An article appeared a week and a half ago by Gail Broadbent with the title "Premier must lift the curse of the cars". It talks about the costs to society of people using cars.
Pay As You Drive Insurance is estimated to reduce driving by 8-12%. The reason for this is that traditional insurance pricing for cars is like an all-you-can-eat buffet. You pay once and then drive as far as you want. This is not equitable, not smart and is in fancy terms an negative externality, which means people drive more than they would if they were paying fairly for car use.
There is a fair bit to be saved by people switching over to Pay As You Drive. Our customers at Real save on average 30%, and many up to 70% of their annual car insurance bill. Very few days go by when someone does not tell me how fantastic the product is and how much they saved. It is a great product for people who drive their cars less than average.
The savings for the country from widespread adoption of Pay As You Drive as a pricing mechanism is staggering. Assuming a 10% saving, and using the figures in Gail Broadbent's article:
- Saving of $2.1bn in congestion costs
- 160 lives saved, that are lost today
- 3,000 serious injuries avoided
- $1.8bn in costs of car accidents
Whatever the numbers are, the impact is huge.
The full article below. Original on this
link.
Premier must lift the curse of the cars
Australia has become one of the most car-dependent nations, and Sydney is probably its most car-dependent city. Cars are expensive, one of the least cost-efficient methods of moving people from one place to another. We use 12 to 15 per cent of our collective wealth to pay for it. By contrast, cities that have strong rail networks, as many European cities do, use 5 to 8 per cent of their wealth on transport.
With oil resources dwindling and climate change bearing down on us, we are not well positioned for the future.
But with the Christie report, the NSW state government has a golden opportunity to turn things around and secure a sustainable transport future for Sydney.
The report's primary aim was to show how we can have a workable transport system that will allow Sydneysiders to get around in a cost-efficient way, in less time than it does now and with fewer hidden costs - including social ones - than the system we have now.
The transport policies of successive state and federal governments have left us with massive hidden costs.
One big cost to our community results from congestion on our roads. Across Australia, this has been estimated by the federal government at $21 billion - and that was just for 2006.
Sydney has a quarter of Australia's urban population; the cost burden for the people of NSW is massive. It comes not only in wasted time and fuel but in productivity losses. Every time you get in a plumber or other tradesperson, you pay for that lost time in higher charges. The plumber can do fewer jobs in a day, meaning more people in that trade need to be trained and on the road every day.
Another cost is the road toll. Every year about 1600 Australians are killed in motor vehicle accidents and 30,000 more are seriously injured. Every year the government delays improving public transport, or establishing safe cycleways, means avoidable deaths are added to the toll.
The federal government's infrastructure department found that car passengers were 10 times more likely to have a serious injury than those in trains, based on distance travelled. It estimates that car accidents cost our community $18 billion a year.
A third cost is health. Encouraging walking and cycling for short journeys would be a cost-effective way of tackling the obesity epidemic which is fuelling diabetes, heart attacks and strokes.
These ''externalities'' - air and noise pollution, road accidents, physical inactivity and the contribution to greenhouse gases and global warming - are costing us dearly. That's before we consider other social impacts such as social exclusion for those who don't drive and have inadequate access to public transport.
We need to update our thinking about transport so the costs are no longer hidden and so they reflect what fossil fuels are really costing us. The federal government's fuel excise, for instance, is the fourth-lowest in the world, according to a Treasury report on Australia's future tax system. It goes nowhere near paying for all the hidden costs of road transport.
To do so, we should be paying fuel excise of $1.33 a litre - 3½ times what we pay now. The politics of that mean it's unlikely to happen, but we need to go some way towards reflecting the real cost to society of using fossil fuel-dependent cars. The revenue from removing fossil fuel subsidies should be used to provide better, safer, more sustainable transport.
As a nation we urgently need to prioritise investment in the public transport, cycling and walking networks of our cities. We need governments to look ahead 10 and 20 years and help us make the transition away from oil dependency, with all its hidden costs, towards a sustainable transport future.
In NSW, the Christie report provides a chance for our new Premier to show us what she is made of, and give us a vision of which we can all be proud. She could start by investing in a program to maximise the opportunities for people to use public transport and get rid of the second car.
