Usage-based insurance (UBI), Pay-As-You-Drive (PAYD) and Pay-How-You-Drive (PHYD) are types of automobile insurance integrating into a growing segment of the automobile insurance industry. Differing from traditional auto insurance, which focuses on past driving history and rewarding “safe” drivers with lower premiums, these new policies base their costs on monitoring present driving habits.
Though less than half of all auto insurers offer such policies today, many industry experts predict that these new policies will see rapid growth in the U.S., with 20 percent of all vehicle insurance in the U.S. expected to incorporate some form of UBI, PAYD or PHYD within five years.
These products trade off the promise of cheaper premiums, if the driver allows for a monitoring device (‘black box’) to be plugged into their OBD II port, which is an interface located below the steering wheel of most cars made after 1995. The first of these programs began with Progressive more than a decade ago, where mileage was monitored. Assuming no accidents, if the mileage was low enough, the driver could expect some type of savings off their premium.
Over time, technology has allowed insurers to gather more information on driving habits, including:
- Number of miles driven
- Driving times throughout the day and night
- Where the vehicle is driven
- Average speed
- Hard breaking
- Hard cornering
There has been a lot of customer reluctance to purchase UBI, primarily because people don’t want their driving habits monitored, especially if they believe they are driving safely. Moreover, they consider their time in their cars personal and private. Many consumer groups find concern with insurers knowing their location and driving patterns, for fear that their data will be sold or used in ways other than for pricing insurance premiums. Still other groups believe that these ‘schemes’ are a new way for insurers to find greater profit margins.
Stepping away from privacy fears and corporate interest, one must recognize the all-too-real issue surrounding millions of drivers in the U.S. who speed each and every day. Whether its the young reckless driver on the interstate, the business person driving to work each morning, or perhaps the parent running behind on dropping their kids at school, most everyone speeds to some degree.
According to the National Safety Council’s report Focus on Safety: A Practical Guide to Automated Traffic Enforcement, drivers speed for the following reasons:
- They’re in a hurry
- They’re inattentive to their driving
- They don’t take traffic laws seriously
- They don’t think the laws apply to them
- They don’t view their driving behavior as dangerous
- They don’t expect to get caught
The fact is that speeding is a major contributor to many accidents and injuries. The National Highway Traffic & Safety Administration (NHTSA) reports that speeding is involved in about 33% of all fatal crashes, and is the third leading contributing factor to traffic crashes. But while other contributing behaviors, such as driving while impaired/intoxicated and not wearing seat belts have been significantly reduced, speeding remains a consistent “challenge”.
Placing officers in strategic positions to monitor speeding is at best a public service through a temporary and short-lived deterrent. At worst, it is an inefficient use of police manpower and a tremendous waste of taxpayer money.
Moreover, many people erroneously think that when they pay an expensive traffic ticket that the money is all going to the county police department. Depending on state, a large part of every ticket goes to the state and then the court system. It may surprise people just how little actually gets to the police department whose officer wrote up the ticket.
In recent years, the use of cameras to detect speeders has been used. This has been shown to generate a larger amount of tickets and reduce police manpower. However, its shortcomings are the same of the police cruiser with a radar gun. People WILL slow down in the monitoring area, but then they will speed up once they clear it. The simple fact is that we can’t have cameras and speed monitors everywhere – or can we?
My proposed invention, A System for Speed Mapping and Reporting, allows for our present speeding ticketing and financial punishment system to work without so many manual and people-dependent processes. It will be mandated for all monitored vehicles – in other words, ALL cars and trucks in America. The program will be run by each state, whereby drivers are given a periodic ‘report card’ of their driving habits, delivered to them on a quarterly basis.
The premise is that by mapping out all roads by connected sections of speed limits, the vehicle will be able to send its speed and its position to a satellite. From there, the information will be collected onto a database and put through a series of comparative measurements. If for example, Bob Smith were driving his car for a 3-month period, this monitoring system would be able to know on every single occasion, when Mr. Smith’s speed in a particular stretch of ‘speed zone’ exceeded that zone’s required speed limit.
Since most everyone speeds, then it stands to reasons that everyone will be paying state penalty money from these reports, right? Well not exactly.
Like anything else, there will be arguments and determination on what constitutes a ‘safe driver’. Is it perhaps only breaking speed limits by an average of less than 5 m.p.h.? Is it breaking the limits of less than 50 speed zone areas per month? What about those who violate speed zones in more residential/school areas? All of this would need to be determined, as well as what happens when a driver is flagged out-of-state or when driving a rental car. Certainly, there would have to be a period of time to get drivers used to a such a monitoring system, prior to its actual release.
Plus, what would be the fees associated with certain low, medium and high-scoring (penalized) drivers? Should there be a significant penalty for drivers who are caught driving more than 25 m.p.h. over a speed zone’s limit? If that happens many times, does it mean a potential loss of license? This begs the question of how a monitoring system like this would know who is driving the car?
Perhaps that may not matter if ultimately the quarterly reports and financial penalties are within reason. But when a report comes out showing that a driver exceeded 20 mph in speed zones more than 100 times in three months, perhaps a biometric device to determine driver identify, coupled to the vehicle starting, may be needed. Otherwise, dear old Mom and Dad can take full responsibility and penalty for their teenager’s driving habits when using their car. Remember, we’re talking about a dangerous driver and the statistics on speeding and accidents are quite clear.
It is also likely that this invention could be tied into a web-based application, allowing drivers to keep accurate measurements of their current ‘driving scores’ in real time. Imagine that a driver, through such an application, knows when they are heading toward a bad quarterly report score. Could they conceivably reduce points by showing consistency in lowering their speeds over time and speed zones? There is a lot of area for growth in training drivers to be safe, by having a monitoring program such as this in place.
And what of those people ‘rushing’ to get somewhere because of their poor planning? Simply stated, this program teaches them to be better organized. Many of these people are selfish, and seem to forget that we all share the road. A concept that has been well lost over all the many years and incidents of drunk driving, speeding, reckless driving, and road rage.
How would automobile insurance companies fit into all of this?
Since insurance companies do base their rates, in part, on when drivers get speeding tickets, this would obviously make some difference on premiums. However, I do believe that because states will be collecting far more money from drivers, perhaps there could be a mandate on just how much a premium could be raised. After all, we do want to see the roads safer, especially by means of cost-saving technology. But hardly at the expense of bankrupting the drivers of America.
I can hear all the readers who are privacy advocates screaming out, “BIG BROTHER…LESS GOVERNMENT”. I couldn’t agree more. However, less police officers on the road, less speeding tickets, less court costs, less police officers having to spend their time in court, less court cases piling up, less government and law enforcement personnel needed ALSO means less government and a possible financial break to the taxpayer. Couldn’t we all use a little tax break?
At the heart of this entire system is the simple rule that people make decisions for one of two reasons – either they want to avoid pain or gain pleasure. That’s why speeding tickets, at least to some extent when given, do get people to drive slower. Unfortunately, this is temporary and altogether lost on the millions of drivers who are not regularly caught and ticketed. Why not use this motivation for the good of society and the safety of our roads?
There’s nothing unfair about penalizing drivers who choose to drive more dangerously. It’s a fair system, both for the 65-year old grandmother driving her Toyota Camry, as well as the 19-year old driving a his new red sports car. All drivers will have the same chance to pay or not pay, depending on how they choose to drive. Plus, truly reckless drivers won’t have to rely on their good luck, as they are flagged all the time.
So much for those fancy radar detectors!