Car insurance companies are continually trying to improve their assessment of customer risk so that premiums can better match the likelihood of an insurance payout. In recent years several trials have been conducted. Initially these looked at distance travelled and other simple parameters. More recently the availability of on-board GPS systems and electronic data recorders has meant that the manner in which a person drives can be recorded and analysed. One highly successful trial was by Assoc Prof Stephen Greaves from the University of Sydney:
"Pay-How-You-Drive (PHYD) products being increasingly offered through the commercial insurance sector. While undoubted challenges remain, GPS technology opens up the possibility for developing greater equity in charging systems that reflect not just the kilometres driven but when, where and how they are driven...it has been demonstrated that it appears possible to significantly change aggregate behaviours (particularly speeding) of a segment of the motoring public through financial leverages based on incentivising positive changes in driving behaviour." (Analysis of a financial incentive to encourage safer driving practices)
That project used an on-board recording system developed by Smart Car Technologies that
included a digital map of Australian speed limits (the basis of the
SpeedAlert intelligent speed assistance system).
The system can record incidents of exceeding the speed limit. The
driving characteristics of participants were recorded before they were
told about the puprose of the trial. They were then offered moderate
financial incentives to reduce the kilometres driven, reduce night-time
driving and reduce episodes of exceeding the speed limit. As indicated
above, the results were remarkable, particularly for speeding.
It is estimated that significant reductions in serious and fatal crashes could be achieved if "low range" speeding was eliminated (Paine 2009 & CASR 2011) therefore an insurance system that encouraged compliance with speed limits would have major road safety benefits.
There will, of course, be a vocal group that opposes a "big brother" approach and deny that speeding is a road safety problem. They will simply miss out on the big insurance premium discounts that will be offered to people who elect to take part in Pay-How-You-Drive insurance. Indeed most of us are subsidising a reckless few under the current arrangements.
4 Dec 12 Foxbusiness: Will Insurers Soon Pay us Not to Speed? NHTSA study
Institute of Transport and
Logistics Studies (ITLS) - Sydney University
Greaves, S.P., Ellison, A.B., Personality, risk aversion and speeding: An empirical investigation. Accid. Anal. Prev. (2011)
As You Drive car insurance around the world - SaraFreeKm (SARA) –
Italy’s PAYD uses a GPS device which relies on satellite data to
calculate the exact kilometres driven.
AAMI has offered a 20% discount on car insurance for the first 1,000
customers who take up the BetterDriver™ Service (May 2012).
Created by Michael Paine,