The car insurance contribution is a substantial cost for the car user. At this moment the car users in the Netherlands pay a fixed amount for their insurance per month or quarter, independent of the quantity of kilometers traveled. In this system the increased risk of involvement in an accident when traveling more miles is hardly or not at all charged to the car user. TNO and CE studied the possibility to introduce a mileage based insurance for cars in the Netherlands. This is called Pay As You Drive (PAYD), named after similar initiatives in North America. In the study we explored the opportunities for PAYD, conditions that are relevant for implementation and potential cost and benefits to society. PAYD can be an incentive for the consumer to drive less. And if driving less can result in a reduction in the number of accidents happening, PAYD will increase traffic safety. Data from the Dutch Centre of Insurance Statistics show that the crash related claims partly depend on the yearly car mileage. We have elaborated a case in order to make a first estimation of the potential costs and benefits to society. The study shows that the potential benefits to society could be in the order of several hundreds of millions of Euros per year, if the implementation costs can be limited. The total sum of benefits can be 50 to 100 euro per car per year, excluding the implementation costs. The impact on traffic safety will result in a yearly reduction of approximately 30 deaths and 200 casualties on the long term. These benefits are in favor of society, but a large part of the cost for implementing PAYD will be on the account of the insurance companies. PAYD seems to be a win-win situation for consumers, insurance companies and society, but the question remains how to allocate the costs and benefits in a balanced way. There are two ways to introduce PAYD in the Dutch insurance market: 1) Introduce a stimulus to transfer the societal benefits to the insurance companies or the consumer; 2) Lower the implementation costs. Based on the study we recommend further research in three perspectives: possibilities of insurance with a contribution per day; possibilities to exempt insurance companies who offer PAYD from insurance taxes to make PAYD as a product more attractive to them; and ways to fit PAYD in a package of in-vehicle services for which the consumer is willing to pay. (Author/publisher)
Abstract