"I am thrilled to pave the way for California drivers to obtain insurance that is more environmentally friendly and more accurately reflects driving habits," said Poizner. "As a strong advocate of healthy market competition and a healthy environment, I am especially pleased to encourage this kind of innovation and additional options for consumers."
The Environmental Defense Fund estimates that if 30% of Californians participate in this voluntary coverage, California could avoid 55 million tons of CO2 between 2009 and 2020, which is the equivalent of taking 10 million cars off the road. This would save 5.5 billion gallons of gasoline and save Californians $40 billion dollars in car-related expenses. Additionally, the California Air Resources Board has recommended the adoption of pay as you drive as one of the means to meet future climate change gas reduction targets.
Current auto insurance regulations require that rates are based on estimated annual mileage. The new regulations will provide an additional option for actual mileage, or pay-as-you-drive coverage. Poizner's newly proposed regulations will let insurers offer a voluntary option for consumers who are interested in pay-as-you-drive coverage.
Under the new regulations, consumers could verify mileage by odometer readings, automotive repair records, or a technological device used to collect mileage data. Poizner's regulations explicitly prohibit insurance companies from requiring policyholders to participate in a pay-as-you-drive program.
As a former Silicon Valley entrepreneur who founded SnapTrak, a company that pioneered technology to put GPS receivers into cell phones, Poizner says he understands firsthand that GPS can be a life-saving tool when used appropriately. However, Poizner has also said this type of technology does not have a place in pay-as-you-drive auto insurance for privacy and public policy reasons.
"California has always been at the forefront of technological innovation. A major priority for the Department of Insurance is harnessing this technology to benefit consumers," continued Poizner. "At the same time, it is vital that the privacy of drivers remains intact. I will not approve any auto insurance policy that aims to utilize GPS devices in order to obtain location data from consumers."
California law has procedures in place to allow for public involvement in adopting new regulations. After these procedures are completed, the regulations will take effect - not later than fall 2009. Insurers will then be able to apply to offer this product in California.
Poizner says he will continue to pursue policies that benefit the environment. Currently, he is sponsoring a bill that will allow insurance companies to submit paperless filings to the Department of Insurance, significantly reducing the amount of trees cut down by the numerous paper filings the Department receives annually. Last month, Poizner approved the first green homeowners insurance policy in California.