June
2005 the Vancouver City Council and the Greater Vancouver Regional District (www.gvrd.bc.ca/board/archive/comagendas/PlanningEnvironment/june/4.4.pdf)
passed resolutions asking the Insurance Corporation of British Columbia
(ICBC), which provides basic liability coverage for all vehicles in the
province, to offer Pay-As-You-Drive pricing.
Italian Insurance Companies Introduce PAYD Innovations
The
Italian insurance company SARA (www.sara.it)
offers a per-day insurance policy, in which customers can send a text message
indicating that they will drive the next day (or the next week) and in return
receive a code which provides coverage for that period. Other insurers,
including UNIPOL (www.unipolonline.it)
employ in vehicle telematics units mainly for reasons of post-crash services
(like airbag deployment call, or liability determination). This equipment can
provide PAYD pricing, as demonstrated at
www.octotelematics.com. 70,000 of
those units have been sold in 2005 and approximately 1,000 plus are installed
in Italian cars each month for UNIPOL´s services.
City of Philadelphia
Authorizing
City Council’s Committee on Law and Government to conduct a full and
comprehensive investigation of the desirability of offering mile-based
insurance to drivers in the
WHEREAS, The Administration has begun an aggressive
enforcement initiative designed to compel uninsured Philadelphia drivers to
purchase appropriate automobile insurance or risk losing their vehicles through
seizure; and
WHEREAS, The largest barrier to compliance by Philadelphia
residents with the Commonwealth’s mandatory automobile insurance law has been
the unconscionably high cost of automobile insurance for Philadelphia drivers;
and
WHEREAS, This Council has recently adopted several
resolutions decrying the pricing practices of insurance carriers which charge
Philadelphia drivers more than twice the rate charged to residents of the
surrounding four counties and three times the rate of residents of the City of
Pittsburgh; and
WHEREAS, Traditional dollars-per-year automobile
insurance, which is priced without regard to the amount of vehicle miles
driven, overcharges those drivers who drive the fewest miles and are often the
least able to afford the higher costs of conventional coverage; and
WHEREAS, There is an affordable, cost-based
alternative to traditional dollars-per-year insurance known as cents-per-mile
automobile insurance, which allows drivers to exert direct control over the
cost of their insurance by purchasing only the amount of insurance they need at
a cents-per-mile rate; and
WHEREAS, The State of Texas became the first state
to permit non-commercial drivers to purchase automobile insurance coverage by
the mile on January 23, 2002, giving Texas drivers the choice of either the
traditional fixed annual rate or the new cents-per-mile for their car’s profile
group; and
WHEREAS, Those choosing to buy insurance at the
cents-per-mile rate can decide when to buy miles of protection in advance and
how many miles to buy at a time to suit budget and convenience -- much like
buying gasoline or pre-paid long distance telephone calling cards; and
WHEREAS,
RESOLVED, BY THE COUNCIL OF THE CITY OF
PHILADELPHIA, That the authority be given to the Law and Government Committee
to conduct a full and comprehensive investigation of the desirability of
offering mile-based insurance to drivers in the
|
As
a man was driving down the freeway when his car phone rang. Answering,
he heard his wife’s voice urgently warning him, “Herman, I just heard on the
news that there’s a car going the wrong way on route 290. Please be careful!” “Heck,”
said Herman, “It’s not just one car. It’s hundreds of them!” |
References And Resources For More Information
Ian Ayres and Barry Nalebuff (2007), “Would You Buy Car Insurance By The Mile?, Forbes.com (http://moneycentral.msn.com/content/Insurance/P45802.asp).
Jason E. Bordoff (2008) Pay-As-You-Drive Car Insurance, Brookings Institution (www.brookings.edu/articles/2008/spring_car_insurance_bordoff.aspx).
Jason E. Bordoff and Pascal J. Noel (2008), Pay-As-You-Drive Auto Insurance:
A Simple Way to Reduce Driving-Related Harms and Increase Equity, The Brookings Institution (www.brookings.edu); at www.brookings.edu/papers/2008/07_payd_bordoffnoel.aspx.
