Pay-As-You-Drive is a variable pricing model for auto insurance, where the more you drive the more you pay - the topic of my "Middle Year" thesis. Here the interview report, which was an exercise in writing according to a designated format and tone.

1. MEMORANDUM
TO: HANNA MUSIOL
FROM: JESSICA DONADIO
SUBJECT: INTERVIEW REPORT
DATE: 11/29/2005
PURPOSE
The purpose of this memo is to recap the interview I had conducted with civil engineer ----------
assessing its effectiveness in studying my topic. I will first present background information about ----
-------; outlining his qualifications and demonstrating how his commentary is pertinent, and then I
will list the questions that were asked in the interview. By considering his responses, I hope to
convey how they shaped and built upon my thesis.
INTRODUCTION OF INTERVIEWEE
To better interpret the follow-up results of the Atlanta, Georgia project that was started in 2003
in order to help city planners decide what streets are in need of stoplights, which are prone to
bottleneck traffic, and which have become heavily-used shortcuts, I contacted --------, a Professor in
the School of Civil and Environmental Engineering at the Georgia Institute of Technology. Atlanta
had conducted the experiment in order to mitigate the startling crash and injury statistics in the
region where nearly 200 people are injured daily, along with attempting to reduce the high amount of
carbon dioxide emissions the city was issuing. ------- is the director and founder of the project,
dubbed Commute Atlanta, being a $2.3 million joint-value pricing initiative sponsored by the Federal
Highway Administration and Georgia Department of Transportation. He headed the collection and
analysis of vehicle speed, position, and engine operating data from 470 vehicles. His researchers
have monitored more than one million vehicle trips, amounting to over 350,000 vehicle-miles per
month. In 2005, the Commute Atlanta households were also chosen to participate in road pricing
experiments including cent/mile as well as real-time congestion pricing. ------- wished to assess
firsthand the consumer response to these pricing mechanisms. The objectives of the research being
to advance monitoring technologies such as GPS tracking and investigating services to support future
transportation planning, safety, and operation policy initiatives, their conclusions are clutch in

2. 2
providing substantial evidence in my paper. Likewise with my study, development of tools for data
management, data analysis, and privacy protection have also proven to be key research goals.
-------- completed his PhD in Civil Engineering at the University of California at Davis. After
working for the California Air Resources Board for seven years, where he evaluated the design and
implementation of transportation control measures by regional air quality management agencies, he
joined the Georgia Tech Institute, one of the nation's premiere research universities; ranked ninth
among U.S. News & World Report's top public universities. There, Dr. -------- main research focus has
been the development of these new monitoring and modeling tools to assess the impact of
transportation policies on air quality. Dr. -------- was also the Chairman of the Transportation
Research Board committee on Transportation and Air Quality from 1997 to 2002. From 1995 to
2001, he served on the Environmental Protection Agency’s Mobile Source Technical Advisory
Subcommittee.
APPOPRIATENESS OF SELECTION
Although the likely candidate for my paper would be an expert in the auto insurance industry
rather than an engineer, I feel as though my choice was able to add dimension to my research. After
corresponding with the Progressive spokesperson --------, I realized auto insurers are further obliged
to withhold information about their operations and true attitudes towards experimental studies.
However, I was able to ascertain that insurers have not conducted a sufficient amount of research in
regards to the proposal; explaining their reluctant nature toward a policy such as PAYD. Insurers
claim that no hard evidence exists directly correlating reduction in driving to a decrease in crashes
and pollution. Some even go as far as stating that there would be little deviation in people’s driving
behavior relative to being charged by the mile. Geico Auto Insurance has shown no action in
changing their pricing procedure; however, it is apparent that the company strives to remain diverse
and consumer-oriented. Therefore, they most likely hold the same concerns ------- expressed, and ---
-----’s conclusions are able to provide the affirmative answers the company would need to implement
reform to some of their practices.
The shortfall in -------- ‘s commentary is potential bias, considering he is looking for results to
favor his positive position on PAYD in order to serve his own environmental and ergonomic agenda.
However, considering the extent and necessity of validity for his research, I am assured that he
presents his conclusions in an honest light.

