Salvador Minguijón Pérez on PAYD

Dear Ladies and Gentlemen,
 
David McClure Director of telematics in Research and Markets exposed in its last report on the branch tendencies: 
 
"We have witnessed a dramatic change in the telematics industry in recent years, with the initial dominance of vehicle manufacturers being replaced by the business needs and policy objectives of the insurance industry and European governments.
"But in order for them to realise their goals, we need to see a step-change from the current situation, where each telematics service requires different in-car hardware, to a point where all applications can be supported on a single platform. This will require major investment and at present, none of the principle stakeholders appears willing to make the commitment alone, each preferring to 'piggyback' their services off a system installed at someone else's expense.
"Our report clearly illustrates the benefits that can be achieved once the present impasse is resolved."
 
Refering to the project "Pay as you drive" I fully coincide with the diagnosis of David Mcclure, it is a reality that I usually have to face with in the negotiations for the exploitation of the patent EP 0700009.
 
Currently, IP Auctions GmbH (Germany) is entrusted with the conduct of negotiations with interested parties in Europe. The final bidding phase will be brought to termination on October 31st. More information at www . ip-auction .eu

A fact that can break this situation is the acquisition of Tele Atlas by TomTom. We had recently commented that TomTom had acquired the centre of development of Siemens-VDO in Einhoven, and with it, the whole telematic technology of Siemens-VDO.
 
But, besides the development plans of TomTom in this field, we will also have to pay atention to the reaction of their competitors Navman, Mio, Garmin, etc that will tend to articulate around Navteq. That, on the other hand, will see in danger its up to now comfortable leadership in the business applications market.
 
For most of the insurance companies, it would be great if a company like TomTom or Navteq took the leadership in the offer of a platform that supports an application "Pay as you drive" together with other telematics solutions.
 
Nevertheless, there are some companies and people that, for one or another reason, are carrying out big efforts to overcome this impasse, for example:

At first place we have Norwich Union whose objective is to become the leader in the automobile insurance in England, and that supports its project with a set of additional services offered by RAC and Trafficmaster.
 
Octotelematics, that has worked with its own system of localization of vehicles to get a great penetration in the insurance companies. It has a platform that is gradually turning to be as a "Pay as you drive" system. It is nowadays a business model for Spanish, French or American companies, an other countries where the problem of robbery is much more important.
 
It is necessary to name Todd Alexander Litman in Canada and Ian Parry and Allen Greenberg in U.S.A who are taking several years trying that their respective governments force the insurance companies to offer policies linked to the use. This is a topic that we will discuss later on, because it deserves a specific article.
 
We should also mention to the family Cobopoulos, which is determinated in developing a telematic project in the city of Athens that would be a world reference and that would incorporate, among other multiple services, the "Pay as you drive" Insurance.
 
We should not forget that Fotis Karamitsos, the godfather of the telematics in Europa, is Greek and that he has a great influence in his country. It is hoped that Greece reaches a great economic dynamism in next years. The traffic supposes a tremendous problem in this country already. So everything indicates that indeed Greece can play an important part in the development of the European telematics systems.
 
In my previous bulletin of June, I made the error of linking the activities of Detecon and T-Systems, when in fact Detecon is a completely independent consultancy. They advise their clients with the best possible solutions for their business and are not bounded in any way to solutions offered by its shareholder T-Systems. Certainly, and without any doubt, a partner that any European insurance company that wants to throw a project "Pay as you drive", should speak with.

As always, I have upgraded my " Pay As You Drive Directory" and my News Bulletin.

If somebody wants that their address is erased of my distribution list, please return me this message with the word "DELETE."

Yours sincerelly.
 
Salvador Minguijón Pérez.
Interim Management.
+ 34 649 49 17 70
+ 34 976 59 58 71
Email: s.minguijon@salvador-minguijon.es
Web: http://www.salvador-minguijon.es

News from Todd Litman

Here are news items concerning Pay-As-You-Drive pricing:

Ian Ayres and Barry Nalebuff (2007), "Would You Buy Car Insurance By The Mile?, Forbes.com ( http://moneycentral.msn.com/content/Insurance/P45802.asp). This article by two Harvard economists highlights the economic justification for PAYD.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

The National Motorists Association's "NMA's Position on Auto Insurance" ( http://www.motorists.org/insurance ) indicates that many motorists support PAYD insurance pricing.
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Salvador Minguijon's "Pay_as_you_drive Blog" ( http://payasyoudrive.wordpress.com ) provides updates on various issues related to PAYD insurance.
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Below is a letter I sent to CEO of the Insurance Corporation of British Columbia (ICBC), our provincial insurance agency. British Columbia has a special opportunity to implement PAYD vehicle insurance and registration fees because ICBC insures and registers all vehicles in the province. PAYD would help achieve many of ICBC's stated goals, including increasing insurance affordability and equity, reducing traffic deaths and accident costs, and responding to consumers. In recent years a number of organizations have asked ICBC to offer PAYD pricing, or at least to implement a pilot project to test the concept.
 