Jason E. Bordoff and Pascal J. Noel (2008b), The Impact of Pay-As-You-Drive Auto Insurance in California, The Brookings Institution (www.brookings.edu); at www.brookings.edu/papers/2008/07_payd_california_bordoffnoel.aspx.
Kenneth R. Buckeye, et al. (2007), Minnesota Pay-As-You-Drive Market Research, Paper 07-1687, TRB Annual Meeting (www.trb.org).
Patrick Butler (1992), Operation of an Audited-Mile/Year Automobile Insurance System Under Pennsylvania Law, National Organization for Women Insurance Project (www.now.org); at www.centspermilenow.org.
Patrick Butler (2000), Why The Standard Automobile Insurance Market Breaks Down In Low Income Zip Codes, Report to the Texas House Committee on Insurance, Cents Per Mile For Car Insurance (www.centspermilenow.org); at www.centspermilenow.org/633b-4522.pdf.
Ira Carnahan (2000), “Insurance by The Minute,” Forbes, 11 December 2000, pp. 86-88.
CCAP (2005) Transportation Emissions Guidebook:
Land Use, Transit & Transportation Demand Management,
CDI (2008), Insurance Commissioner Poizner Sets Framework For Environmentally–Friendly Automobile Insurance, Increased Options For Consumers, California Department of Insurance; at
www.insurance.ca.gov/0400-news/0100-press-releases/0070-2008/release089-08.cfm.
Cents Per Mile For Car Insurance (www.centspermilenow.org) is a
website that promotes “cents per mile” vehicle insurance as allowed by
legislation passed in the state of
Stephen J. Dubner
and Steven D. Levitt (2008), “Freakonomics: Not-So-Free Ride,” New York Times, April 20, 2008, (www.nytimes.com/2008/04/20/magazine/20wwln-freakonomics-t.html).
Aaron S. Edlin (2003), “Per-Mile Premiums for Auto Insurance,” Economics for an Imperfect World: Essays In Honor of Joseph Stiglitz, MIT Press; at: http://works.bepress.com/aaron_edlin/28.
Aaron S. Edlin and Pinar Karaca Mandic (2006), “The Accident Externality from Driving,” Journal of Political Economy, Vol. 114, No. 5, pp. 931-955; at http://works.bepress.com/aaron_edlin/21.
Environmental Defense PAYD Website (www.actionnetwork.org/campaign/payd) provides information on a campaign to promote pay as you drive vehicle insurance.
Keri Funderberg, Michael Grant and Ed Coe (2003),
“Changing Insurance One Mile At A Time,” Contingencies (www.contingencies.org/novdec03/changing.pdf),
Nov./Dec. 2003, pp. 34-38.
Allen Greenberg (2007), Designing Pay-Per-Mile Auto Insurance Regulatory Incentives Using the NHTSA Light Truck CAFE Rule as a Model, Paper 07-3457, TRB Annual Meeting (www.trb.org); at www.vtpi.org/07-3457.pdf.
Randall Guensler, Adjo Amekudzi, Jennifer Williams, Shannon Mergelsberg and Jennifer Ogle (2003), “Current State Regulatory Support for Pay-as-You-Drive Automobile Insurance Options,” Journal of Insurance Regulation, National Association of Insurance Commissioners (www.naic.org) Volume 21, No. 3, Spring 2003.
Christine Hagerbaumer (2004), “Drive-By Rates: Can Pay-As-You-Drive Insurance Attract Good Risks And Gain Insurers An Environmentally Responsible Image?” Best’s Review, April 2004, pp. 68-69.
Winston Harrington and Ian W.H. Parry (2005), “Pay-As-You-Drive Car Insurance,” New Approaches on Energy and the Environment, Resources for the Future (www.rff.org).
Greig Harvey and Elizabeth Deakin (1998), “The STEP Analysis Package: Description and Application Examples,” Appendix B, in Technical Methods for Analyzing Pricing Measures to Reduce Transportation Emissions, USEPA, Report #231R98006 (www.epa.gov/clariton).
Holland Insurance, PAY-As-You-Drive Coverage (www.payasyoudrive.co.za).
