Traffic modeling without boundaries
In Europe, there is limited regulation that affects the pricing of motor vehicle insurance
Telematics-based UBI
provides an example of the importance of regulation to the adoption of new tech- nology. As is demonstrated with UBI, regulation can be a barrier to, or catalyst for, innovation and investment in new technologies. It is also an example of
how the regulatory environ- ment may need to change with technology.
Unfortunately reform can
be a slow process. Aside from road users and their fami- lies, technology providers are likely to be the key beneficiar- ies of the reforms discussed.7 In their own and society’s interest, technology provid- ers might consider encourag- ing government agencies to investigate new approaches to make the most of what their technology can offer.
FOOTNOTES 1 ‘Telematics Motor insurance cuts young driver accident risk by up to 40%, Insurethebox media release, Wednesday, 2 May 2012. 2 BIBA Research on Telematics Market, January 2014, Available at
www.biba.org.uk. 3 One pricing regulation, the recent European Union directive that prevents rating based on gender, may have encouraged females to adopt UBI to demonstrate they are a good risk. 4 There is evidence — from before UBI was common — that stringent price regulation contributes to higher average premiums and a higher road-toll. 5 At the time of writing, the UK insurer iKube (www.ikubeinsur-
ance.com) offer a discounted insurance policy that includes a £100 pound penalty for driving between 11pm and 5am. 6 The value of preventing a random fatality (VPF, also known as value of a statisti- cal life) is a measure often used by government agencies in evaluating alternatives. The value used varies significantly. Based on a broad review of the research on what people pay to reduce small risks to life, the United States uses USD$9m (£5.5m). The amount used in UK is only £1.1m, less than half of that used in Australia. 7 Most motor vehicle insurance markets are very competitive and insurers with a strong established position would have limited interest in disrupting the market.
Dr Richard Tooth is an economist and a Director with Sapere Research Group.
rtooth@srgexpert.com
smartHIGHWAYS Vol 2 No 1
smarthighways.net
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