Pay-Per-Mile Car Insurance: It’s Coming.
Filed under: GPS Successes, GPS Tutorials, GPS for Business, Uncategorized
PAYD … Pay As You Drive is the new buzzword. It’s already becoming popular in the UK and in Australia. It theory this should be a great way to be fair to both the supplier and the consumer.
Several US states have been talking about usage based road taxes and car registration fees as well. There is some “goodness” in all the ideas but there are two key elements missing before systems like this can become truly viable.
First, there has to be a way to definitely and accurately track the usage. We could just ask motorists to send in the mileage figures, but it’s easy to see how open to abuse that idea would be. If it costs money per mile, people are going to under-report, and the process of collecting and tabulating the data is going to incur huge overheads. In addition, to be really fair to the parties involved the process should not just be miles alone, it should take into account where the miles were accumulated. So, let’s set up a program where driver sort car owners can use a cheap, commercial-off-shelf GPS tracking system that reports to the insurance company, the state government, or whomever wants to set up a PAYD program at no cost. Are there such systems readily available out there? You bet. I even sell one viable contender, there are others.
Wait a Damn Minute!!!! GPS track all my driving? You’re crazier than you look, Starr … I Ain’t A Gonna Do It!
That’s right, the second yet to be solved issue is privacy. Assume a magic wand is waved and every mile traveled and where you travel is tracked. Who is going to have access and how is the data going to be used?
The issue of privacy and access control is, like almost all potentially good ideas, much more political and procedural than technical. However, before the length of this post gets out of hand, I’ll propose a quick straw man of one possible way, using only technology I can test and supply today.
The company or agency who wants to track vehicle usage and set up a PAYD program purchases a small GPS tracker “black box” which is installed on the PAYD subscriber’s vehicle. The cost of the unit and installation is handled by absorbing it in the company’s overhead, having the subscriber pay up front, leasing the systems for a buck a day from a third party lessor, or???
The participating program can have simple, hands-off private radio frequency download units at the programs main and/or branch office, at the subscriber’s home or office, or any number of other geographic locations. The output of information from the vehicle is already encrypted so that the over the air data can’t be read by a third party, and the vehicle’s unit is identified only by a permanently installed ID number, very much like a MAC address in a computer. Only the subscriber and the service provider can know who is personally represented by the ID number.
If a second provider comes on the screen, let’s say the original system is a state government initiative and an insurance company wants to offer in state customers a PAYD program, the second and subsequent suppliers don’t need to re-invent the wheel, they can simply go to the original supplier and pay a very small fee to “piggy back” on the original GPS initiative. The subscriber’s data can still only be identified if the subscriber then tells the secondary service provider the subscriber’s own unit ID number, thus linking it to his or her name.
If only 2 or 3 major subscribers in a state come on board it would be easy to offer subscribers free equipment, cover the costs of operating the network and gathering the data and still improve the provider’s bottom lines as well as giving the consumer a better deal in life.
Not to mention, the subscriber could also use the data for his or her income tax report … a whole nother big money issue we’ll talk about here soon.
Dave: to split hairs, you use the word tracking loosely. A navigation system that reads GPS signals and determines where you are on a map is NOT tracking. An asset management system or any device that reports [near] real-time positions back to a monitoring station IS tracking. Tolling for road-use, for parking and for PAYD Insurance does not require tracking and would be a foolish design for several reasons. (I can send papers.) It is possible to build a tolling system for road use and for parking that is ANONYMOUS (i.e. not “just” private) However, a PAYD data feed, however private and protected, could not be anonymous, since the rates are different for different drivers. You could conceive of prepaid, anonymous PAYD, but it would be wildly expensive. grushhour[dot]com
Hello Bern,
Thanks for stopping by. I’m amazed anyone reads this far back. Sadly, not a lot of original thought has surfaced since I wrote this post so, so I guess it’s all still what passes for ‘current”. I did take alook at your blog and now it’s added to my Google Reader … recommended.
feel free to split all the hairs you wish to, I certainly do at times. We’re certainly in agreement on some things:
1. You are certainly correct that “tracking’ should be define more precisely. Indeed that’s one of my pet peeves … GPS (or to be precise, the GPS Mission One package which is all the non-US DoD ever sees or can access) tracks _nothing_, ever. There are two other “missions” aboard each GPS spacecraft which actually do perform some services that might fit the definition “tracking” but they won’t be dealt with here and have nothing to do with the public).
The system provides the data which enable tracking, which is how most folks make the at times erroneous connection.
There is a variant of near real-time tracking where the “real’ is significantly shifted in time which I had in mind when I penned the original article, though. (it’s made right close to you, see http://www.geotab.com). There is _no_ datalink, and thus no direct cost of operation, yet the user of the system, at his/her control (literally local and key) would have the option of sharing the tracking data with those s/he chose to share it with … an insurance company, a tolling agency, parking auhtority, whatever. And there is no data transmission cost unless the user chose to opt for a data channel that does have a cost … such as GPRS.
It is possible to contrive a PAYD scheme without tracking but it loses so much of it’s potential “goodness” … but yes, it is not practical to mak eit actually anonymous.
This is what I had in mind when I originally started this thread. But fear not, I don’t sell this (or any other technology) any longer