Accelerating Pay-As-You-Drive auto insurance.

• Position: CLF Ventures

Although CLF Ventures, the nonprofit consulting affiliate of CLF, works with a range of clients to develop innovative solutions to energy and environmental challenges, one of Ventures' most compelling projects is entirely homegrown. Over ten years ago, dovetailing with CLF's innovative climate change advocacy, CLF Ventures hatched a commercial solution to reduce greenhouse gas emissions from the personal auto sector. Targeting environmentally-aware car owners, Ventures formed the Environmental Insurance Agency (EIA) to market a green alternative to traditional auto insurance--one that would reward people for driving less and doing their part to combat climate change.

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Today, EIA continues to be in the vanguard of developing innovative, mileage-based insurance products, also known as Pay-as-You-Drive (PAYD) insurance. Studies show that if auto insurance were priced by the mile, drivers would reduce their mileage by as much as 20 percent, significantly cutting fossil fuel consumption, carbon emissions and traffic congestion. As an agent of Plymouth Rock Assurance, EIA sells partially mileage-based auto insurance (as well as homeowners) policies in Massachusetts and New Hampshire. EIA's environment and wallet-friendly policies reward car owners by offering discounts to those who drive fewer miles than the average annual total for their communities. As the industry matures, EIA intends to offer more robust PAYD products and expand across New England.

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While New England is leading the PAYD movement on the East Coast, the PAYD concept is also gaining momentum on the opposite side of the country. In October 2009, the state of California approved regulations for the state's first mileage-based insurance products. The new directives allow insurers to offer a price-per-mile or prepaid mile option, as well as a number of mileage verification options to ensure that drivers pay rates based on actual mileage, rather than on estimates.

While California's decision is a major step forward, PAYD advocates raised concerns that the California guidelines did...