Cost and privacy concerns stall PAYD car insurance

R.A. Hettinga rah at
Wed Feb 2 09:12:42 PST 2005


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Cost and privacy concerns stall PAYD car insurance
By Lucy Sherriff (lucy.sherriff at
Published Tuesday 1st February 2005 11:53 GMT

Pay-as-you-drive car insurance will not be commercially viable anytime in
the next three years, according to Strategy Analytics. It cites privacy
concerns, launch costs and patent fees, along with back-end data
integration, as significant short-term obstacles to the technology's
mass-scale deployment.

Under pay-as-you-drive insurance, a black box records data about the
driver's journeys. Charges vary, according to the risk of each journey.
Last August, Norwich Union started testing the technology in the UK, with a
pilot scheme for younger drivers
launched this year.

Clare Hughes, a Strategy Analytics analyst, said: "While PAYD protects
drivers from generalized assumptions, there are still major hurdles to
overcome before PAYD insurance schemes are commercially viable; and these
are not going to be successfully addressed for a number of years."

But in due course, PAYD will become widespread, she said. Its introduction
will be driven by an increased government focus on road safety, the
availability of tamper-proof vehicle data to verify insurance claims, and
the potential cost savings to the companies and the consumer.

"The days of the once a year insurance premium will eventually disappear
for the majority of consumers, with the rollout of risk-based variable
monthly billing." .

R. A. Hettinga <mailto: rah at>
The Internet Bearer Underwriting Corporation <>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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