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This blog is focused on providing information on Pay As You Drive car insurance in Australia. If you find any information, papers, news articles or websites that we should add, please let us know!

Friday, August 24, 2007

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.
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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.

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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"