For when a family gets rid of its second car and puts the savings in superannuation, they can save more than $750,000 over a working life. Think of the benefit to people, communities and the economy of just that switch.
Gail Broadbent is the Australian Conservation Foundation's sustainable transport campaigner.
Posted by Roger Grobler at 2:21 PM
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The Blue Tongue beer company ran a great billboard campaign a year or so ago. The tagline read something like: "We never believed in awards, until we won one...". At Real we feel the same way. We don't really believe in awards, but we love getting them! This one is I think my favourite so far, as it recognises the impact that Pay As You Drive can have on the environment.
Real Insurance wins Best Climate Business Award
Real Insurance received the 2010 Money Magazine Best of the Best Climate Business Award. The Best of the Best awards are now in their ninth year with Real previously winning in the Cheapest Car Insurance category.
Real Insurance has also recently been awarded with:
· The 2009 Celent Carrier Award for Innovation
· The AB+F 2009 Best General Insurance Product award
· The 2009 Money Magazine Cheapest Car Insurance award
· A Cannex Canstar Award for Innovation
· The AB+F Direct Marketing Campaign award
Real Insurance was honoured with the Climate Business award due to its innovative Pay As You Drive car insurance product, which rewards customers for helping the environment by driving less. Pay As You Drive from Real Insurance, is the first insurance product of its kind in Australia whereby qualified motorists pay only for the kilometres they plan to travel.
Real Insurance CEO Roger Grobler said, “Current car insurance pricing is inefficient and unfair. Drivers who are similar in respect of age, gender, location and driving safety record and who use their cars sparingly to help the environment should not have to pay the same as their neighbour who may be driving four or five times the distance.
Environmentally conscious motorists, who are cutting down on driving their cars in response to climate concerns should be rewarded for driving less.
It was against this background, that we felt the time was right to offer a robust, comprehensive motor insurance product for which customers pay only for the kilometres they plan to travel.”
Grobler continued, “A study conducted by the Brookings Institute in Washington last year found that introducing pay-as-you-drive insurance would generate an eight percent saving in CO2 emissions, nearly two-thirds of households in the US would have lower premiums and the average savings for that group would be $276 per vehicle per year.”
However, Grobler points out that Pay As You Drive is not for everyone.
“Pay As You Drive is ideally suited for people who drive to and from the train station, or work close to home, and maybe use their car a bit on the weekend. Anyone driving less than the average for people with their same insurance profile will pay less than ‘traditional’ comprehensive car insurance.
We want to give climate change conscious drivers a fair go. Pay As You Drive reflects large scale changes in motoring habits and in so doing, accommodates the changing needs of motorists,” says Grobler.
Recognising that these changing motoring habits reflect people wishing to lower their carbon footprint, Pay As You Drive has partnered with Greenfleet, a government approved greenhouse gas reduction initiative to offer motorists the option to offset their car emissions with a one off tax deductible donation which will assist in the planting of trees. This is just one other way that Real Insurance is innovating to help protect our fragile environment.
Gillian Lilley
Freelance Business Writer
Original link here.
Posted by Roger Grobler at 5:54 AM
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Another excellent post by Bern Grush at Grush Hour: (original post here)
If Steve Jobs decided to design a stick-on-your-windshield gizmo to handle payment of road tolls, what would he do so that people would line up outside the Apple store starting the night before to be the first to get one?
You’re probably thinking he wouldn’t be caught dead doing that, right?
But what if he knew there is talk of putting one on every car in the US after 2015? And every car in Europe in that same time-frame? And on every car in several Asian countries, as well? You know, for when we finally start doing something about congestion like we keep talking about, or start using alternative power vehicles and the gas tax dries up? Yeah. Then.
Well, first of all he would envision his customer looking like this fellow who just bought an iPhone. You know that, for sure.
Then he would figure, there is not a single person on the planet that wants to pay road tolls. Not even the people saying we need to start paying road tolls actually want to pay road tolls. He’d know that there will be competition and that his will have to do dozens of cool things that the competitors’ don’t.
