Just motor insurance
Would it not a good idea if the oil companies proposed All-you-can-drive gasoline? For a fixed price, you can take as much as you want. This is obviously ridiculous. It would be massively unfair. It would be terrible to create incentives. But it is, as auto insurance is sold. Some insurers offer a discount of 15% if you spend less than 7500 miles per year. But beyond that distance, the price is fixed. People, the reader 100000 or 10000 miles to pay the same premium.
Econ 101 stipulates that if something is free, people consume too much. In this case, all-you-can-drive insurance encourages people to drive more than it would otherwise, if they were to be the full cost for each kilometer. The drivers are serious, not with all costs associated with their actions - hospital bills, invoices body, highway congestion.
Low-performance drivers (eg women, the reader, half as much as men), a raw treatment. Fixed price insurance evil Detroit, too. More people than you choose, if the second and third cars - maybe a ragtop for the weekend? — If insurance is not as expensive.
So what should we do? Easy. Directs the pilot of insurance in a pro-miles basis. This does not mean that the average increase in insurance rates. This means that low life would stop subsidizing drivers of high-performance pilot. If the Pro-miles reflects the incremental costs of risk, Berkeley, Professor Aaron Edlin calculated that the conduct would be reduced by 9%, with an insurance savings of $ 8 billion per year and another $ 9 billion savings to reduce traffic congestion. Not to mention the environmental benefits of reducing fuel consumption.
Proposals for the implementation and use of the breakage rate from turning back. In 1963, Nobel Prize winning economist William Vickrey suggested that insurance companies are buying tires. In anticipation of the objection that this can lead man to drive on tires soon, “said Vickrey Drivers must have for the rest of the racing surfaces, whether it is in a tire.
Andrew Thomas has proposed a variant of this system would be in the insurance included in the price of gasoline. This would have the added advantage of the solution to the problem of uninsured drivers (about 28% of motorists CA). In Tobias pointed out, you can drive a car without insurance, but you can not drive a car without gasoline.
In Vickrey’s time to turn around odometers was perhaps too easy. Thanks to digital electronics, roll-back of odometer is much more difficult. It is also illegal. Odometer readings are quite well for rental cars - why not for auto insurance?
Otherwise, perhaps an insurer, driving distances with the Global Positioning System. As already mentioned this magazine (Nov. 27, 2000), Progressive Corp. (NYSE: PGR - News - people) had a pilot Insurance Program of this technology.
GPS, the disc could be more finely the risk equation. Highway performance could get a discount, and at night could lead to charge a premium. The acceleration could also lead to higher premiums. For a positive side-effects on him: you sure that the discounts you deserve.
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