New York Times: Is Privacy Worth Sacrificing to Save on Insurance?
The New York Times reports on proposals for “pay as you drive” or “usage-based” car insurance. This issue has been raised before. In an interview last year, Transportation Secretary Ray LaHood suggested the idea of taxing drivers based on their mileage, which would require the tracking of individual drivers through technology such as GPS. White House press secretary Robert Gibbs quickly announced that such a tracking and taxing plan “is not and will not be the policy of the Obama administration.” Also last year, California considered a “pay as you drive” proposal.
One can see how collecting and retaining the data of when and where people are or have been would raise significant privacy questions. The Times reports:
The idea is that observed driving would let insurance companies gauge a driver’s risk more accurately. In turn, the company could charge more fairly than the current method, which relies on drivers to report risk factors, like how many miles a year they drive, themselves.
Here’s how it would work: if a driver agreed to it, a small monitor would be plugged into a car’s on-board diagnostic port to record when a car ran, how many miles it was driven, its speed, acceleration and deceleration. With a GPS, the monitor could also give a position. [...]
Needless to say, the idea hasn’t been a big hit with privacy advocates, but that alone isn’t what has held the industry back. Pay-as-you-drive programs haven’t been practical for consumers because of the cost of the hardware, which is generally included in the cost of the insurance. That has changed.
Auto insurance company Progressive has had “pay as you drive” insurance plans for six year; variations of the “MyRate” plan is offered in 19 states.
One of the more successful formulas, said Richard Hutchinson, general manager of usage-based insurance at Progressive, is to set a driver’s rate based on the standard formula and then give them a monitor with the promise that their rate won’t go up, but careful driving could result in a discount.
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March 25th, 2010 at 12:48 pm
Atrios has been on about this for quite some time now. I agree with his take: this is idiocy. There is already a tax which is tied very closely to the number of miles driven. It’s called a gas tax. It already exists. It’s easy to add another couple percent.
Of course, a gas tax allows some drivers to pay less on a per-mile basis, because they are driving more gas-efficient vehicles… but isn’t that a positive incentive?
And inversely, the gas tax might have a disproportionately large impact on people who drive old pickup trucks and inefficient SUVs. Which, again, is a positive outcome.
But no, of course it’s much more efficient to force all automobile manufacturers to install GPS tracking modules in their vehicles, pass state and federal laws making it a crime to tamper with the electronics, create state and federal government entities (or even better, private-sector government contractors!) to track the data and issue billing statements, write and print literature explaining how this system is better for everyone involved…
*facepalm*