ICF (1997), Opportunities to Improve Air Quality Through Transportation Pricing Programs, USEPA (www.epa.gov/omswww/market.htm).
Insurance Information Institute (www.iii.org) provides information on the
insurance industry.
Insurance Services Offices (www.iso.com) is the property and casualty insurance industry’s leading supplier of statistical, actuarial, underwriting, and claims information.
IVOX (www.ivoxdata.com/ivox.htm) uses various GPS and GIS data systems to track vehicle travel patterns and use the information to calculate insurance premiums.
Laura Kramer (2005), “Pay As You Drive Insurance,”
Auto Buying Advice, (http://autoadvice.about.com).
Todd Litman (1997), “Distance-Based Vehicle Insurance as a TDM Strategy,” Transportation Quarterly, Vol. 51, No. 3, Summer 1997, pp. 119-138; at www.vtpi.org/dbvi.pdf.
Todd Litman (2001), Distance-Based Vehicle Insurance Feasibility, Benefits and Costs: Comprehensive Technical Report, VTPI (www.vtpi.org); at www.vtpi.org/dbvi_com.pdf.
Todd Litman (2004), Pay-As-You-Drive Pricing For Insurance Affordability, VTPI (www.vtpi.org); at www.vtpi.org/payd_aff.pdf.
Todd Litman
(2005), “Pay-As-You-Drive
Pricing and Insurance Regulatory Objectives,” Journal of Insurance
Regulation, Vol. 23, No. 3, National Association of Insurance
Commissioners (www.naic.org),
Spring; at www.vtpi.org/jir_payd.pdf.
Todd Litman
(2007), Pay-As-You-Drive Pricing in
British Columbia: Backgrounder, VTPI (www.vtpi.org);
at www.vtpi.org/paydbc.pdf.
Todd Litman (2007), Win-Win Emission Reduction Strategies: Smart Transportation Strategies Can Achieve Emission Reduction Targets And Provide Other Important Economic, Social and Environmental Benefits, VTPI (www.vtpi.org); at www.vtpi.org/wwclimate.pdf.
Todd Litman (2008),
Pay-As-You-Drive Insurance:
Recommendations for Implementation, VTPI (www.vtpi.org);
at www.vtpi.org/payd_rec.pdf.
Todd Litman and Steven Fitzroy (2005), Safe Travels: Evaluating Mobility Management Traffic Safety Impacts, VTPI (www.vtpi.org); at www.vtpi.org/safetrav.pdf.
Todd Litman (1998), Charles Komanoff and Douglas
Howell, Road Relief; Tax and Pricing
Shifts for a Fairer, Cleaner, and Less Congested Transportation System in
METRO (2007), Pay-as-You-Drive (PAYD) Insurance Pilot
Project, King County Metro
(www.metrokc.gov/exec/news/2007/pdf/Payasyougofacts.pdf).
Salvador Minguijon (2007) PAYD Blog (http://payasyoudrive.wordpress.com).
National Association of Insurance Commissioners (www.naic.org) provides information on insurance regulation issues.
National Organization For Women Insurance Project (www.now.org/issues/economic/insurance) provides information on efforts to implement per-mile insurance pricing to improve equity.
NCTCOG (2008), Pay As You Drive (PAYD) Insurance Pilot Program: Phase 2 Final Project Report, Progressive County Mutual Insurance Company and the North Central Texas Council of Governments (www.nctcog.org); at www.nctcog.org/trans/air/programs/payd/FinalPAYDReport_11-05-2008.pdf.
NMA (2007), NMA’s Position on Auto Insurance, National Motorists Association (www.motorists.org/insurance).
NOW (1998), Congress Can End Overcharging By Auto Insurers; Per Mile Auto Insurance Option Act, National Organization for Women (www.now.org).
Oregon Environmental Council PAYD Website (www.oeconline.org/climate/payd).
Ian W. H. Parry (2004), “Comparing Alternative
Policies to Reduce Traffic Accidents,” Journal of Urban Economics, Vol.
