Pay-as-You-Drive Strategies

The safety and accessibility effects of pay-as-you-drive (PAYD) strategies were simulated with a transportation model and compared. PAYD is an insurance policy for car owners in which, to reflect crash risk better, the insurance premium is paid per kilometer actually driven. With more advanced monitoring technologies, the PAYD insurance premium can be differentiated further to reward safe driving behavior with a lower premium. This more differentiated concept of PAYD is currently being tested in a real-life pilot. As part of this pilot, a modeling study was performed to assess the possible network (safety) effect of large-scale implementation of PAYD. Seven PAYD strategies were investigated with different kilometer-based insurance premium differentiations (road category differentiations, time differentiations, age differentiations). The network effects appear to vary greatly, depending on the design of the PAYD strategy. The most common effects found in this model study are mode shifts and trip making (elastic demand effect) and route shifts. To improve traffic safety, the best strategy would be to differentiate premium to reflect safety—that is, higher fees for unsafe road categories and nighttime driving—most effectively and apply it to all drivers. This way, drivers optimize toward the lowest cost and highest traffic safety. Total crash reduction is estimated to be more than 5% with the model, resulting in a reduction of 60 fatalities and more than a 1,000 injured by traffic each year in the Netherlands.