Theofilatos A., Tselentis D.I., Yannis G., Konstantinopoulos M., “Willingness-to-Pay for Usage-Based Motor Insurance”, Proceedings of the 96rd Annual meeting of the Transportation Research Board, Washington, January 2017.

This paper aims to investigate which parameters affect users’ willingness to pay for alternative usage-based motor insurance pricing schemes such as Pay-as-you-drive (PAYD) and Pay-as-how-you-drive (PHYD). For that reason, a dedicated questionnaire was designed and administered to 100 participants including both revealed and stated preference questions and proposed scenarios regarding current and alternative insurance schemes. Then a mixed logit model was applied to examine the effect of driving characteristics, drivers’ demographics and the price of vehicle insurance premiums on vehicle insurance choice. Two distinct mixed logit models were developed; one mixed logit model to investigate the factors influencing the choice of present insurance policy over PAYD and one for present insurance policy over PHYD. Results indicated that women and smartphone owners are more likely to choose a new insurance schemes. Kilometers and cost reduction were also found to affect similarly the choice for both Usage-Based-Motor Insurance (UBI.) Moreover, the higher the speed reduction imposed to the user, the lower the probability of the UBI scheme to choose it. It was also found that people over 40 years old are less likely to choose PHYD insurance. Lastly, people with lower education are more likely to choose PAYD insurance.