Insurance Head Aims at Vehicle Greenhouse Gases

By Published On: June 13, 2008

California Insurance Commissioner Steve Poizner proposed a rulemaking that could lead to pay-as-you-drive auto insurance policies in California as a way to cut greenhouse gases. It is a strategy advocated by some environmentalists and an advisory committee to the California Air Resources Board. Making sure that motorists and other industries do their fair share to cut greenhouse gas emissions will lessen the pressure on the state’s electric power industry to cut emissions. State regulators are squeezing stationary industries for substantial gas cuts under California’s climate protection law, AB 32. The Department of Insurance plans to open a proceeding. On June 23, is set to hold a workshop in San Francisco to gather ideas from the public on how to shape “regulations with the goal of making pay as you drive insurance widely available in California and to encourage participation” by motorists. Bob Epstein, vice chair of the Air Board’s Economic and Technology Advancement Advisory Committee, lauded the move by Poizner, saying it had the potential to cut greenhouse gas emissions and auto use. The committee estimates that pay as you drive insurance in California could cut automotive greenhouse gas emissions by up to 12 percent. Transportation is the largest source of the state’s global warming gases–accounting for about 40 percent–followed by the electricity sector. The proposed rule has the potential to more fully capture all of the costs of using cars, including accidents, parking, and pollution, said Todd Litman, Victoria Transport Policy Institute executive director. Under the concept, mileage would be strictly monitored by insurance companies, rather than self-reported by motorists. Insurance rates would be tied more closely to how much people actually drive. Key issues in fashioning pay as you drive regulations include what information insurers would be allowed to collect and how the information would be handled in light of concerns about privacy, Darrel Ng, department spokesperson explained. Automatic collection of mileage data, particularly through GPS technology that tracks the whereabouts of motorists, raises privacy issues that the department will have to deal with in the course of the rulemaking, he said. The security of radio transmissions from vehicles is another privacy concern the department plans to address. The rulemaking comes against the backdrop of a bill, AB 2800, that is pending in the state Senate to authorize the pay as you drive concept. Poizner’s office, however, said it can move independently. Editor’s Note: For a more detailed report, please see our sister publication, Energy Meets Climate Challenge, E=MC2. It can be found at

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