A Greener Big Apple

A plan aimed at improving New York City’s environment has been unveiled by Mayor Michael Bloomberg. Among the proposals, the idea to charge an $8 congestion fee to drivers entering Manhattan at peak hours during the week. A series of cameras would capture license plates, either charging the car’s commuter account or generating a bill. Modeled after a similar congestion charge introduced across the pond in London in 2003, the plan may have significant implications for auto insurers and their policyholders. It’s easy to identify a few potential benefits right away. As the risk of auto accidents increases in areas of high traffic density, a reduction in the number of vehicles on the road could have a positive effect on auto claims. For drivers who decide to leave their car at home and take the train instead, the lower average miles per year driven could reduce the price they pay for auto insurance. What is not so certain and perhaps up for debate is how the new technology under such a scheme might intersect with the auto insurance underwriting process. What are your thoughts?  

One thought on “A Greener Big Apple”

  1. The London congestion charge has had mixed results. When it was first introduced, in February 2003, commuter traffic intially fell by about 20%. Since then the level of traffic has increased, despite an increase in the charge to £8 ($16 !!!). It is still 10% than pre-charge levels. Pollution is down, and the money generated from the charge has helped in other areas – such as an improved bus service. I’m not sure if the number of accidents has decreased, and hence the number of claims, but it is reasonable to assume they have.

    The downside is the effect on businesses. West end theatres have noticed that less people are coming in to see plays / musicals. Small business have also been hit by the charge – some have closed. I know of one popular renowned bookstore, Politicos, which had to close. And now the mayor, Ken Livingstone, has expanded the charge west to include Kensington & Chelsea. There is no economic benefit – the level of congestion is low in these areas – it’s a class thing. Livingstone has a chip on his shoulder about the wealthy (on paper at least) residents of this area.

    So on balance I think it’s a good idea – but it has to be well thought out and they should consider the impact on small businesses.

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