Integrating Pay-as-you-drive Insurance and Mileage-based Road User Fees

On April 19, 2010, a workshop on integrating pay-as-you-drive (PAYD) insurance and mileage-based road user fees was held at the University of Minnesota's Humphrey Institute of Public Affairs. The workshop brought together representatives from the insurance industry and researchers and professionals involved with mileage-based user fees. The purpose of the workshop was to have a discussion and gauge the interest of the insurance industry in partnering on pilot projects related to PAYD insurance and mileage-based user fees.

Various perspectives were expressed from the insurance representatives and the interest level in partnering on future pilots was very high if the insurance companies would be offered the freedom to design the projects to meet their own needs, while competing for government funding based on how well the companies' proposed pilots would also meet government needs. Company interest became more mixed if government were to have a greater direct role in designing the pilot, choosing technology, etc. Companies did not want to participate in pilots that had a forced end point, either because the government would insist upon such an end point or would remove monitoring equipment from vehicles thereby making continuation infeasible.

In general, companies that were less far along in developing their own PAYD insurance programs expressed greater flexibility in their willingness to partner with government on pilots than companies that already have well developed PAYD insurance products using in-vehicle
telematics. The industry representatives stated that the information that they would be interested in obtaining from pilots would be data on driving, including not just mileage, but also the time of day and location (e.g., road type, central city or rural, etc.) of the driving. Industry representatives stressed that they would like this data in a raw form, as that would facilitate their ability to learn as much as possible about driving behavior and claims' risk and to price policies reflective of such risk.

Full summary of the workshop:
Integrating PAYD Insurance and Mileage-based Road User Fees Workshop Summary

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Hubert H. Humphrey Institute of Public Affairs