Toronto-area drivers say they would try pay-as-you-drive insurance
~ Posted on canadianunderwriter.ca/news on 2012-04-23
Two-thirds of drivers in the Greater Toronto Area (GTA) say they would likely try pay-as-you-drive (PAYD) insurance if it were available, notes a study by the Pembina Institute, a non-profit think tank that promotes sustainable energy solutions.
The institute’s study offers policy options on how to avoid traffic congestion in the GTA, canvassing the opinions of 1,001 area drivers whose one-way commutes to Toronto took more than half an hour.
Of the approximately 66% of respondents who were open to trying PAYD insurance, 85% indicated they would change commuting habits to find another way to get to work if they had the insurance.
The Pembina Institute report suggests examining “a pilot project for PAYD insurance, ensuring that it is at minimum revenue neutral, but provides strong incentives for drivers to leave the car at home in favour of other cost-effective options.”
PAYD insurance is not currently available in Canada, although Aviva Canada offered a pilot program in Ontario from 2005 to 2010. The Pembina report notes 6,000 Ontarians participated in Aviva’s program, with an average premium savings of 19%.
In the United States, Progressive Insurance offers optional PAYD insurance in 39 states, with an average savings for customers of 10 % to 15%.
The insurance option is most likely to be popular among people who drive less than 10,000 km per year, the report states.
“For insurance companies to offer the program, it needs to have public support — which has been demonstrated by the [Insurance Bureau of Canada] poll as well as by this survey,” the institute reports. It also must be cost-effective and operational at a large scale.
“As the tracking devices can be expensive, the province could implement legislation to reward participating companies, such as tax credits that would be phased out once a specific number of vehicles are covered by PAYD insurance.”