The British Columbia government recently established one of North America's most aggressive climate change emission reduction targets (emissions 10% below 1990 levels by 2020) and appointed a special Climate Change Secretariat to identify potential emission reduction strategies. Each government agency is required to recommend emission reduction strategies. This is an opportunity for ICBC to show international leadership with insurance pricing innovation. However, despite several requests, ICBC has not indicated its position on PAYD pricing or whether this will be included in its submission to the Secretariat.

~~~~~~~~~~~~~~~~~
Paul Taylor
President and Chief Executive Officer
Insurance Corporation of British Columbia
151 West Esplanade
North Vancouver, BC V7M 3H9
15 August 2007

Dear Mr. Taylor,
I am writing once again to ask for ICBC's policy on Pay-As-You-Drive (PAYD) pricing, and specifically whether this strategy will be included in ICBC's submission to the BC Climate Change Secretariat. I made this request twice before during the last month and have so far received no reply.
 
Research by myself and others indicates that PAYD pricing could provide significant benefits to motorists and other road users; it can help achieve ICBC's stated goals to increase insurance affordability and road safety; and it can be implemented with minimal risk by starting with a pilot project.
 
I believe that, as people learn more about Pay-As-You-Drive they will agree that it should be considered as a climate change emission reduction strategy, and that ICBC should quickly implement a pilot project to test the concept. I therefore ask you:

• To provide ICBC's official policy on PAYD pricing.
  
• To share the results of ICBC's research on PAYD pricing.
  
• To include PAYD in ICBC's submission to the BC Climate Change Secretariat.
  
• To quickly implement an odometer-based PAYD pilot project to test the concept.
  
• To explain any objections ICBC has to this concept.
  

Our Institute will soon begin a multi-media campaign to educate people about PAYD pricing and build support for its implementation in BC. It would be best for everybody if this is a cooperative effort between our organizations. I would like to meet with you to discuss this.

Sincerely,
Todd Alexander Litman
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Attached is a backgrounder which provides additional information about PAYD in British Columbia. Please let me know if you have comments or questions about this.

Sincerely,
Todd Alexander Litman
Victoria Transport Policy Institute (www.vtpi.org)
litman@vtpi.org
Phone & Fax 250-360-1560
1250 Rudlin Street, Victoria, BC, V8V 3R7, CANADA
"Efficiency - Equity - Clarity"

Salvador Minguijon Perez on PAYD

Dear Ladies and Gentlemen:

There has been a lot of activity in Germany with regard to the project "Pay as you drive" during this month. 

I try to look for the English versions of the documents that I use in my references, but this is not always possible. Although I suppose that it is better to have located this documentation in German than to ignore it.  

The most important news is that there is an agreement between IBM and Allianz to develop the project at European level .

We all know that IBM has been working for years in this project and that its collaboration first with Norwich and later on with Cert, has allowed him to dedicate a very superior quantity of resources than the rest of its competitors. However, the sudden interest of Allianz in this project has surprised me.

Also with European objectives we have the projects of Siemens
with Zürich Versicherung and T-System
with WGV . All with the enough capacity to develop this project. 

A special case is Swiss-Re that, together with Norwich Union, are the insurance companies with more motivation in this project and this compensates in great way its difficulty to manage technical projects.  

I imagine that Axa-Winterthur, eternal competitor of Allianz, will redefine his strategy with regard to this project immediately, in fact their North American branch Unigard has thrown an investigation project with a budget of 6 million dollars, a third of which are federal founds.

I suppose that these companies will establish one or two projects at European level, which will be the ones that definitely will be implanted. The rest of the companies, with local project, such as Sara , Unipol, Uniqa and Huk-Corbug will finish adding to these projects.  

In great way, what will happen depends on the result of the auction of the patent EP0700009 that is something like a ticket to be able to participate in this project. This ticket allows you to ascend to this train, called PAYD, but you have to make the effort of being in the station, at the correct time and in the correct train. In this train there are few seats, so if you don't have ticket, you will have to fight to go up to it, and have luck, because many travelers will stay in the station.

