Rewarding safe drivers could make roads safer
Cheaper insurance rates for cautious drivers might be one way of reducing traffic accidents.
Insurance schemes that reward safe drivers with lower premiums can actually help prevent accidents, according to a report from the Swedish National Road and Transport Research Institute (VTI).
“Pricing of car insurance that is aimed at rewarding safe traffic behaviour can help limit the number of accidents,” the VTI reports in a press release.
The report proposes giving insurance companies access to police records of individual traffic offences and crimes - a suggestion that not surprisingly is controversial. In Norway drivers have been made to toe the line since 2004 with a system that assigns penalty points to driver’s licenses for various offences. If a driver gets too many of these black marks within a certain period, he or she can lose his or her license. Perhaps penalty points could also cause a driver’s insurance premiums to go up.
The more a driver breaks traffic regulations, the greater the odds that he or she will be involved in an accident. With access to customers’ penalty point tally, insurance companies could calculate the traffic risk they pose.
When insurance companies get new customers they don’t know what kind of drivers they are. Insurers would be far better informed if they had access to police records.
Data from different insurance companies can also be pooled to get a better idea of the risks drivers are exposing themselves and others to.
Knowledge would help
The report concludes that the insurance trade would benefit from knowing more about individual customers and price premiums accordingly.
Society would benefit if this could help lower traffic accidents and result in fewer deaths and injuries.
“We are now working on ways to alter the insurance business for the benefit of society,” says Professor Jan-Eric Nilsson of VTI.
He points out that insurance companies use general categories, such as male, 18-25 years old when they assess premiums. A man aged 21 who often drives like a maniac can pay the same rates as someone in the same category who drives carefully.
Nilsson did not write the VTI report but he led an internal evaluation of it at VTI.
Black box in the car
An alternative proposal is to use more modern technology. Drivers could voluntarily install a so-called black box in their cars.
The box would record speed, acceleration and braking, which can reveal what sort of driving habits a person has and what risks are being taken on the road.
Those who voluntarily accept such a scheme could be rewarded with cheaper insurance.
“The capabilities provided by modern technology are incalculable,” says Acting Director Tori Grytli of the Norwegian Council for Road Safety.
“The challenges here involve concessions to the rights of privacy. But we think in many cases traffic safety should take priority over privacy rights,” she says.
Grytli names limiters in cars that put a cap on the top speed of the car as another technological option.
Norwegian insurance companies are denied access to police data regarding traffic violations and crimes.
Grytli doesn’t expect to see the police records made available to insurance companies in the near future.
“This is totally unrealistic in Norway,” she says.
The country’s insurance companies currently issue bonuses – incremental reductions in rates – to customers who drive without getting in accidents. The system is based on voluntary reporting and many choose to foot the bill of a fender bender, or refrain from making repairs, to avoid losing their bonus and getting higher rates. This can make the insurance companies’ data incorrect.
People who are involved in accidents can also choose to switch insurance companies. This can also keep insurance companies in the dark about their driving records.
As far as we know there are no initiatives in the cards in Norway to pool the records of insurance companies or to give them access to police data.
Bjarne Aani Rysstad is a communications director at the insurance company Gjensidige. He says a comprehensive evaluation of car insurance risks is underway.
“We have come pretty far in creating a fine-meshed net. We have a good overview of the general picture when it comes to traffic accidents,” he says.
The goal is to price insurance premiums more fairly according to risk. Safe drivers shouldn’t be footing the bill for careless ones.
But such assessments are always made at a group level, not at an individual level.
Rystad says the company has taken steps to lower accidents, including initiatives that reward young people who have driven trouble-free for several years in a row. The company also rewards young drivers who can document having practiced driving a long time before getting their driver’s licenses.
Read the Norwegian version of this article at forskning.no
Translated by: Glenn Ostling