A press release by the Californian Department of Insurance states that if 30% of Californian drivers participate in Pay As You Drive insurance, California could avoid:
- 55 million tons of CO2 between 2009 and 2020.
- That is the equivalent of taking 10 million cars off the road!
- It would save 208 billion liters of petrol.
- It would save Californians US$40 billion in car-related expenses.
Given that Pay As You Drive theoretically charges people who drive less than average, less for insurance, it would appeal to 50% of the market. The 30% participation figure is therefore quite plausible.
The numbers are quite staggering.
Full press release below. Source: http://www.insurance.ca.gov/0400-news/0100-press-releases/0070-2008/release089-08.cfm
SACRAMENTO - Insurance Commissioner Steve Poizner today announced that he is making a new, green auto insurance option available for California consumers. Pay-as-you-drive auto insurance is a way for motorists to more accurately pay for the coverage they need, by linking their premium more closely with the number of miles they drive. Any incentive like this to get people to drive fewer miles will help reduce greenhouse gases and vehicle accidents.
"I am thrilled to pave the way for California drivers to obtain insurance that is more environmentally friendly and more accurately reflects driving habits," said Commissioner Poizner. "As a strong advocate of healthy market competition and a healthy environment, I am especially pleased to encourage this kind of innovation and additional options for consumers."
The Environmental Defense Fund estimates that if 30% of Californians participate in this voluntary coverage, California could avoid 55 million tons of CO2 between 2009 and 2020, which is the equivalent of taking 10 million cars off the road. This would save 5.5 billion gallons of gasoline and save Californians $40 billion dollars in car-related expenses. Additionally, the California Air Resources Board has recommended the adoption of pay as you drive as one of the means to meet future climate change gas reduction targets.
Current auto insurance regulations require that rates are based on estimated annual mileage. The new regulations will provide an additional option for actual mileage, or pay-as-you-drive coverage. Commissioner Poizner's newly-proposed regulations will let insurers offer a voluntary option for consumers who are interested in pay-as-you-drive coverage.
Under the new regulations, consumers could verify mileage by odometer readings, automotive repair records, or a technological device used to collect mileage data. Commissioner Poizner's regulations explicitly prohibit insurance companies from requiring policyholders to participate in a pay-as-you-drive program. A copy of the regulations is available below.
As a former Silicon Valley entrepreneur who founded SnapTrak, a company that pioneered technology to put GPS receivers into cell phones, Poizner understands firsthand that GPS can be a life-saving tool when used appropriately. However, Poizner has also said this type of technology does not have a place in pay-as-you-drive auto insurance for privacy and public policy reasons.
"California has always been at the forefront of technological innovation. A major priority for the Department of Insurance is harnessing this technology to benefit consumers," continued Commissioner Poizner. "At the same time, it is vital that the privacy of drivers remains intact. I will not approve any auto insurance policy that aims to utilize GPS devices in order to obtain location data from consumers."
California law has procedures in place to allow for public involvement in adopting new regulations. After these procedures are completed, the regulations will take effect - not later than fall 2009. Insurers will then be able to apply to offer this product in California.
Commissioner Poizner has and will continue to pursue policies that benefit the environment. Currently, Poizner is sponsoring SB 1279 (Sen. Maldonado), which will allow insurance companies to submit paperless filings to the Department of Insurance, significantly reducing the amount of trees cut down by the numerous paper filings the Department receives annually. Last month, Poizner approved the first green homeowners insurance policy in California.
Click here for proposed regulation.
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