For a while now, Northwest transportation experts and advocates have promoted pay-as-you-drive-insurance (PAYD), one of the most promising market approaches to reducing driving. We’re getting closer-Oregon passed a bill encouraging insurers to offer PAYD last year-but it hasn’t yet accelerated from “cool idea” into implementation.
But it has in other places. As reported by Victoria Transport Policy Institute‘s Todd Litman, the latest is Dutch insurer Polis Direct, which announced this week that it’s launching a full-fledged PAYD program (or “variabele autoverzekeringspremie”).
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Participants will pay an "advance premium"–90 percent of their current premium—and at the end of the policy term receive a rebate or pay extra based on how much they drive. Mileage data will be odometer-based—collected during annual vehicle inspections and recorded in the national vehicle registration database.
Participants in a PAYD have an incentive to drive less, they stand to save a lot; it’s also expected they’ll have lower-than-average claim costs. The Dutch government, meanwhile, is promoting PAYD for its other benefits, including reduction of congestion, accidents, and emissions.
As Litman notes, this will be a useful case study in how PAYD implementation affects insurance markets. “We expect the policy to attract many new customers,” he says, “since this is a unique new product that offers many motorists significant savings.