Ford’s Model T was a groundbreaking feat of mass production—cutting car costs by more than half over the course of a decade and spurring the massive rise in automobile use across the U.S. Those days seem far behind us, according to the latest reports. Transportation costs have risen by nearly 20% since 2022, as reported in the Wall Street Journal, and car insurance in some states could rise 50% by the end of the year.
insurance
Auto disruptor looks to shake up car insurance
Along with other disruptions to the car industry, Tesla is now poised to change the auto insurance market. Tesla has partnered with Liberty Mutual Insurance Company to roll out a Tesla-specific insurance product. This may be just the first step in Tesla’s plans to integrate vehicle purchase, maintenance, and insurance. Such integration might begin to answer questions about liability posed by AVs.
Megaships may be approaching their maximum size
According to the Journal of Commerce, the size of the world’s largest container vessels has increased more than sixfold since 1975 and is expected to grow an additional 13 percent by 2020. While these larger ships can be operated by small crews and use less fuel per container than smaller ships, there are a number of costs that come with these larger vessels, including increased risk, port infrastructure costs, and congestion.
Insurers taken to task for ignoring drivers’ mileage when setting rates
A recently released study from the Consumer Federation of America has found that insurers rarely give low-mileage drivers much of a break on their rates despite the fact that mileage driven is one of the best predictors of insurance claims, and most consumers feel that basing rates on mileage is fair.
Lack of transparency in use-based insurance may undercut demand management benefits
One policy tool that holds promise in the effort to manage transportation demand is mileage-based insurance, also known as pay-as-you-drive insurance. Most motorists today pay premiums that are essentially fixed costs, with little or no connection to the amount of travel consumed. Evidence suggests that if insurance were more like motor fuel, with a direct connection to use, the price signal would encourage more efficient travel.
Lack of transparency in use-based insurance may undercut demand management benefits
One policy tool that holds promise in the effort to manage transportation demand is mileage-based insurance, also known as pay-as-you-drive insurance. Most motorists today pay premiums that are essentially fixed costs, with little or no connection to the amount of travel consumed. Evidence suggests that if insurance were more like motor fuel, with a direct connection to use, the price signal would encourage more efficient travel.
Who Pays for Climate Change? (National Resources Defense Council, 2013)
U.S. taxpayers outspend private insurers three-to-one to cover climate disruption costs. Paying for climate disruption was one of the largest non-defense discretionary budget items in 2012. Private insurers themselves only covered about 25 percent of these costs, leaving the federal government and its public insurance enterprises to pay for the majority of the remaining claims.
Unique storm surge bonds for MTA prove popular
For the first time, Standard & Poor’s has rated a catastrophe bond, also known as a cat bond, based on the level of a storm surge. First Mutual Transportation Assurance Co., a subsidiary of the New York Metropolitan Transportation Authority, is working with a reinsurer in Bermuda that specializes in catastrophe bonds. The bonds have proved so popular that the amount being issued jumped from $125 million to $200 million. MTA stated that they probably could have raised more money, but closed the sale.
Red light cameras still popular with municipalities, but not drivers
Almost half the states allow red light cameras, and municipalities are increasingly installing them at intersections as tools to increase public safety. Despite public pushback concerning the cameras, and some hiccups with implementation, this technology should stay in place where it is established and be installed at problem intersections whenever possible. The clear improvements in safety and traffic operations provide a benefit to the public and the best argument for accepting the utility of red light cameras.
VMT fees, per-mile insurance make headway
Although several states have considered VMT fees as an alternative to the gas tax, none have yet instituted them. But recent news articles show that interest is still high, and some states may be inching toward this model. Insurance billed on a per-mile basis is also beginning to appear.