It doesn't seem that Norwich has any intention of informing us of how its project is developing. We can only sense it for the euphoric presentation of results of its supplier Trafficmaster, not bad if we remind that the project began commercially in September of 2006. 

Regarding Progressive's Tripsense project in USA, has announced to wide their tests to the states of Michigan and Oregon, it is necessary to remember that he has already made some small tests in Minnesota, using very low cost equipment, with open software and that doesn't need installation. It is the most economic way to make some tests, although if the project gets in a commercial phase, a more specific equipment would be designed.

There are new informative publications of the project that have a great interest:

http://www.ptv.de/download/mobility/hintergruende/PayAsYouDrive.pdf


http://www.sbd.co.uk/assets/Future_Trends_NEWS_release.doc

http://en.wikipedia.org/wiki/PAYD

http://www.vtpi.org/dbvi.pdf

http://www.ivw.unisg.ch/org/ivw/web.nsf/SysWebRessources/FT4-Helvetia/$FILE/Helvetia.pdf


http://www.lexisnexis.de/aktuelles/112115?or=13&ur=0&tt=news


http://www.businessportal24.com/de/Kfz_Versicherer_Verdraengungswettbewerb_Massnahmenbuendel_Marktposition_158341.html


http://payasyoudrive.wordpress.com/2007/03/22/the-endless-crisis-in-the-automobile-insurance/


 
It is also interesting the publication of the University of Cambridge that list projects that are linked with this in great way, the interest raised in the sector of rent-a-car, in companies
of services
, technology
or countries like Korea or India
.
 
I have upgraded my database Pay as you drive directory .

If somebody wants that their address is erased of my distribution list, please return me this message with the word "DELETE."
 
Yours sincerelly.
Salvador Minguijon Perez. 

Salvador Minguijon Perez on PAYD, including Michael Hawker from IAG

Dear Ladies and Gentlemen:

The Victoria Transport Policy Institute has revised the document Pay-As-You-Drive Vehicle Insurance, which is without any doubt the most complete study that exists on this topic and, of course, I recommend reading it again.  

Insurance Australia Group (IAG) chief executive Michael Hawker, exposes his vision about this project
that is not very different from what we had already exposed in the article Strategic Positioning of the Insurance Companies regarding the projects "Pay As You Drive".

If a month ago I underlined the errors of Wikipedia relating to the Patent EP0700009, this month I take back because the information that is in the epigraph Insurance Patent is concise and correct. When trying to look for the person that has published this information I found NOWA. I suppose that in fact it will be Marc Nowotarski, one of the few specialists in the application of patents in the sector of the insurance.  

Such as I advanced last month, the rights of the European patent that are still of my property, that is to say in Italy, Spain, France and Germany, although in the last three countries there is granted an nonexclusive license, will be jointly auctioned next day May 15 in Munich by the company IP Auctions GmbH . It is still possible that some country is retired of the auction.

The auction of the patent has some very concrete motivations , but I am convinced that will favour the development of this project. Some great insurance company has manifested a certain relief, because they thought that the property of the patent would pass to a great technological company and that consequently it could not be used aggressively by their competitors. I am not so sure of this, the range of companies that are looking at this project is very wide and with very different interests .

Besides
the interests of the insurance own companies (in Europe) and of the users (in United States), there are two problems of great importance pushing this project, one of them is the congestion of the traffic and the other one the climatic change . For instance, it doesn't seem that nobody worries too much of the 30,000 annual deaths that originates the traffic in Europe.  

Regarding the first one, I believe that Tony Blair's answer to the popular rejection to the project Road Charge represents the position of all the governments of the industrialized and democratic countries, in opinion of some, too fearful of losing votes.  

But contrarily to what is usually thought, it is not that the public transportations absorb the decrease of the private traffic
, that would be practically impossible, but of conjugating this with a smaller use of the vehicle, something that will have many repercussions in the organization and forms of life of our cities.  

If some wants to deepen more in the topic of the congestion of the traffic, I recommend you the following mail list http://lists.umn.edu/cgi-bin/wa?A0=con-pric .

           I have upgraded my database Pay as you drive directory .
            If somebody wants that their address is erased of my distribution list, please return me this message with the word "DELETE."
 
Yours sincerely.
Salvador Minguijon Perez.