So he would have his device let you park your car and forget getting out to pay a meter on the curb. And he’d find a way to end the need for parking tickets just like he ended the need for music CDs. He'd do that by providing for graduated pricing instead of a $30 ticket when you are 5 minutes late. And he would have it handle pay-as-you-go insurance to save those people who drive less than average save some money. He’d throw in an emergency call button, a carbon meter (or not).
He’d allow a credit exchange system so that your city could reward you with a couple of hours of free parking for leaving your car home once or twice a week a week. Or even provide you with some road use credits as a form of tax credit. He’d allow it to handle loyalty programs so if you kept using the same parking garage, you could get a few free hours once in a while. That would let you skip the monthly parking pass, because you’re thinking about teleworking more often anyway.
I doubt he’d stop there. He probably put in an wireless interface to your iPhone so you could download your parking and tolling bills and maybe sort them out for your expense reports. He’d add in a parking finder and reservation system – and maybe a way to guide you right to the spot using your iPhone. He would put in a program that optimizes your time or route of travel to minimize your cost of tolls.
I’m sure he’d have lots more ideas, as well. And if these saved you time and trouble and money – perhaps even as much money as you spend on tolls – then maybe you’d line up for it. I would.
Last week our meter was described in a few articles and on television. Several callers asked: “where can I get one?”
One person wrote: “I plug two dollars into a parking meter only to return to my car a few minutes late and I have a $20 or $30 dollar ticket waiting for me. I had $360 in such tickets last year! Sign me up. Not having to buy, maintain and collect and count coins from parking meters is money saved that can be put towards improving the transit system.”
Posted by Roger Grobler at 8:56 AM
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The following is an article that appeared in thetyee.ca in Canada. It talks about how the large insurance company ICBC is stonewalling Pay As You Drive insurance, in spite of the fact that it is great for consumers, the environment, and even the insurance industry. The large Australian insurers should heed the same advice.
Drive Less, Pay Less: Why pay-as-you-drive auto insurance would help just about everyone -- and how the province keeps missing the boat.
By: By Alan Durning and Eric de Place, 29 December 2009, TheTyee.ca
View full article and comments: http://thetyee.ca/Subscribe/2009/12/29/Idea7/
[Editor's Note: For your consideration, we'd like to present the 2010 edition of New Ideas for the New Year. This popular annual series highlights creative ideas for improving our lives and communities. We'll publish a new one starting today until Jan. 1.]
Imagine a policy fix that's as good for drivers as it is for the planet, that saves both lives and money, and that trims carbon emissions while correcting an injustice. Imagine this solution boosts profits for the industry it affects, and that it can be implemented gradually.
Imagine this innovation has deep roots in British Columbia -- that a leading champion of it works just minutes from the legislative buildings in Victoria -- and that the province is a particularly easy place to implement it. Imagine that this fix is already in place in more than a dozen places around the world.
Now imagine that the public corporation positioned to make this fix has been stonewalling for years. In a nutshell, that's the story of pay-as-you-drive auto insurance and the Insurance Corporation of British Columbia (ICBC): a boat missed, repeatedly.
Drive less, pay less Car insurance in British Columbia is like an all-you-can eat buffet: once you've made the purchase, you may as well gorge. Mileage is correlated with risk; the more you drive, the more likely you'll crash. But unlike a driver's age and safety record, insurers have historically underweighted mileage in their rating formulas because it has been difficult to ascertain. Information technology and tamper-resistant odometers have changed all that, making it possible to approach the insurance actuaries' Holy Grail: matching premiums precisely to actual risk.
Actuarial accuracy is the key to insurance profits. A fairer price schedule -- one based on mileage driven (along with other existing factors such as age and crash history) -- is also the key to giving owners a new way to save money, by driving less. The result is mileage-based insurance or pay-as-you-drive (PAYD) car insurance. Insurers can check mileage by reading odometers, by installing mileage-recording transponders or even with high-tech GPS. Essentially, pay-as-you-drive makes buying car insurance like buying gasoline: drive less, buy less.
