Incentive Mechanisms for Safe Driving: A Comparative Analysis with Dynamic Data

Abstract

Résumé:Les politiques de sécurité routière utilisent souvent des mécanismes incitatifs basés sur les infractions pour améliorer le comportement des conducteurs. Ces mécanismes sont par exemple des amendes, des primes d'assurance ou des permis à points. Nous analysons l'efficacité incitative de ces mécanismes. Nous obtenons leurs propriétés théoriques par rapport au nombre de points associés aux infractions et par rapport au temps contrat. Ces propriétés sont ensuite testées empiriquement avec des données issues du système public d'assurance au Québec. Nous concluons à la présence d'aléa moral dans les données, qui traduit le fait que les conducteurs qui accumulent les points deviennent plus prudents car ils sont plus sous risque de perdre leur permis. Par ailleurs, la prime indicée sur les points introduite en 1992 a réduit de 15% la fréquence d'infractions. Nous utilisons ce résultat pour calculer des équivalents monétaires pour les infractions et les retraits de permis. Abstract:Road safety policies often use incentive mechanisms based on traffic violations to promote safe driving. Examples of mechanisms are fines, experience rating and point-record driving licenses. We analyse the effectiveness of these mechanisms in promoting safe driving. We derive their theoretical properties with respect to contract time and accumulated demerit points. These properties are tested empirically with data from the Quebec public insurance plan. We find evidence of moral hazard, which means that drivers who accumulate demerit points become more careful because they are at threat of losing their license. The insurance rating scheme introduced in 1992 reduced the frequency of traffic violations by 15%. We use this result to derive monetary equivalents for traffic violations and license suspensions. Mots clés :Mécanismes incitatifs, permis à points, sécurité routière

The Empirical Measure of Information Problems with Emphasis on Insurance Fraud and Dynamic Data

“…The same public enterprise is also in charge of the point-record license system. Dionne, Pinquet et al (2011) show that the new insurance pricing scheme introduced in 1992 reduced the number of traffic violations by 15%. They also verified that there is residual ex ante moral hazard in road safety management.…”

“…The model proposed by Dionne, Pinquet et al (2011) tests for an increasing link between traffic violations and the number of accumulated demerit points over time. Rejecting the positive link is evidence of moral hazard.…”

“…However, their data do not support the presence of moral hazard. Dionne, Pinquet et al (2011) extend their model and do not reject the presence of moral hazard, using a different data set. The potential presence of adverse selection in their data was not a real problem because all drivers must be insured for bodily injuries (see also Abbring et al, 2008, andRowell, 2011, for other tests of moral hazard).…”

“…They do not reject moral hazard for a given group of policyholders, and do not reject asymmetric learning for younger drivers. The empirical methodologies of Dionne, Pinquet et al (2011) and Dionne, Michaud, Dahchour (2011) are reviewed in detail below.…”

On the road again: traffic fatalities and auto insurance minimums

“…Abbring, Chiappori and Zavadil (2008) study dynamic incentives of experience-rated policy and find evidence of moral hazard in the Dutch auto insurance market. Using data from the Quebec public insurance plan, Dionne et al (2011) also find evidence that accumulated demerit points incentivize safer driving due to the threat of driver's license revocation. Furthermore, Dionne, Michaud and Dahchour (2013) use experience-rated, longitudinal survey data with dynamic information both on claims and accidents from France during the 1995-1997 period and find evidence of moral hazard among a subgroup of policyholders with on the road again: traffic fatalities and auto insurance minimums public sector economics 42 (1) 45-65 (2018) 49 less than 15 years of driving experience.…”