Progressive Auto Insurance
Progressive Auto Insurance company has piloted a unique voluntary insurance program in Texas which bases auto insurance rates upon specific driving factors such as mileage driven, time of day, and geographic location, in lieu of more customary factors such as age, sex, and marital status. This new program is made possible by a global positioning system device which Progressive installs in their customers' vehicles. The information recorded by the device ensures that the customer will only pay insurance for the miles that are actually driven. Progressive's system is designed not only to lower costs for its customers, but also to encourage positive driving behaviors which may lead to a reduction in accidents, thefts, and harmful air emissions.
Reducing vehicle miles traveled is a fundamental strategy in addressing the full range of environmental harms related to travel ranging from air emissions to habitat destruction. Although the direct environmental impact of Progressive's previously piloted insurance program has not yet been calculated, preliminary anecdotal evidence shows an initial reduction in driving mileage by customers in the Progressive program.
It is estimated that once an individual purchases a car, roughly 80% of their transportation costs remain the same on a monthly basis regardless of how much or little they drive. EPA expects that individuals will respond to the increased per mile cost of driving that results from converting automotive insurance from a fixed to a variable cost, the same way they do to the increased per mile cost of driving that results from fuel price increases. As drivers begin to understand how their driving habits affect their costs, it is likely that they will reduce their total amount of driving time.
EPA is conducting an analytical study with the U.S. Dept. of Transportation and the Insurance Institute for Highway Safety to test the degree of environmental improvement that results from using this insurance product. As this insurance program becomes available in other geographic regions, Progressive will make available to EPA aggregated data on driving habits of program participants. Personal information, such as names and addresses of participants, will not be included in the study. No regulatory flexibility is currently being offered; however, if the study determines that superior environmental performance results from this insurance, EPA may, in the future, consider offering flexibility to promote it.
The Department of Transportation/Federal Highway Administration, the Insurance Institute for Highway Safety and Environmental Defense have contributed to the development of this project; EPA will continue to work cooperatively with these groups and other interested parties throughout the project's implementation.