THIS STORY HAS BEEN FORMATTED FOR EASY PRINTING
IN PRAISE OF ‘PAY AS YOU DRIVE’ AUTO PREMIUMS

Indeed a link between miles driven and accident risk

January 19, 2011

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IN THE Jan. 13 editorial “Driving: No ‘pay as you go’ premiums,’’ the assertion that “there is no direct connection between miles driven and risk of accidents’’ is incorrect. The state’s environmental plan refers to our study, in which we used mileage and insurance claims data from 3 million automobiles in Massachusetts to demonstrate a strong, statistically significant relationship between miles driven and the risk of accidents.

Our analysis suggests a number of ways in which mileage-based insurance would improve affordability, fairness, and equity. Your article assumes that mileage-based insurance would be priced at a flat per-mile rate, but it is also feasible to charge motorists different rates depending on their driving record and where they drive. Your hypothetical good driver living in Dorchester and working on Cape Cod might save money, since most of his or her mileage is on low-risk highways rather than high-risk city streets.

The primary reason for pay-as-you-drive insurance is to improve the accuracy of insurance pricing. The incentive that comes from improving insurance rating through appropriate per-mile pricing would motivate some reduction in driving, and that would result in environmental benefits. So why shouldn’t the state’s environmental plan encourage this form of improved insurance pricing?

Joseph Ferreira Jr.
Eric Minikel
Cambridge

The writers are co-authors of a November 2010 study, commissioned by the Conservation Law Foundation, on pay-as-you-drive auto insurance in Massachusetts. Ferreira is a professor of urban planning and operations research at MIT, and Minikel holds master’s degrees in city planning and transportation from MIT.