Washington Refines Pay-As-You-Drive Legislation

A Washington Senate Committee 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.

Nothing prevents insurers from offering PAYD programs in Washington, according to Kenton Brine of 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.

The substitute bill that was passed out of the Senate Financial Institutions, Housing & Insurance committee includes language that says rating plans and models are protected as proprietary trade secrets. The substitue bill also removed a mandatory discount for drivers who drive less than 5,000 miles per year.

“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.