A reader writes:
Eric Jaffe's description of the pricing of automobile insurers is decidedly incorrect. As a pricing actuary for a top 10 U.S. insurer, I can assure you that most, if not all of the top 20 companies, already factor into the price of auto insurance the amount of miles driving. In our company's parlance, this variable is called "annual mileage." All other rating variables being equal, somebody who drives, say, 12,000 miles a year already pays considerably more (more than twice as much) than somebody who drives only 3,000 miles annual miles.
What is emerging in the field of auto insurance pricing is what's referred to as "usage-based insurance". A small device installed in the car measures "how you drive." It measures abrupt lane changes, accelerations, heavy breaking, etc. Ideally, the "usage-based" data will allow insurers to more accurately predict risk and therefore differentiate premiums more appropriately.