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

[Todd Alexander Litman]

Dear Jonathan,

Thank you for your comments.

There is more detailed information on PAYD on our website, which discusses 
how it can be implemented (see http://www.vtpi.org/dbvi.pdf and 
http://www.vtpi.org/dbvi_com.pdf). There are several possible ways to track 
annual mileage, ranging from GPS tracking systems (the current Norwich 
Union and GMAC systems uses this approach, but it adds considerable cost, 
eliminating PAYD as a way of making insurance more affordable to 
lower-income motorists, and raises privacy issues), to the approach that I 
think will work best in most cases, which involves insurance companies or 
governments certifying third parties, such as garages and insurance 
brokers, to perform "odometer audits." This is a quick check for signs of 
tampering, recording odometer readings and sending the information to the 
vehicle registration database. This should take 2-5 minutes, and so should 
cost $5-10, or even less if performed in conjunction with scheduled 
maintenance such as an oil change. It does not require any new bureaucracy, 
and all costs would be covered by users.

As part of this project I've done quite a bit of research on the risks of 
odometer fraud. Odometers are increasingly tamper-resistant because so many 
large transactions depend on their accuracy, including lease payments, 
vehicle warantees and used vehicle sales, which often involve thousands of 
dollars, far more than would be involved in most insurance premiums. 
Odometer fraud is difficult, illegal and would void insurance policies. I 
believe that odometer data should be as accurate as information used for 
other common commercial transactions, and far more accurate than current, 
unverified annual mileage claims used for vehicle insurance pricing.


Best wishes,
-Todd Litman


At 09:47 PM 5/19/2004 +0700, Jonathan E. D. Richmond wrote:

>Todd's idea is a good one -- the more the costs of driving can be
>connected with usage the better because having high fixed costs and then
>low marginal costs only promotes usage for those who have bought cars.
>
>But there would be a problem over the need to take mileage readings --
>requiring a bureaucracy and opening the process up to possible abuse. How
>could that be dealt with? --Jonathan
>
>-----
>
>Jonathan E. D. Richmond                               02 524-5510 (office)
>Visiting Fellow                               Intl.: 662 524-5510
>Transportation Engineering program
>School of Civil Engineering, Room N260B               02 524-8257 (home)
>Asian Institute of Technology                 Intl.: 662 524-8257
>PO Box 4
>Klong Luang, Pathumthani 12120                        02 524-5509 (fax)
>Thailand                                      Intl:  662 524-5509
>
>e-mail: richmond at ait.ac.th               Secretary:  Ms. Nisarat Hansuksa
>         richmond at alum.mit.edu                         02 524-6051
>                                               Intl:  662 524-6051
>http://the-tech.mit.edu/~richmond/


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