IDEAS home Printed from https://ideas.repec.org/p/ags/rffdps/10906.html

Pay-At-The-Pump Auto Insurance

Author

Listed:
  • Khazzoom, J. Daniel

Abstract

PAY-AT-THE-PUMP is a proposal to replace the current insurance system of lump sum payments for automobile insurance by a mechanism whereby motorists pay for their insurance as they buy fuel for their vehicles. PAY-AT-THE-PUMP has several advantages. It reduces insurance cost and cross subsidies and enhances equity. It also benefits the environment, safety, balance of payments, and security. In this paper we study limited but very important issues in the theory and implementation of PAY-AT-THE-PUMP insurance. We address issues of efficiency, subsidy, equity, externalities, safety, insurance cost and cost of insuring the uninsured motorist under a PAY-AT-THE- PUMP regime. We use the insurance industry's criticisms of mandatory auto insurance as a lens through which we view PAY-AT-THE-PUMP insurance and ask how PAY-AT-THE-PUMP fares by comparison. Finally we address one aspect of insurance that has been neglected in the current debate -- the human dimension of the problem of uninsured motorist and the contribution PAY-AT-THE-PUMP can make to solve this problem.

Suggested Citation

  • Khazzoom, J. Daniel, 2000. "Pay-At-The-Pump Auto Insurance," Discussion Papers 10906, Resources for the Future.
    • Handle: RePEc:ags:rffdps:10906
    DOI: 10.22004/ag.econ.10906
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/10906/files/dp980013.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.10906?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Smith, Eric & Wright, Randall, 1992. "Why Is Automobile Insurance in Philadelphia So Damn Expensive?," American Economic Review, American Economic Association, vol. 82(4), pages 756-772, September.
    2. repec:aen:journl:1997v18-03-a05 is not listed on IDEAS
    3. J. David Cummins & Sharon Tennyson, 1992. "Controlling Automobile Insurance Costs," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 95-115, Spring.
    4. repec:aen:journl:1986v07-01-a05 is not listed on IDEAS
    5. Gaudry, M., 1986. "Measuring the Effects of the 1978 Quebec Automobile Insurance Act with the Drag Model," Cahiers de recherche 8644, Universite de Montreal, Departement de sciences economiques.
    6. repec:aen:journl:1990v11-03-a02 is not listed on IDEAS
    7. Robert W. Hartman & Stephen D. Sugarman, 1994. "“Pay at the pump” auto insurance: The vehicle injury plan (VIP) for better compensation, fairer funding, and greater safety," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 13(2), pages 363-368.
    8. Khazzoom J, Daniel, 1995. "An Econometric Model of the Regulated Emissions for Fuel-Efficient New Vehicles," Journal of Environmental Economics and Management, Elsevier, vol. 28(2), pages 190-204, March.
    9. repec:aen:journl:1994v15-04-a04 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Luigi Buzzacchi & Tommaso M. Valletti, 2005. "Strategic Price Discrimination in Compulsory Insurance Markets," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 30(1), pages 71-97, June.
    2. Mercedes Ayuso & Montserrat Guillen & Ana María Pérez-Marín, 2016. "Telematics and Gender Discrimination: Some Usage-Based Evidence on Whether Men’s Risk of Accidents Differs from Women’s," Risks, MDPI, vol. 4(2), pages 1-10, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Khazzoom, J. Daniel, 1999. "Pay-at-the-Pump Auto Insurance," RFF Working Paper Series dp-98-13-rev, Resources for the Future.
    2. Mary A. Weiss & Sharon Tennyson & Laureen Regan, 2010. "The Effects of Regulated Premium Subsidies on Insurance Costs: An Empirical Analysis of Automobile Insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 77(3), pages 597-624, September.
    3. Domenico SCALERA & Alberto ZAZZARO, 2004. "From regulation to free market: the experience of the European motor insurance market," Working Papers 205, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    4. Sharon Tennyson, 2007. "Efficiency Consequences of Rate Regulation in Insurance Markets," NFI Policy Briefs 2007-PB-03, Indiana State University, Scott College of Business, Networks Financial Institute.
    5. McShane, Michael K. & Cox, Larry A. & Butler, Richard J., 2010. "Regulatory competition and forbearance: Evidence from the life insurance industry," Journal of Banking & Finance, Elsevier, vol. 34(3), pages 522-532, March.
    6. Fredrik Carlsson & Dinky Daruvala & Olof Johansson‐Stenman, 2005. "Are People Inequality‐Averse, or Just Risk‐Averse?," Economica, London School of Economics and Political Science, vol. 72(287), pages 375-396, August.
    7. Paola Fersini & Salvatore Forte & Giuseppe Melisi & Gennaro Olivieri, 2019. "A stochastic model to evaluate pricing distortions in indemnity insurance methods for MTPL insurance," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 42(1), pages 103-133, June.
    8. Raphael, Steven & Rice, Lorien, 2002. "Car ownership, employment, and earnings," Journal of Urban Economics, Elsevier, vol. 52(1), pages 109-130, July.
    9. Molly Espey, 1997. "Pollution Control and Energy Conservation: Complements or Antagonists? A Study of Gasoline Taxes and Automobile Fuel Economy Standards," The Energy Journal, , vol. 18(2), pages 23-38, April.
    10. Patrick L. Brockett & Hwei-Mei CHEN & James R. GARVEN, 1995. "Event Study Methodology: A New And Stochastically Flexible Approach," Risk and Insurance 9507001, University Library of Munich, Germany.
    11. Patricia Born & J. Bradley Karl & Charles Nyce, 2024. "Availability of the seat belt defense: Implications for auto liability insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 91(1), pages 193-212, March.
    12. Kavalec, Chris & Woods, James, 1999. "Toward marginal cost pricing of accident risk: the energy, travel, and welfare impacts of pay-at-the-pump auto insurance," Energy Policy, Elsevier, vol. 27(6), pages 331-342, June.
    13. Schaper, Philipp, 2017. "Under pressure: how the business environment affects productivity and efficiency of European life insurance companiesAuthor-Name: Eling, Martin," European Journal of Operational Research, Elsevier, vol. 258(3), pages 1082-1094.
    14. Sandile Buthelezi & Vimbai Hungwe & Solly Seeletse & Taurai Hungwe, 2024. "Unpaid insurance claims: Language and communication gaps," International Journal of Business Ecosystem & Strategy (2687-2293), Bussecon International Academy, vol. 6(4), pages 408-414, September.
    15. Cohen Alma, 2006. "The Disadvantages of Aggregate Deductibles," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 6(1), pages 1-28, April.
    16. Susan J. Suponcic & Sharon Tennyson, 1998. "Rate Regulation and the Industrial Organization of Automobile Insurance," NBER Chapters, in: The Economics of Property-Casualty Insurance, pages 113-138, National Bureau of Economic Research, Inc.
    17. Khazzoom, J. Daniel, 2000. "What We Know About Uninsured Motorists and How Well We Know What We Know," Discussion Papers 10533, Resources for the Future.
    18. Michael K. McShane & Larry A. Cox, 2009. "Issuance Decisions and Strategic Focus: The Case of Long‐Term Care Insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 76(1), pages 87-108, March.
    19. Pierre Picard, 2025. "Economic Analysis of Insurance Fraud," Springer Books, in: Georges Dionne (ed.), Handbook of Insurance, edition 0, pages 259-323, Springer.
    20. Dwight Jaffee & Thomas Russell, 1998. "The Causes and Consequences of Rate Regulation in the Auto Insurance Industry," NBER Chapters, in: The Economics of Property-Casualty Insurance, pages 81-112, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:rffdps:10906. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/rffffus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.