USA Today gives a nod to the concept of pay-as-you-drive (PAYD) car insurance in an article about how technology is changing insurance pricing. The article reviews pilot projects in Minnesota (Progressive’s Tripsense) and the U.K. (Norwich Union’s PAYD program).
Both programs are using GPS and wireless technology to track aspects of participants’ driving—including distance, time of day, and where the vehicle is driven-that affect safety but aren’t usually calculated into insurance premiums. Premiums are then priced accordingly. Not surprisingly, motorists are becoming more aware of the consequences of their driving behavior. And awareness, of course, is the first step toward change.
Here’s an interesting twist: The monitoring seems to be getting people to drive more safely – not because they’re afraid of repercussions, but because they’re motivated to get bigger discounts. So instead of red light cams and state troopers with radar guns, maybe the way to get people to obey the rules of the road is to pay them to do it.
Research also indicates that the incentive of discounts will get people to drive less–up to 15 percent. But will drivers be willing to trade a little privacy for more cash? The USA Today writer thinks so.
It seems unlikely that any U.S. lawmaker would ever dare force car monitoring on us, but a decade from now, we might find ourselves buying into it, one person at a time.
Then, like those grocery cards, suddenly car monitors could seem as common and acceptable as house keys.
See a summary of PAYD programs here.