In January 2002, Texas became the first state to explicitly permit
per-mile insurance. There is mileage-based insurance legislation
pending or in place in both Oregon and Georgia. In the U.K., Norwich
Union, a major auto insurer, has already rolled out a similar plan. My
question: What other jurisdictions around the world have
cents-per-mile (or per kilometre) insurance in place or pending?

---

Clarification of Question by uzzz-ga on 23 Jul 2003 05:20 PDT

This is also known as Pay-As-You-Drive (PAYD) insurance.

---

Clarification of Question by uzzz-ga on 23 Jul 2003 05:31 PDT

From: http://www.vtpi.org/tdm/tdm79.htm

Description

Pay-As-You-Drive 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. The more you drive the more you pay
and the
less you drive the more you save. This is done by changing the unit of
exposure (i.e., how premiums are measured) 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 U.S. motorist
would pay about 6¢ per mile.

---

Request for Question Clarification by markj-ga on 23 Jul 2003 07:22 PDT

uzzz --

Although I have not yet found examples of other actual or pending
permissive legislation or regulation in this area, I have e-mailed a
leading authority on the subject and am very hopeful of getting an
informed response.  I will post any such information as soon as I
receive it.

markj-ga

---

Clarification of Question by uzzz-ga on 23 Jul 2003 12:56 PDT

Hello markj-ga

Thanks. I look forward to the information.

Regardzzz

Uzzz

uzzz-ga --

I believe that I have established "beyond a reasonable doubt" that,
apart from the situations you mentioned, there are no "other
jurisdictions around the world [which] have cents-per-mile (or per
kilometre) insurance in place or pending."

Indeed, the situation is worse than that you implied in your question
in one way.  That is, while the Texas legislature indeed authorized
"cents-per-mile" insurance in legislation passed in 2001, there is no
company offering such insurance at the present time in the U.S. 
Progressive Insurance abandoned its 1999 pilot project in Texas in
2001 because of the "barriers of high cost and low availability of
telematics technology" that it faced:
Financial Technology Network: Norwich Pilots Telematics
http://www.financetech.com/story/wireless/IST20030401S0002

On the other hand, the pilot project planned in the UK by Norwich
Union Insurance ("NUI") appears to be on track to begin late this
summer or early fall.   Significantly, NUI is partnering with IBM on
the project.  Here is IBM's March 2003 press release:
IBM: "Norwich Union appoints IBM and Orange for 'Pay as You Drive'
insurance"
http://www-1.ibm.com/industries/automotive/doc/content/news/pressrelease/397218108.html

Using the same global positioning method as Progressive (under license
from Progressive), NUI will install "black boxes" in the cars of 5000
volunteers for approximately two years.  During and after the test,
NUI will "look at all the data and work out how this can be built into
premiums based on use of the car."  During the test, the volunteers'
premiums will continue to be based on the current system.  Here is a
link to the relevant pages on NUI's website:
NUI: Pay-As-You-Drive
http://www.norwich-union.co.uk/pay_as_you_drive/index.htm

NUI: Pay-As-You-Drive: What is the Scheme?
http://www.norwich-union.co.uk/pay_as_you_drive/what_is_payd.htm

NUI: Pay-As-You-Drive: Latest Updates
http://www.norwich-union.co.uk/pay_as_you_drive/latest_updates.htm


I have several bases for my conclusion that they are "no other
jurisdictions around the world [which] have cents-per-mile (or per
kilometre) insurance in place or pending."

First, I have had an e-mail exchange with Todd Litman, who is "founder
and executive director of the Victoria Transport Policy Institute, an
independent research organization dedicated to developing innovative
solutions to transport problems."  Mr. Litman's name and work came up
very frequently in my research on your question, and he is a very
prominent expert on this subject.  Indeed, he is the author of the
"TDM Encyclopedia," which is the source of the very informative and
current summary of the state of play in "pay-as-you-drive" insurance
that you posted in your clarification:
Victoria Transport Policy Institute: TDM Encyclopedia:
Pay-As-You-Drive Vehicle Insurance
http://www.vtpi.org/tdm/tdm79.htm

Here is Mr. Litman's resume:
Victoria Transport Policy Institute: Todd Litman
http://www.vtpi.org/resume.htm


Here is my e-mailed question to Mr. Litman, which I posed after
referring to his work that I had reviewed online:
"I would very much appreciate any information you might be able to
provide me on the question of what countries, states or provinces have
actual or pending permissive laws or regulations on "pay-as-you-drive"
auto insurance."

Mr. Litman's response:
"A few years ago the Progressive Insurance company had a PAYD pricing
pilot project which proved the technical feasibility and market
demand, but it was not profitable (in my opinion, because they used a
high-cost GPS-based system rather than simple odometer audits). There
is now a test project in Atlanta, Georgia. Other than that, there is
no PAYD insurance pricing available. The Oregon governor just signed a
new law that will offer a $100/policy tax incentive to insures to
offer PAYD, which we hope results in implementation."