More companies getting PAYD The race to mileage-based insurance has been on for several years, as companies strive to find cheap, reliable ways to track their customers' mileage. Commercial insurance for businesses' vehicle fleets and for truckers is now routinely mileage-based. Consumer auto insurance is moving in the same direction. In Ontario, Aviva offers a by-the-mile plan. In the Netherlands, Polis Direct does; in Japan, Aioi; in Israel, Aryeh; and in South Africa, Nedbank and Holland Insurance.
In the United States Progressive and GMAC now offer plans that weigh mileage more heavily than most insurers, though they're not full mileage-based insurance. A new company in Texas called Milemeter launched a true by-the-mile insurance plan in 2008, and in 2010, Seattle-based Uniguard will launch its own fully distance-based plan in Washington state.
ICBC refuses to play By rights, ICBC, the province's official auto insurance monopoly, should be leading this charge. Shielded from competitors by law and chartered to serve a public purpose, ICBC could launch by-the-mile pricing without fear of losing a single customer. Instead, the company has folded its arms and refused to play.
B.C.'s absence is conspicuous, given the history.
In 1995, Sightline (then Northwest Environment Watch) commissioned research on PAYD from Victoria Transport Policy Institute's Todd Litman. Litman went on to become perhaps the world's leading proponent of the concept. He has tirelessly developed the design for PAYD insurance, researched all dimensions of its implementation, and advised governments and insurers on how to do it. (A compilation of Litman's research is here. He makes the case here that B.C. should give PAYD a chance, particularly through a low-cost odometer-reading pilot project.)
Sightline has been advancing the concept in countless ways ever since. Partly prompted by our work, in 2005, both the Vancouver City Council and the Greater Vancouver Regional District passed resolutions asking ICBC to introduce PAYD, to no avail.
Are you listening, Mr. Premier? The stakes are enormous: pay-as-you-drive insurance could spur all types of motorists to drive less, which would reduce congestion and auto accidents. One study estimates that a universal system of per-mile auto insurance would reduce U.S. driving nationally by about nine per cent with a potential insurance savings of $8 billion a year. Litman, for his part, estimates that PAYD would reduce driving by around 10 per cent and crashes by 12 to 15 per cent.
PAYD offers huge advantages. It's fairer than ICBC's current all-you-can-drive insurance: people who drive a little currently wind up subsidizing people who drive a lot. And it creates an automatic disincentive for extra driving: just as an all-you-can-eat buffet encourages gorging, all-you-can-drive insurance makes it more likely that you'll drive more than you really need.
Will 2010 be the year when ICBC catches up with innovators across the globe and launches an insurance option that matches the province's green-economy ambitions? Perhaps the province's carbon-busting premier should put ICBC on his "to call" list. ![[Tyee]](http://thetyee.ca/Subscribe/2009/12/29/Idea7/%3C?=%20$static_url%20?%3E/ui/img/ico_fishie.png)
Information thanks to Todd Litman, source of lots of good PAYD information.
Posted by Roger Grobler at 8:48 AM
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Bern Grush is a blogger that is worth checking out for his posts on PAYD related topics.
In his latest post he discusses what Governments can do to promote telematics. What is particularly interesting to me however is his description of Pay As You Go parking, which is enabled through telematics.
I must say, I won't miss the sight of Parking Rangers waiting to pounce on the next car to write a ticket, and nor would I miss the sight of a whole Sydney street lined with "mobility" parking permits. I am sure a telematics based system will finally weed out the cheaters of the mobility permits, as well as make parking a lot more hassle free, cheaper and more efficient.
I have been describing satellite (GPS)-based multi-function payment telematics that encompass road-tolling, parking metering and pay-as-you-drive insurance since 2003. First in patents filings, then at EU conferences then, starting in 2005 in the EU trade press, and in my blog (
grushhour.com) since 2007 (
this one is fun) and now in keynote speeches at transportation conferences and workshops in North America.
A reader recently asked: “How best can the government facilitate the development of private sector ‘multi-function payment telematics’?” A critical question, indeed.
The Government has two critical roles to play.
The first is to support standards in order to protect consumers, which in this case of road-use payment telematics encompasses users (drivers) and payment operators (toll operators, parking operators, insurance companies). This will include interoperability, communication interfaces, privacy, charging reliability, security, and evidentiary weight for non-repudiation. The International Standards Organization via its European partner, CEN, is addressing these standards now. Only one American regularly participates. More are needed.
