Collaboration in Civic Spheres

King County hopes to revive mileage-based car insurance

by October 27th, 2011

After a planned “pay as you drive” (PAYD) auto insurance pilot program using on-board devices to track mileage and facilitate rate discounts was announced with fanfare by King County in 2007, it quietly fizzled by mid-2011, as a related contract with Unigard Insurance’s Bellevue office was cancelled. But now the County is hoping to ramp up the experiment once more, perhaps lending impetus to stalled state legislation which would authorize insurers to offer a PAYD option to Washington motorists. With a $1.9 million grant from the Federal Highway Administration still in hand, King County is seeking proposals by November 3 from insurance companies to develop a PAYD product, also known as mileage based auto insurance (MBAI), that would be marketed to drivers as a way to save money, reduce vehicle miles traveled, and in urban regions such as Seattle, cut greenhouse gas emissions from vehicles.

Although an announcement by then-King County Executive Ron Sims in 2007 heralded the joint county-state pilot project with Unigard and said it aimed to include 5,000 drivers statewide as enrollees a compendium of reports to the County from the contractor between late 2009 and mid-2011 tell a very different story. The number of vehicles enrolled in the program peaked at 13 and had dwindled to six by June, 2011. According to the contractor reports an initial “pre-test” group of 100 enrollees had been sought with 1,100 ultimately to have been enrolled and participating with in-vehicle mileage-counting technology.

The County’s contract with Unigard started in August 2009 and was to have continued through May 2014 at a cost of up to $1.7 million. But the project was cancelled in July, 2011 after just $16,729.71 had been spent.

According to the reports submitted by Unigard to the County marketing challenges included the size of discount for lower mileage which at 5 percent with the possibility of rising to 15 percent may not have been enough. One snapshot: 123 sales leads, generated through referrals from the Web site of the Seattle-based Sightline Institute and via the Cascade Bicycle Club over two months resulted in only seven policies being sold and although the conversion rate was not out of the ordinary an informal survey of those who declined indicated that “prospective customers will not switch merely to support the environmental aspects” of the program; “prospects only switch if their immediate insurance costs are lowered.”

As the pilot project slowed to a halt a report from Unigard to the County in April, 2011 said next steps should be to get more participants and “momentum.”

The County’s current Request For Proposal seeks an insurance carrier who will roll out by October 2012 a three-year pilot program offering one or more MBIA products – likely to include use of existing GPS technology which automatically records number of miles traveled. The work also entails related marketing efforts, state regulatory approvals, training of agents, and comprehensive evaluation and regular reporting to the County on the new pilot project’s progress.

The County’s RFP emphasizes to would-be contractors the potential ties between MBAI marketing and increased transit usage. “…MBAI is a viable strategy to reduce vehicle trips…The consumer can choose to reduce one of the highest costs of driving by reducing trips, particularly commute trips, by taking the bus or vanpool. We are quite interested in the cross-marketing potential of MBAI to help build transit ridership…an appropriate incentive might be a pre-loaded ORCA (transit fare) card…” King County Metro, the cities of Seattle, Bellevue and Redmond and non-profit partners are all poised to help market MBAI products, according to the RFP. The new MBAI contract is to be awarded by King County on December 5.

According to a U.S. Census Bureau/U.S. Commerce Department survey of commuters aged 16 and older, 8 percent of 2008 respondents in King and Pierce counties (“Seattle-Tacoma-Bellevue” in the study) said they’d taken public transportation to get to work in the last week, versus 8.7 percent in 2009. Transit usage is much higher in Seattle itself, accounting for some 40 percent or more of daily work trips. King County’s population is 1.9 million, including 608,360 residents of Seattle. The population of Central Puget Sound, including King, Pierce, Snohomish and Kitsap counties is estimated at 3,715,630.

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2 Responses to “King County hopes to revive mileage-based car insurance”

  1. jim5car says:

    So the county wants to, once again, meddle in the marketplace, use it to make social policy? If this was a beneficial business move insurers would have done it long ago.

    Under this proposal drivers who have less than average mileage will benefit, drivers who have more than average won’t – so apparently the latter will wind up subsidizing the former, the money has to come from some where.

    Which means implementing this policy will screw 50% of drivers – gee, what a shock…

  2. Bruce Peterson says:

    Progressive is pushing this lately. I suspect it’s going to become a way of life. Any way that the insurers can squeeze more money out of their customers. It’s already outrageous. $900 per year to insure a 10 year old car, retired driving less than 5,000 miles per year, with no tickets or accidents EVER. It’s a way of life any more. How can the government force its citizens to drive less? Next thing you know they’ll be installing equipment to read your car’s computer so they can assess fines for speeding as reported by your car. I know I’m tired of government interference in my life. Tolling, increased taxes of every sort, out of control government budgets. Of course, I haven’t heard of them cutting back on government administrative staffing. I wonder how many staffers in Gregoire’s office alone. And imagine the wasted money in such departments as Transportation, Health and Human Services, etc. I would be willing to bet that if we cut government administrative staffing in half we’d balance the budget and not even feel the pinch. And, while I feel outrage at cutting education spending, I don’t hear the schools talking about cutting administrative staffs. How many vice principals does it take to run a school? I’ve seen four in some. When I went to school there was a principal, vice principal, secretary and nurse. That’s it.