[sustran] Re: hgtrans: Re: Pay-As-You-Drive Pricing For Insurance Affordability - Media Notice

[Mason Gaffney]

Good thinking, Eric.  I haven't been following the earlier dialogue, but
your statement makes sense.

Social charges for autos are best imposed as variable costs, not fixed
costs.  Besides insurance, there are the fixed costs of license fees, and
sales taxes on buying autos and trucks, and smog checks, and no doubt some
others.

Parking is a mixed bag.  Owners should pay for domiciling their cars, and
generally do.  But when they hit the road for work or shopping or church,
they generally get free parking thrown in.  This constitutes a subsidy for
auto use.  Donald Shoup at UCLA has written a lot on this matter.

Meantime, gasoline taxes have moved sharply downwards over the last century.
In 1920, they contributed a much higher fraction of state revenues than
today, even with so few cars being driven.  Every time gas prices rise, the
fixed tax per gallon falls as a % of the price.


Mason Gaffney


----- Original Message -----
From: "Eric Bruun" <ericbruun at earthlink.net>
To: "Sierra Club Forum on Transportation Issues"
<CONS-SPST-SPRAWL-TRANS at LISTS.SIERRACLUB.ORG>
Cc: <sustran-discuss at jca.ax.apc.org>; <hgstransport at yahoogroups.com>
Sent: Wednesday, May 19, 2004 4:41 PM
Subject: hgtrans: Re: Pay-As-You-Drive Pricing For Insurance Affordability -
Media Notice


> Todd,
>
> You forgot one additional important reason for Pay as You Drive (PAYD). In
> Philadelphia, auto insurance rates are very high. In fact, they are so
high
> that people of low or even moderate incomes can not afford both auto
> insurance and to buy a monthly transit pass. So once they buy insurance,
> they can no longer be persuaded to use transit. I am quite sure that
transit
> use would increase significantly with PAYD in any location where insurance
> rates are very high.
>
> Eric
>
> P.S. I think there is also a racial dimension to insurance pricing. In
> Philadelphia, there is an automatic huge penalty for having an address in
> the city proper, regardless of where one actually drives and the risks to
> which one is exposed. It seems that this is proxy for a racial penalty,
> since it is strictly illegal to use race as a basis for assessing rates.
>
>
> ----- Original Message -----
> From: "Todd Alexander Litman" <litman at vtpi.org>
> To: <CONS-SPST-SPRAWL-TRANS at LISTS.SIERRACLUB.ORG>
> Sent: Wednesday, May 19, 2004 10:21 AM
> Subject: Pay-As-You-Drive Pricing For Insurance Affordability - Media
Notice
>
>
> PAY-AS-YOU-DRIVE PRICING:
> Innovative Strategy Proposed To Increase Insurance  Affordability And
> Reduce Uninsured Driving
>
> Media Notice
> For Immediate Release
> 17 May 2004
>
> For information Contact Todd Litman
> Phone: 250-360-1560
> Email: litman at vtpi.org
>
>
> In a paper presented this week at a national meeting of the Casualty
> Actuarial Society (the professional organization for insurance risk
> analysts), researcher Todd Litman of the Victoria Transport Policy
> Institute describes a new strategy to increase vehicle insurance
> affordability and reduce uninsured driving called "Pay-As-You-Drive
>  Pricing."
>
> Pay-As-You-Drive (PAYD) pricing means that a vehicle's insurance premiums
> are based directly on how much it is driven. Premiums are calculated by
the
> vehicle-mile, so a low-risk driver pays 2-4¢ per mile and a high-risk
> driver pays 10-20¢ per mile. This lets motorists save money by reducing
> their mileage. PAYD can be a consumer option, so motorists select the rate
> structure that offers them the best value.
>
> U.S. households spend approximately $1,000 per year on average on vehicle
> insurance. Vehicle insurance can be major financial burden for
lower-income
> households, forcing many to forego vehicle ownership or drive uninsured.
> Various studies indicate that 10-35% of vehicles are uninsured, and this
> increases to more than 50% in some lower-income communities.
>
> According to Litman, "Pay-As-You-Drive offers a new way to provide
> affordable insurance and reduce uninsured driving. Currently, 'insurance
> affordability' means that even high-risk, lower-income motorists can
afford
> unlimited-mileage coverage. To achieve this, insurance companies are
forced
> to overcharge lower-risk drivers compared with their claim costs. PAYD
> redefines 'insurance affordability' to mean that higher-risk drivers must
> limit their mileage to the accident exposure level they can afford. It
> actually reduces crashes and insurance claims rather than just shifting
> costs, and eliminates the need for unfair cross-subsidies between risk
> classes."
>
> Litman describes how PAYD can help lower-income workers. "Consider the
> situation of a worker who loses his or her job, and because they no longer
> commute, drives fewer miles. With current pricing, they continue paying
the
> same vehicle insurance premiums, although both their income and their
> chance of having an insurance claim decline. People who are unemployed
> often find insurance costs a major financial burden, and so face the
> prospect of driving uninsured or giving up their car and the employment
> opportunities it provides. With PAYD, unemployed workers pay lower
premiums
> and so can afford to keep a car for essential trips, job searches and
> future employment."
>
> Pay-As-You-Drive pricing offers a number of additional benefits. By
> providing an incentive to reduce annual mileage it reduces accidents,
> traffic congestion, energy consumption and pollution emissions. It is
> currently being promoted by a variety of transportation, social equity and
> environmental organizations.
>
> Some major insurance companies have implemented PAYD pilot projects,
> including GMAC (General Motors Acceptance Corporation) Insurance,
> Progressive Insurance and Norwich Union. However, these programs require
> installation of special equipment in each vehicle, which increases costs.
> According to Litman, "Insurance will only become more affordable when
> insurance companies offer the simpler, odometer-based system recommended
in
> my paper."
>
> The full report, Pay-As-You-Drive Pricing For Insurance Affordability, is
> available at the Victoria Transport Policy Institute website at
> http://www.vtpi.org/payd_aff.pdf.
>
>
>
> Sincerely,
> Todd Litman, Director
> Victoria Transport Policy Institute
> "Efficiency - Equity - Clarity"
> 1250 Rudlin Street
> Victoria, BC, V8V 3R7, Canada
> Phone & Fax: 250-360-1560
> Email: litman at vtpi.org
> Website: http://www.vtpi.org
>
> - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
> To view the Sierra Club List Terms & Conditions, see:
>  http://www.sierraclub.org/lists/terms.asp
>
>
>
> ------------------------ Yahoo! Groups Sponsor ---------------------~-->
> Yahoo! Domains - Claim yours for only $14.70
> http://us.click.yahoo.com/Z1wmxD/DREIAA/yQLSAA/J1EolB/TM
> ---------------------------------------------------------------------~->
>
> To unsubscribe, send an email to:
> hgstransport-unsubscribe at yahoogroups.com
>
>
> Yahoo! Groups Links
>
> <*> To visit your group on the web, go to:
>      http://groups.yahoo.com/group/hgstransport/
>
> <*> To unsubscribe from this group, send an email to:
>      hgstransport-unsubscribe at yahoogroups.com
>
> <*> Your use of Yahoo! Groups is subject to:
>      http://docs.yahoo.com/info/terms/
>
>