Sustainable Marketing

Saving cash and the environment are top priorities for many consumers today. In response, insurance companies in recent years have rolled out programs offering cheaper premiums for less time behind the wheel.

In recent years, several PAYD models have emerged that are having a positive impact on the environment. For example, smart grid initiatives provide consumers with tiered pricing models that incentivize them to reduce or shift energy use during peak periods. Additionally, PAYD models in cloud computing allow consumers the flexibility to add computing capacity in real-time, while avoiding the need to overinvest in server capacity utilized only during peak periods.

Such a model is enabled through the tracking of personal driving data. Consumers self-report miles driven (and validate periodically through inspection) or do so automatically through an active OnStar system or small telematics device that plugs into a diagnostic port under the dashboard. Insurance companies then effectively create personalized rates based on actual car use.

Potential benefits for the environment from PAYD are significant: The State of California estimated that subscribers may reduce miles driven by 10% or more, saving consumers money while reducing accidents, congestion and air pollution.

A wide variety of companies are now in a position to consider testing PAYD models with their customers, especially those that are price sensitive, tend to use a product less than the average or demand additional services during peak periods. While consumers may focus on saving money, the real benefits may be saved for the environment.

Some counter argument have been encountered as to how much one drive, has no baring on how safe driven on the road. Given the option to choose the type of car insurance, I believe this PAYD program will vastly be beneficial to the driver as well as the environment.