Nationwide, United States
Non-Toll Pricing: A Primer
Summary Information
Pay-as-you-drive-and-you-save (PAYDAYS) car insurance allows companies to more accurately bill their customers on the basis of crash risk and provide policyholders a financial incentive to drive less. In Vehicle Data Recorders (IVDR) collect data on the vehicle utilization pattern to determine the discount level on the driver's insurance premium. A Brookings Institution study estimates that 63.5 percent of all households would experience savings with PAYDAYS insurance, and such savings would amount to an average of $270 per vehicle and $496 per household, among households that do save.
Beginning in 2004, Progressive Insurance began its TripSense Program in Minnesota, Michigan, and Oregon. TripSense collected data—including miles and the time of day driven, hard acceleration, braking, and speed—from vehicle on-board diagnostic systems (which did not record driving location). Drivers can earn discounts of up to 25 percent off their car insurance.
In 2008, Progressive launched MyRate. It is the next generation of TripSense, providing cellular communication of the on-board diagnostic data from the vehicle to Progressive, expanding product availability to more states and affecting premiums more substantially. That is, although drivers could earn total discounts of up to 25 percent under TripSense, with MyRate, depending on state regulations, discounts of up to 60 percent and surcharges of up to nine percent could be applied on renewal of the policy.
Results
Insurance company representatives have said that with TripSense, 34 percent of its customers who signed up for insurance by telephone or the Internet chose TripSense over Progressive’s standard product in the three states where TripSense was offered. Progressive also reported interest among over half its customers for PAYDAYS policies, as long as they could save money.