The second is encourage voluntary use of telemetric devices for parking and insurance, ostensibly while waiting for policy and planning to be ready for GNSS-based road-tolling. One way this can be done is to encourage municipalities to permit programs for voluntary parking payment via GNSS meters. More detail on this, below.
Another way voluntary use can be encouraged is by permitting PAYD insurance programs in jurisdictions where legislation still lags, or by mandating that a gradually increasing percentage of insurance files be converted to PAYD. There are also a significant number of ways to meter and charge for PAYD insurance and the ones that use pay-by-use telematics are the most fair. These can be encouraged through subsidies to municipalities that partner with insurance companies to bundle parking and insurance on the same meter. The attraction here is that once a few thousand vehicles in a municipality or megaregion are equipped for parking, then an insurance company can offer PAYD premiums to those motorists without consideration for developing a telematics system, since it would already be in place.
Still another way to encourage use is to permit users of these new devices to pay existing RFID tolls on the same bill, since these systems can be set to identify the identical tolling amounts. Those highways for which the tolling authority is a government could consider a small discount, as further motivation.
Of course, if these municipalities and megaregions were to offer rewards of, say, parking-payment credits, to vehicles that did not move during peak hours, or were small, or were electric, or were driven very efficiently (hypermiling), or were driven less often, and if municipalities permitted local business improvement associations (BIAs) to offer loyalty rewards to frequent shoppers in the form of parking credits, this would further develop this new metering sector as it would reward users who subscribe to metering services.
So the short answer to the question “How best can the government facilitate the development of private sector ‘multi-function payment telematics’?” is simple to permit demand to be created by removing restrictions and encouraging the shift. Soon after would follow numerous competitors. Here is what some of them would look like.
~~~~~
Now to return to parking – by far my favorite congestion-related subject.
The advantages of satellite-based parking for a municipality are:
- Infrastructure costs are reduced which enables expansion of managed parking.
- Enforcement costs are reduced permitting the same parking officers to manage an expanded area of municipal parking.
- Citations for meter violations can be replaced with graduated pricing, reducing enforcement labor per parking spot, court backlogs and court services costs, while raising revenue and net revenue.
- The reduction of underpriced or unpriced parking reduces urban street congestion.
The advantages of satellite-based parking for a driver are:
- No need to pay each time you park.
- Pay only for the minutes used.
- Can overstay without ticket-anxiety.
- No parking tickets for expired meters.
- Expense management for business users (note that parking payments may be a business expense, while a parking citation is generally not).
- Able to purchase PAYD insurance (to save money).
- Able to pay existing (and new!) road-tolls with the same device.
The steps a municipal government must take to permit satellite-based parking:
- Permit one or more satellite-parking operators to meter and collect payment for your municipal parking spaces, lots and garages.
- Prepare pricemaps of the parking facilities. These are geographic locations (labeled polygons) with associated times and prices. Give these to the satellite-parking operator(s).
- Promote the service to your residents, especially to those receiving parking tickets, since those drivers generally find parking payment systems (which include payment of citations) to be bothersome. (Stick a service offer under the wiper with the ticket!)
- Do not ticket satellite-parking users for meter violations. Use graduated pricing instead. This should be set for the municipality to be able to encourage short-term parking to remain short, while appreciating the same net revenue as before.
- Offer a startup incentive such a credit on account for the first several hundred users.
- Design rewards for drivers to encourage both less driving and the use of satellite-based, in-car meters.
The advantage to Departments of Transportation is that voluntary adoption of road-use/parking-use meters permits governments to watch the technology develop and ascertain its reliability at very little risk, while users become accustomed to its fairness, convenience and privacy protection.
Everyone wins. No political suicide.
Posted by Roger Grobler at 8:46 AM
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We are doing a series of interesting press releases on run of the mill census data. They deal with who the biggest users of alternative transport are in Australia. Like who are the biggest train users. Clearly these people are going to be winners when they take out Pay As You Drive!