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EXPECTATIONS
My primary objectives were to clearly identify the Commute Atlanta findings along with
obtaining answers to questions I had when reading the project report. The answers recorded are not
direct quotes, but ad-libbed, and the questions asked were:
Q. In the Atlanta paper, it is stated that once mileage-based insurance pricing programs are
offered on a regional scale, there will be no need for government monies to flow into the
program. This has me confused considering that many environmental agencies, including
ones in Oregon, are encouraging the government to provide monetary incentive to insurance
companies to adopt PAYD. How do you contend that this is not necessary?
R. Regionally, private industry handles implementation and management of pricing programs so
that the government would not be burdened with any costs. The regulatory agency must
approve the rate structure based upon actuarial data; however, any new pricing program is
immediately self-sustaining, which is why the insurance industry will not implement a
regional program unless they stand to operate at a profit. In the paper, it is just saying that
the government is not affected; however, encouraging companies to adopt the policy by
offering monetary incentive would benefit social concerns far beyond the payout.
Q. How do mileage-based insurance programs compare to other proposed value-pricing
solutions?
A. Unlike Hot lanes and other traditional congestion pricing projects, implementing the mileage-
based pricing requires no modifications to the transportation infrastructure. Hence, there
are no problems with establishing consistency with federal-aid, state, local and
environmental planning requirements. There are also no conflicts with existing roadway
pricing policies.
Q. One of the secondary objectives was to learn which households chose to enter the program
and which households declined. What did your team find significant about this?
A. Households were selected for participation through a random-stratified sampling process.
The research team first established income, household size, and vehicle ownership samplings
that reflect the distribution of households in the Atlanta region. We were pleasantly
surprised by the number of households that agreed to participate in the study, even though
instrumentation had to be installed in their vehicles. Many participants stated they believe
such studies very important and are glad to provide information that will help transportation
planners make improvements to our congested system. Recruitment and retention in the
upper income strata were much higher than originally expected.
Along with the trip data collector, we also provided every household with a travel journal, so
we could even further understand the trips that were being made. We therefore were
looking for policyholders who were going to be anxious to elaborate on their driving
experiences. Analyses are currently underway to compare diary-reported trips against
vehicle-reported trips and also to compare the vehicle activity for those households that
completed their diaries against those households that opted not to complete their diaries.

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Q. One of the major concerns with PAYD is compromising privacy. What did your team do to
ensure confidentiality?
A. All data collected in this study remains strictly confidential. A Certificate of Confidentiality
was issued by the National Institutes of Health for this study. This certificate ensures that
researchers cannot disclose any data that would identify project participants.
Q. Phase two and three would be the most critical to my research. Have there been any
developments?
A. Unfortunately, the U.S. Department of Transportation has chosen not to support the
second and third phases due to lack of funding. Despite the loss for ongoing research on
insurance pricing, the phase one research effort still yields the best comprehensive set of
travel data ever collected and the research team has submitted a proposal for additional
funding.
Q. Can you share some of your findings so far?
A. The professor directed me to a link where I learned that most trips were made on Tuesday,
Wednesday, and Thursdays, and in the months of September and October. Males drove
more than females in general. The hours of day where engines were started most often
peaked at around two and three in the afternoon, and leveled off completely after ten in the
evening.
CONCLUSIONS
I found the graphs I was directed to very useful and I plan to further study the data and
incorporate the information in my own report. It will help to illustrate the significant percentage of
drivers who don’t drive as often, and the statistics on crash rates will prove influential, considering
both of my current sources who confirmed similar studies were not American-based. The link also
contained the new proposal, which outlined the reasoning for changing the procedures of phase two
and three; directly involving variable pricing options per mile, which will help in formulating my own
recommended proposal and timeline to Geico. The information about the number of households
that were enthusiastic to be part of the project is interesting, and can help back-up my case for
existing market demand toward the policy. I am disappointed the results of phase two and three
have yet to be attained, but the interview provided me with more comprehensive answers and I now
better understand the progress of the project.
Please feel free to contact me with any comments or concerns. Thank you for your time.