Washington Refines Pay-As-You-Drive Legislation

Washington’s Senate Committee on Financial Institutions, Housing & Insurance has refined a proposal to allow drivers’ insurance rates to be based primarily on the number of miles driven per year. The PAYD bill, Senate Bill 5730 would allow insurers to offer lower rates to drivers with lower mileage. Drivers would be incentivized to drive less and save money in insurance, fuel, and vehicle maintenance costs. That subsequently would reduce accidents, congestion and pollution, supporters of the bill say.

There’s nothing preventing insurers from offering PAYD programs in Washington, and some do, according to Kenton Brine, assistant vice president for the Northwest region for the Property Casualty Insurers Association of America.

“What is stopping (more) insurers from offering PAYD in Washington, is that once they file an underwriting and rating plan (with the Office of the Insurance Commissioner), it becomes available for public inspection,” Brine said. Insurers want their proprietary trade information kept private, added Nicole Mahrt, public affairs director for PCI’s western region.

However, the substitute bill that was passed out of the Financial Institutions, Housing & Insurance committee now includes language offered by the insurance industry that says rating plans and models are protected as trade secrets. Language in the original PAYD bill that would have required insurers to offer a discount for all motor vehicle liability policies on vehicles driven less than 5,000 miles per year also was removed in the substitute bill.

“If that legislation (with the revised language) passes, there will be, I’m certain, more  insurance companies that will come into the state writing that PAYD product,” Brine said.