GPS-based insurance pricing
Description
In Texas, legislation was passed in 2001 authorising private insurance companies to begin for distance-based insurance. Progressive
Insurance Company piloted an insurance program called Autograph from 1998 to 2001 which based auto insurance rates on driving factors
such as mileage driven, time of day and geographic location. A global positioning system (GPS) device was installed in the customer vehicle
to track the mileage driven and customers were billed accordingly. The technology worked and customers approved of the product, but the
program was ended because most cars are not equipped with GPS devices. (Note: The Aviva company has acquired the licence to test the
Autograph program from Progress Insurance in the UK and Canada. In the UK, 5000 participants began participating in 2003 through Norwich
Union Insurance and in Ontario, Canada, the same number will begin participating in 2005 through Aviva Canada.)
Vehicle Kilometres Traveled Impact
Reported
Progressive reported a reduction of total vehicle miles travelled by 5 to 15%. Based on standard elasticities,
Litman estimates GPS-based systems can have a market penetration of 10% and reduce travel by participating vehicles by 15% and total
vehicle travel by 0.8%
Greenhouse Gas Emissions Impact
Estimated
Based on the given 5% to 15% VMT reduction, the GHG emissions reduction would be about 5% to 15%
Pollutant Reduction
Reported
GPS-based pricing provides an extra incentive to avoid congested conditions, thereby providing extra emission reduction benefits per
participating vehicles, but its total impacts are small due to its limited penetration.
Congestion Impact
Reported
GPS-based pricing provides an extra incentive to avoid congested conditions, but its total impacts are small due to its limited penetration.
Other Impacts & Co-Benefit
Reported
In Houston, Autograph saved consumers an average of 25% compared to what they had been paying using a traditional auto insurance package.
Reference
Litman, Todd. "Distance-Based Vehicle Insurance as a TDM Strategy." Unpublished paper for the Victoria Transport Policy
Institute published earliery in Transportation Quarterly 51, no. 3 (1997): 119-138. Victoria, BC: Victoria Transport Policy Institute,
2003.
Commute Trip Reduction Task Force. 2001 Report to the Washington State Legislature. Olympia, WA: Washington State Department
of Transportation (WSDOT), Transportation Demand Management Office, 2001.