Posts Tagged ‘payd’

The recent recalls of motor vehicles from several manufacturers have resulted in a call for “black boxes” to be installed in new vehicles. Toyota had to recall approximately 8.5 million vehicles since last year for sudden acceleration problems and have been blamed for causing the deaths of 89 people through possible defects causing accidents. In the US a House panel has already approved a far-reaching auto-safety bill that will see “black boxes” installed in newly manufactured vehicles.

What are these black boxes?

These nearly indestructible components are better known for their usage in the aviation industry. We always find that after an aircraft accident investigators are searching for the “black box” to provide them with information on the cause of the accident. In aviation, a black box is an audio recording device in the cockpit of an airplane or helicopter. It records the conversation of the pilots during a flight, so if something goes very wrong, investigators can use the black box recording to determine what happened.

Black Boxes in the Motoring Industry

The usage of a black box or data recording device is not new to the motoring industry. They have been used in different shapes and sizes, offering different capabilities in the fleet management industry. They have been known as data storage devices and sometimes also referred to as CDR’s or Data Crash Recorders.

Some of these recording devices have been used to document the speed, braking, acceleration and other data five seconds before an accident.

The technical requirements of what needs to be measured still need to be identified – and new technology can measure far more accurate than initial requirements for the fleet management industry.

DigiCore has revealed that the new NX40 measures and stores acceleration at 100ms resolution and can be downloaded in the event of an accident with the 1second speed, making much more detailed analysis possible.

DigiCore expects that new legislation will also require storage of Engine Management data to enable accident investigators to audit the electronic and onboard software in the event of an accident.

Black Boxes and Pay As You Drive Car Insurance

Monitoring devices are well known in the car insurance industry. In the simplest forms there are the odometers capturing the distance that the driver travels. This allows the vehicle owner to pay a fair amount for his car insurance – Drive a lot, pay more. Drive less and save!

We have previously discussed the benefits of Pay As You Drive Car Insurance – amongst which we find perhaps the most obvious benefit – that distances to be driven could be reduced by up to 10% [Study from Federal Highway Administration]. This reduces the cost of car insurance and are also reducing how much we spend on fuel and the wear and tear on our vehicles.

There are also environmental benefits as reduced driving distances could save pollution and lessen the impact on the environment.

Monitoring devices should however go much further than merely measure you far you drive – but also measure “How you Drive”!!

We would like to invite readers to view The Blog post titled “How is safe driving measured for Pay As You Drive Car Insurance?” This provides a neat explanation of what can be measured with technology used for fleet management.

Impact of Proposed Legislation on the Cost of Cars

The proposed legislation will still have to pass a few hurdles and it will take some time to finalize how this is to be implemented. At this stage we would like to share the following aspects on the blog:

• The Alliance of Automobile Manufacturers voiced concerns about the industry’s ability to meet timelines for the costly rollouts of technology.
• The bill’s costs are unknown, given that details of the new technology requirements would later be set by the Department of Transportation.
• Now, all cars would be required to have “black boxes” that record crash data starting in the 2015 model year.
• Cars would also be required to have brake-override systems, which ensure a car will stop even when the throttle is jammed open, though the legislation doesn’t specify a compliance date for that measure.
• The bill would also eventually impose a $9 fee per car, with the NHTSA collecting the revenue to improve its operations.
• It is expected that the installation of black boxes will add upward pressure on manufacturing costs and increase the price of cars.

Impact of black boxes on car insurance premiums

Even though vehicles may become more expensive, black boxes could drive down the cost of car insurance. It is expected that this will not only result in less distances travelled – but also safer driving!

Fleet Managers have saved large amounts of money through fleet management technology measuring the driving behaviour of their drivers. There is value in having a “Big Brother” measure not only how far you drive, but also how fast you drive, how much you are applying t brakes etc. Perhaps these black boxes might just be what are needed to apply the brakes to our escalating road deaths!!

Across the globe many environmental protection agencies and NGO’s have recognized the threat of global warming and the need to protect the environment. Nature conservationists and scientist are often fighting side –by side in developing strategies to protect our environment.

Few of those protecting our environment would be aware of another rather unlikely source of environmental protection – car insurance, and more specifically Pay As You Drive Car Insurance!!

We have discussed on the Car Insurance Blog the nature of Pay As You Drive Car Insurance and also how to measure Pay As You Drive Car Insurance. But what possible impact could PAYD have on protecting our environment and reducing the effects of global warming?

Todd Alexander Litman from the Victoria Transport Policy Institute has provided a fascinating insight on this topic by sharing a testimony to be presented at the Senate Environment and Public Works Committee by Deron Lovaas of the Natural Resources Defense Council. This addresses the topic “Opportunities to Improve Energy Security and the Environment” and makes a specific mention of the opportunity presented by Pay As You Drive Car Insurance [PAYD].

We would like to refer to the argument in favour of PAYD as car insurance option and mechanism to protect our environment:

• Low-mileage drivers are subsidizing risk for high-mileage drivers; this results in distorted price signals for the costs of car insurance and driving.
• Converting the variable portion of insurance costs into a per-mile cost for drivers – a system known as Pay as You Drive (PAYD) – will correct these price signals.
• Research shows that the majority of drivers in the U.S. would actually save money under such a system, since the current subsidy to the smaller pool of relatively high-mileage drivers would be eliminated.
• States in the US are taking note of the advantages and pollution reductions afforded by PAYD. No fewer than 14 states are relying on PAYD as a strategy to combat global warming pollution, and expect PAYD alone to contribute on average 3% of their state’s total emissions reduction. In all cases, PAYD is projected to have either no cost or to result in net savings.

Why are American drivers not using PAYD and still driving with one-price-fits-all car insurance policies?

• There are still many regulatory obstacles to insurance companies offering PAYD policies.
• Many insurers are unwilling to explore PAYD because of uncertain start-up and administrative costs.
• An essential element of PAYD is to guarantee insurers the right to verify mileage and adjust premiums accordingly. Many insurers are unsatisfied with current methods of mileage collection and their attendant cost.
• Insurers appear to lack confidence in the ability of drivers or other 3rd parties to accurately and honestly report their mileage to them.
• There is still not a consensus definition of PAYD. This makes it difficult for policymakers and regulators, not to mention insurers and consumers, to identify exactly what they are striving for.

It is argued that these obstacles should be overcome if we are serious in achieving the goal of protecting the environment.

How could Pay As You Drive Car Insurance [PAYD] protect the environment?

If PAYD policies were made an option for all drivers, between 20-40 percent of drivers could be expected to use it as a way to reduce auto insurance premiums. Allowing PAYD as an option in all states could generate savings of 56 million barrels of oil in 2020 and almost 60 million in 2030.

Considering car insurance options such as PAYD is “thinking outside the box”. Pay As You Drive Car Insurance offers definite advantages to car owners in search of affordable car insurance premiums. A recognized by-product of driving less is a reduction in emissions. By driving less we will not only be able to save on car insurance premiums – but also protect our environment!

Also view:

• What is Pay As You Drive [PAYD] Car Insurance?
• How is safe driving measured for Pay As You Drive Car Insurance?