Also, although it obviously difficult to prove a negative, the press
coverage related to the NUI project consistently takes it as a given
that NUI (using Progressive's methodology) is the "only game in town"
at the moment.  For example:

"The notion that the US is not yet ripe for usage-based insurance is
seconded by Progressive. 'We have no plan at this time to reintroduce
it in the US, citing the same reasons we stopped the [Autograph]
pilot,' says Leslie Kolleda, a spokesperson for the carrier.
Nevertheless, Progressive is very interested in NUI's results, Kolleda
adds, and 'we're very interested in marketing it to someone in the
US.' "
Financial Technology Network: Norwich Pilots Telematics
http://www.financetech.com/story/wireless/IST20030401S0002

Also:

"Norwich Union has an exclusive agreement with US-firm Progressive,
which has piloted the systems in America, to use its data collection
and pricing methods.
If the UK trial is successful the insurer will look at rolling it out
in Europe."
Ananova: Norwich Union Pilots Pay-As-You-Drive Insurance
http://www.ananova.com/news/story/sm_759660.html?menu=news.lifestyle.motoring


Finally, the only mention I found of Asia in connection with this
subject was the following reference to Japan as a possible future
market for NUI's technology:

"The success of NUI's telematics will depend on a set of 'winning
conditions,' including the availability of a black-box device as
standard equipment on a large enough set of cars, according to Boyd
Pedersen, a Toronto-based analyst with Boston Consulting Group. 'Those
conditions are starting to exist in several markets around the world,
including Japan and parts of Europe,' he says.
Financial Technology Network: Norwich Pilots Telematics
http://www.financetech.com/story/wireless/IST20030401S0002



Additional Sites:

Here is a link to a description of the very small study being planned
in Atlanta that was mentioned by Mr. Littman:
Georgia Department of Transportation
http://www.dot.state.ga.us/dot/construction/materials-research/b-admin/research/r-air-qual.shtml

Here is a 1995 proposal published on a Victoria, BC web site:
Transport 2000 BC: Pay-by-the-Kilometre Auto Insurance: A Proposal
http://www.vcn.bc.ca/t2000bc/debate/ideas/distance_based_insurance.html



Search Strategy:

I used a variety of Google searches that were intended to sift and
winnow the voluminous online information to get an answer to the
specific question posed, including, among others:

"automobile OR auto OR car insurance" "distance-based rates"
://www.google.com/search?sourceid=navclient&q=%22automobile+OR+auto+OR+car+insurance%22+distance%2Dbased+rates

"norwich union" "pay as you drive"
://www.google.com/search?sourceid=navclient&q=%22norwich+union%22+pay%2Das%2Dyou%2Ddrive%22

"norwich union" "pay as you drive" only
://www.google.com/search?q=%22norwich+union%22+pay-as-you-drive%22+only&hl=en&lr=&ie=UTF-8&start=30&sa=N

"pay-as-you-drive" atlanta
://www.google.com/search?q=pay-as-you-drive%22+atlanta&hl=en&lr=&ie=UTF-8&start=10&sa=N

I also contacted a prominent expert in the field for confirmation of
my conclusion.



Even given the perils of proving a negative, I am confident that this
is the information you are seeking.  I have often wondered why
mileage-based insurance wasn't offered to the public, so I found this
to be a particularly interesting question.   If any of the above is
unclear, please ask for clarification before rating this answer.


markj-ga

Even though you have not answered my question you seem to have
established "beyond a reasonable doubt" that no answer meeting my
criteria exists. The research that you have provided is very good.
THANK YOU and I hope we meet again.

I haven't fully read this article, but when I read your question it
reminded me of this particular site (which is where I first read about
this form of insurance).  This might be a good starting point for you
or a researcher:

http://www.newdream.org/newsletter/PAYD.html

Hello stephenvakil-ga

I checked out your suggestion. Thank you. Very informative- with some
good leads. Thank you for taking the time to post a comment. I hope
that it also assists some researchers to answer the question.

Regardzzz

Uzzz

Thanks very much for the kind words, the five-star rating and the nice
tip.  I too hope we meet again. (You may recall that we met before
when you needed an Italian translation of the song "War.")

Thanks again,

markj-ga

In researching the availability of cents-per-mile insurance for
private passenger automobiles, the Google Researcher seems to have
overlooked the key site www.centspermilenow.org which presents the
original and ongoing work of the NOW Insurance Project, the primary
source from which all the information cited in the Google Answer and
Comments was derived.  This site explains exactly what cents-per-mile
insurance is, how it works, why it is needed, and why insurers have
resisted offering it. References are provided to publications by NOW
Insurance Project Director Patrick Butler, PhD. in insurance
actuarial, regulatory, and trade journals. As drafter of the Texas
cents-per-mile option law, the Insurance Project critiques current
legislative and commercial initiatives in which UK companies are
particularly competitive.

Those with further questions on this subject can find contact
infomation at www.centspermilenow.org.

Maynard1-ga

THANKS maynard1-ga

I had personally found the www.centspermilenow.org site & agree that
it is a great source of information. Thanks for taking the time to
post.