Car insurance changes would drive fairness, clean air

Our Vancouver correspondent: British Columbia ought to adopt pay-as-you-drive auto insurance to meet its climate goals and give consumers a chance to lower their costs.
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Logo of the Insurance Corporation of British Columbia, a provincial crown corporation provide universal auto insurance to B.C. motorists. It also handles driver licensing and vehicle licensing and registration.

Our Vancouver correspondent: British Columbia ought to adopt pay-as-you-drive auto insurance to meet its climate goals and give consumers a chance to lower their costs.

While backroom conversations drag on in Metro Vancouver about how to beat congestion by financing more public transit, a simple, easy solution is standing by, begging for attention. Vancouver filmmaker Cliff Caprani is the latest advocate of pay-as-you-drive (PAYD) insurance, trying to get enough signatures on his online petition to prove to the Insurance Corporation of B.C. that there is consumer interest in the scheme.

Insurance Corporation of B.C. (ICBC) is keeping an eye on this option, but is basically uninterested, claiming a lack of customer interest. The fact that ICBC has a monopoly on car insurance in British Columbia and would have to do a lot of work for no significant economic return is also a big driver in its intransigence.

PAYD, or distance-based insurance, is a proposal to base insurance costs, in large part, on mileage. Instead of the current all-you-can-eat model (pay once, drive endlessly), under PAYD, the less you drive, the less you pay — on the assumption that accident rates are related to time spent driving.

For a province like British Columbia with aggressive greenhouse gas reduction targets, this is a no-brainer. Recent research by the Brookings Institute in the U.S. found that using this pricing model would reduce private vehicle travel by about 8 percent and reduce emissions by 2 percent, as a result of people deciding to cut down on discretionary trips to save insurance costs.

In California, if everyone adopted PAYD insurance, two-thirds of households would save an average of $276 a year per vehicle, according to the Brookings study. That'ꀙs 24 billion fewer miles driven every year and 1.2 billion gallons of gas saved. That would mean lower emissions, less congestion, lower highway maintenance costs, fewer accidents, lower police and health care costs, less oil dependency, and cleaner air. That'ꀙs all without any new taxes, any new transit, any new tolls, or any new bureaucracies.

There are downsides: A third of California households, based on the Brookings Institute study, would pay an average of $393 more per vehicle. But some University of British Columbia researchers have proposed combining PAYD with a vehicle levy based on fuel efficiency. That would allow heavy mileage drivers to lower their PAYD insurance bill by converting to more fuel-efficient vehicles.

The other big objection is privacy. The most common way to measure mileage is through a GPS device planted in the car, raising fears of invasive snooping. But let's put this in context: General Motors offers a PAYD-like program using OnStar, which already knows where every GM vehicle customer is at all times. Your cell phone provider already knows where you are. Your credit card provider already knows where you are shopping. But if that'ꀙs a deal-breaker, either pass up the offer of cheaper insurance, or follow the advice of Todd Litman of the Victoria Transport Policy Institute ( He advocates reading your car's odometer once a year to determine how far you've driven, which is how it's done in Belgium and the Netherlands. A U.S. startup, Milemeter, relies on customers to prepurchase blocks of insurance based on mileage. If they drive after their pre-purchased block is used up, they're not covered. No snooping required.

PAYD insurance is now an option in Ontario, the United Kingdom, Netherlands, Italy, France, Spain, Australia, Japan, Israel, South Africa ,and in 19 U.S. states (in some, mileage is combined with data on driving after midnight and sudden stops and starts). Two car insurers in California, including State Farm, the largest U.S. car insurer, are waiting for official approval to launch their PAYD plans, likely next month.

ICBC at least owes B.C. drivers a pilot program to test these innovations. If they'ꀙre working everywhere else, why wouldn'ꀙt they work in B.C.? And if ICBC doesn'ꀙt like PAYD, can it really defend fairness simply by saying it bases insurance rates on a driver's record (you crash, you pay)?

Continuing indifference to PAYD amounts to monopolistic dysfunction in the face of measurable social, environmental and economic benefits.

Nothing moves in B.C. on PAYD until ICBC shows some interest — or gets an order from the provincial government to get moving.


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