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NAIC Will Not Be Regulating Pay-As-You-Drive Policies

Posted on 11 Dec 2009

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Efforts to regulate pay-as-you-drive (PAYD) insurance policies will remain the province of the states.

At the Climate Change Risk Summit held at the National Association of Insurance Commissioners Winter Meeting in San Francisco, regulators declined the opportunity to standardize rules for PAYD insurance policies. PAYD policies, which charge drivers by the mile, are viewed as environmentally friendly for reducing the number of miles motorists drive.

While insurers such as Mayfield Village, Ohio-based Progressive Casualty Insurance Co. and Boston-based Liberty Mutual Group have PAYD policies have existed for several years, the regulations vary widely by state.

California, for example, approved the pay-as-you-drive regulations for insurance companies in October. Much of discrepancy between states deals with how insurance companies collect mileage data. Acknowledging the concerns of privacy advocates such as the San Francisco-based Electronic Frontier Foundation, California restricts the use locators within vehicles, forcing insurance companies to use other means to verify vehicle mileage.