54, No. 2 (www.elsevier.ocm/locate/jue), Sept. 2004, pp. 346-368.
Ian W.H. Parry (2005), Is Pay-As-You-Drive
Insurance a
Ian W. H. Parry, Margaret Walls and Winston Harrington (2007), Automobile Externalities and Policies, Discussion Paper 06-26, Resources for the Future (www.rff.org); at www.rff.org/rff/Documents/RFF-DP-06-26-REV.pdf.
Pay-Go Systems (http://paygo-system.com/ShamirWeb/PublicSite/about.html ) is a telematics system suitable for PAYD insurance.
Pay As You Drive
Website (www.serconline.org/payd/index.html),
by the
Progressive (1999), Progressive Autograph, Progressive Mutual Insurance, (www.progressive.com).
Progressive (2007), Pay As You Drive (PAYD) Insurance Pilot Program; Phase 2 Mid-Course Project Report, Progressive County Mutual Insurance Company, in cooperation with the Texas Department of Transportation and the U.S. Department of Transportation, Federal Highway Administration, and Federal Transit Administration.
Real Insurance Pay As
You Drive Blog (http://payasyoudriveblog.blogspot.com)
provides information on Pay-As-You-Drive car insurance in
Sightline (2003), NEW Facts: Pay-As-You-Drive Car Insurance, Sightline Institute (www.sightline.org/research/sust_toolkit/solutions/payd).
SkyMeter (www.skymetercorp.com) is a vehicle location billing system that can be used for road, parking and insurance pricing.
STOK (www.stok-nederland.nl) is a technology
company that provides vehicle tracking services for various applications,
including PAYD pricing of insurance.
TNO (2003), “Pay As You Drive” In The
Carmela Troncoso, George Danezis, Eleni Kosta, Bart Preneel (2007), PriPAYD: Privacy Friendly Pay-As-You-Drive Insurance, Workshop on Privacy in the Electronic Society, 2007 (www.csc2.ncsu.edu/workshops/wpes07/accepted.html), COSIC; at www.cosic.esat.kuleuven.be/publications/article-944.pdf.
USEPA (1997), Guidance on the Use of Market Mechanisms to Reduce Transportation Emissions, USEPA (www.epa.gov/omswww/market.htm).
USEPA (1998), Technical Methods for Analyzing Pricing Measures to Reduce Transportation Emissions, US Environmental Protection Agency, Report #231R98006 (www.epa.gov/clariton).
William Vickrey (1968), “Automobile Accidents, Tort Law, Externalities and Insurance: An Economist’s Critique,” 33 Law and Contemporary Problems, pp. 464-470; at www.vtpi.org/vic_acc.pdf.
Tanja Vonk, Marten Janse, Jos Dings and Huib van Essen (2003), Pay As You Drive (PAYD): Scope for a Variable Car Insurance Premium in the Netherlands? CE Delft (www.ce.nl/eng/redirect/thema_pricing_index.html).
Tom Wenzel (1995), Analysis of National Pay-as-you-Drive Insurance Systems and other Variable Driving Charges, Energy & Environment Division, Lawrence Berkeley Laboratory (http://eetd.lbl.gov).
Steve Winkelman (2007), Travel Demand and Urban Form: Lessons and Visions, Asilomar Conference on Transportation and Climate Policy August 22, 2007; at www.its.ucdavis.edu/events/outreachevents/asilomar2007/presentations/Day%201%20Session%203/Winkelman%20Intro%20to%20Asilomar%20Demand%20Session%20(8.22.07).pdf.
Jacobus Zantema,
Dirk Van Amelsfort, Michiel Bliemer and Piet Bovy (2008), Pay-As-You-Drive: Case Study Into Safety and
Accessibility Effects of PAYD Strategies, Transportation
Research Board 87th Annual Meeting (www.trb.org).
This
Encyclopedia is produced by the Victoria Transport Policy Institute to help
improve understanding of Transportation Demand Management. It is an ongoing
project. Please send us your comments and suggestions for improvement.
Victoria Transport Policy Institute
www.vtpi.org info@vtpi.org
Phone & Fax 250-360-1560
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