Pay-As-You-Drive Insurance



A British insurance company has debuted a system in which you pay as you drive for precisely the coverage you need. It monitors your speed, braking habits, etc. and sets premiums accordingly.

By tracking vehicle journeys [with an in-car "black box], taking into account factors such as route, time of day, braking, age of driver, and so on, Norwich Union [insurance company] promises to be able to reward the best drivers with lower insurance premiums. It maintains this doesn't equate to losing customers paying the highest premiums. These individuals tend to call on their insurance more often and lead to lower margins--far better to leave them to the competition.

The system uses an ultra-powerful database that deals with 1 billion rows of data a day. The existence of this database--and the technology to get data into it, in tiny 2 byte packets transmitted from the cars--puts the longstanding libertarian dream of pay-per-mile highway taxes/road maintenance fees in the realm of the possible. Plus it enables nearly perfect price signaling to drivers about the decisions they make on the road about how to drive, where to drive, and how often to drive. And lo and behold:

The U.K. government is eyeing plans for a pay-as-you-drive system to replace standard road tax discs.

Privatize the roads (or at least read about it) here and here.