How Road Usage Charge Programs Will Impact Automotive Insurance

Road Usage Charge Programs Will Have a Major Impact on the Automotive Insurance Industry

For some time now, IMS has been a key part of the innovative OReGO road usage charging program currently administered by the Oregon Department of Transportation. Now, the Waterloo, Ontario-based company is expanding its horizons by taking part in a similar project in California.

Earlier this month the California Department of Transportation (or Caltrans) announced plans to test road usage charging as a possible replacement for gas taxes in order to generate enough money to fix all the 50,000 miles of roads in California. These days, state and provincial governments struggle to pay for the construction of new roads and the maintenance of existing roadways through gas taxes because so many late-model vehicles feature fuel-efficient technology. Simply put, we’re not using as much gas as we used to – and while that’s great for the environment, it’s having a distinctly negative impact on government income.

That’s why Oregon and now California are turning to road usage charging – as the name suggests, it involves charging drivers based on how much they actually use a state’s major roadways.

California’s foray into this area will be known as the California Road Charge Pilot Project. The pilot will officially get started this May, with the California State Transportation Agency (or CalSTA) planning to submit its final report to the California Transportation Commission (CTC) in July 2017.

IMS will play a major part in the initiative by using its unique, state-of-the-art automotive telematics technology to manage the mileage tracking of California drivers participating in the pilot.

DriveSync, IMS’s connected car platform, will play a central role in the California Road Charge Pilot Project. Not only does DriveSync allow drivers to safely monitor details about their trips like duration, cost and carbon footprint, it provides drivers with custom notifications about their vehicle’s health and maintenance. In addition, DriveSync – which works by plugging into a vehicle’s on-board diagnostics (OBD-2) port – provides new revenue stream opportunities to insurers, along with cost reduction opportunities by leveraging an existing installation or connection to the vehicle (aftermarket device or automotive OEM telematics) to deliver usage-based insurance and other insurer supplied connected car services powered by the DriveSync platform.

The global expansion of road charging programs won’t just affect drivers and government revenue, however. It’s also expected to have a major impact on the automotive insurance industry, which is steadily evolving with the rapid introduction of usage-based insurance. Automotive telematics will allow forward-thinking insurance providers to offer unique and differentiated connected car service bundles using either modules or full services from the DriveSync platform: Usage-based InsuranceYoung Driver Programs and Road Usage Charging, coupled with other services such as emissions, driver safety coaching, vehicle diagnostics and road-side assistance to name a few. In any case, California’s move towards road usage charging is further evidence that those insurance companies embracing automotive telematics will have a clear edge on their competition in the near and distant future.

Dr. Otman Basir, founder and chief executive officer of IMS, says the California Road Charge Pilot Project will benefit many people in “The Golden State.” At the same time, it further reveals the growing potential of telematics platforms like DriveSync.

“This partnership further demonstrates the value and versatility of the DriveSync platform, delivering and providing multiple services, such as road usage charging, usage-based insurance and young driver coaching to name a few,” Basir said. “These services benefit insurers, governments and consumers alike.”