Pay as You Drive: Simple Idea, Complex Issue
American Agent & Broker, Feb 2009 by Passmore, Robert
The driving habits of Americans drew intense public scrutiny during 2008 as the price of gasoline skyrocketed to more than $4 a gallon in many parts of the country. As Americans drove fewer miles, interest in programs to base insurance rates on mileage increased. The media, environmental and consumer groups and think tanks all highlighted the potential societal benefits of this approach. However, from an insurance perspective, mileage-based auto insurance creates challenges, benefits and an opportunity not only to meet consumer demand, but to look at how auto insurance rates are regulated.
According to the U.S. Department of Transportation, Americans drove more than 100 billion fewer miles between November 2007 and October 2008 than during the same period a year earlier. October, the most recent data available, marked the 12th consecutive month where Americans drove fewer miles than the year before. Americans drove 3.5 per- cent less, or 8.9 billion fewer vehicle miles traveled in October 2008 than October 2007, the sharpest decline of any October since 1971.
Noting that this is the largest continuous decline in American driving in history, U.S. Transportation Secretary Mary E
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