From http://www.newsmaker.com.au/news/1938:
Residents of Summerhill are Australia’s biggest users of trains per capita and as a result many of them are probably paying far more for their car insurance than they should says Roger Grobler, CEO of Real Insurance.
Says Grobler: “We have analysed numerous Australian Bureau of Statistics figures across the suburbs of Sydney. While Summerhill residents should be commended on their extensive use of public transport the fact of the matter is that if they have a car they are still paying the same car insurance premiums as those who drive even four times the distance.
“In effect many Summerhill car owners using public transport are subsidising other motorist’s car insurance premiums.
“I believe that there are many drivers in Summerhill who are paying far more for their car insurance than they should given their profile and the distance they drive.
“These motorists are far better off exploring a pay-as-you-drive insurance system whereby they only pay for the kilometres they drive.”
Grobler points out that pay-as-you-drive motor insurance only works for those people who drive less than the average for their area and their demographic profile compared to their peers.
He gives the example of a 39 year old female living in Summer Hill who could save up to $365.29 by going to Pay As You Drive car insurance. She drives a 2007 Hyundai Getz 5 door auto and would traditionally pay motor insurance of around $807.88 per annum. Using Pay As You Drive she would pay $442.59 for 5,000kms, $486.91 for 7,000kms or $553.40 for 10,000kms of car insurance purchased.
Further examples
Cairns
Residents of Cairns are the largest bicycle users in Australia, yet like the train users of Summer Hill, are still paying the same premiums as regular car users.
A 29 year old Female living in Cairns who could save up to $193.90 by going onto Pay As You Drive insurance. She drives a 2007 Mazda 2 Neo Auto and would traditionally pay motor insurance of around $563.50 per annum. Using Pay As You Drive she would pay $369.60 for 5,000kms, $401.94 for 7,000kms or $450.45 for 10,000kms of insurance purchased.
Campbelltown
A 49 year old male living in Campbelltown who could save up to $356.97 by going onto Pay As You Drive insurance. He drives a 2007 Ford falcon Eurosport auto and he would traditionally pay motor insurance of around $874.83 per annum. Using Pay As You Drive he would pay $517.86 for 5,000km, $559.73 for 7,000kms or $621.68 for 10,000kms of insurance purchased.
Pymble
A 40 year old male living in Pymble who could save up to $323.82 by going onto Pay As You Drive insurance. He drives a 2008 Holden Lumina VE and would traditionally pay motor insurance of around $800.67 per annum. Using Pay As You Drive he would pay $476.85 for 5,000kms, $517.90 for 7,000kms or $579.51 for 10,000kms of insurance purchased.
Posted by Roger Grobler at 9:21 AM
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Once a year we have a conference at Real Insurance that is attended by our entire team. It is a very special event.
We normally have teams performing skits at our conference. This year we replaced the skits by an invitation to produce TV ads for either Real Insurance or Pay As You Drive. Our team produced over 10 adverts, which we screened on a cinema screen at the Entertainment Quarter in Sydney. The TV ads are part of a competition, and the winners are decided by a combination of the idea, creative execution and views on YouTube. The full set of ads will be placed on YouTube shortly.
In the mean time, have a look at this entry. I must say I am blown away by both the idea and the execution. Make sure you listen to the sound effects. This particular ad was made by our IT infrastructure team. How lucky are we to have such a talented group of people that are not only good with their day jobs, but that can also come up with quality like this:
Posted by Roger Grobler at 9:56 PM
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People who follow the development of Pay As You Drive motor comprehensive insurance internationally will know that California has released regulations that allow insurers in that US state to offer Pay As You Drive policies.
The news clip below typifies a lot of the news coverage about it. Most of the news on Pay As You Drive over the last few months have been about the Californian regulations.
If you're unfamiliar with the US insurance regulations: In most states in the US an insurance company needs to "file rates", which means that prior to issuing a new insurance policy the way in which premiums are calculated needs to be approved. There are guidelines as to what rating factors insurance companies can use. So in California for instance insurance companies could not do Pay As You Drive until the regulator actually allowed rating to reflect kilometres driven.
Posted by Roger Grobler at 7:27 PM
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