Poizner Issues Pay-As-You Drive Rules

By Published On: August 29, 2008

As California aims to cut greenhouse gas emissions, state Insurance Commissioner Steve Poizner introduced draft regulations to authorize pay-as-you drive insurance policies that aim to strike equity between the power industry and motorists. The policy breakthrough would cut rates for those who drive less and emit less greenhouse gas emissions. As Poizner announced the draft rules, Assemblymember Jared Huffman (D-San Rafael) withdrew a measure that would have mandated pay-as-you drive insurance by law, rather than waiting for the Insurance Department to adopt regulations. “This is a win-win for consumers and the environment,” said Huffman. ”I’m glad that my legislation, AB 2800, helped move us in a direction that all the stakeholders can support. I commend commissioner Poizner for taking the ball over the goal line.” Huffman’s measure was backed by environmental groups, but opposed by Consumer Watchdog, a consumer rights advocate. The group feared Huffman’s bill would allow insurers to place automated devices in cars to collect a variety of information about driving patterns–aside from the number of miles driven–on which they could base policy rates. One key Consumer Watchdog fear was that Huffman’s bill would have allowed insurers to use GPS devices to track where motorists drive and charge more for those who drive on more dangerous roads. Doing so, the group maintained, would have compromised Proposition 103, which sets strict parameters on the criteria for car insurance rates. The proposed rules, on the other hand, would limit information collection to miles driven. Participation by motorists in pay-as-you drive policies would be voluntary. “It is vital that the privacy of drivers remains intact,” said Poizner. “I will not approve any auto insurance policy that aims to utilize GPS devices in order to obtain location data from consumers.” The Environmental Defense Fund estimates that if 30 percent of the state’s motorists participate in pay-as-you drive policies, California could avoid 55 million tons of carbon dioxide emissions between 2009 and 2020, the equivalent of taking 10 million cars off the road. It would save 5.5 billion gallons of gasoline and $40 billion dollars in car-related expenses. Poizner’s rules when adopted are expected to put in place the California Air Resources Board recommendation to employ pay-as-you drive insurance as a way to cut greenhouse gases under the state’s climate change law, AB 32. While vehicles emit the largest amount of greenhouse gas emissions in the state, up until these rules, regulators and legislators found it easier to address the power plant industry’s emissions because of their size and their stationary nature. Other emitters include livestock. However, the state has yet to address the dairy and cheeseburger part of the issue. The state’s law to curb greenhouse gas emissions, AB 32, requires a reduction of 30 percent by 2012.

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