United States
                      Environmental Protection
                      Agency
                            Office of the
                            Administrator
                            [Mail Code 1802]
EPA-1GO-F-GO-19
July 2000
(http://www.epa.gov)
 &EPA
WHAT IS
 PROJECT  XL?
   ,»  .. Pro/per
 Project  XL:   Progressive
 Auto   Insurance
 Company	
                                                                            IS
                                                                     REINVENTION
Project XL, which stands for "excellence and Leadership," is a national
initiative that tests innovative ways of achieving better and more cost-
effective public health and environmental protection. The information
and lessons learned from Project XL are  being used to assist the U.S.
Environmental Protection Agency (EPA)  in redesigning its current
regulatory and policy-setting approaches. Project XL encourages
testing of cleaner,  cheaper, and smarter ways to  attain environmental
results superior to those achieved under  current regulations and
policies, in conjunction with greater accountability to stakeholders. It is
vital that each project tests new ideas with the potential for wide
application and broad environmental benefits. As of July 2000, twenty-
six pilot experiments are  being implemented  and  over thirty additional
projects are in various stages of development.
 SUMMARY OF
 THE
 PROGRESSIVE
 PROJECT
SUPERIOR
ENVIRONMENTAL
PERFORMANCE
Progressive Auto Insurance company has piloted a unique voluntary
insurance program in Texas which bases auto insurance rates upon
specific driving factors such as mileage driven, time of day, and
geographic location,  in lieu of more customary factors such as age, sex,
and marital status. This new program is made possible by a global
positioning system device which Progressive installs in their customers'
vehicles. The  information recorded by the device ensures that the
customer will only pay insurance for the miles that are actually driven.
Progressive's  system is designed not only to lower costs for its
customers, but also to encourage positive driving behaviors which may
lead to a reduction in accidents, thefts, and harmful air emissions. This
XL project, EPA's 27th, was signed on July 27, 2000.

Reducing vehicle miles traveled is a fundamental strategy in addressing
the full range of environmental harms related to  travel ranging from air
emissions  to habitat destruction. Although the direct environmental
impact of Progressive's previously piloted insurance program  has not
yet been calculated,  preliminary anecdotal evidence shows an initial
reduction in driving mileage by customers in the Progressive program.

It is estimated that once an individual purchases a car, roughly 80% of
their transportation costs  remain the same on a  monthly basis
regardless of how much or little they drive. EPA expects  that  individuals
will respond to the increased per mile cost of driving that results from

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  FLEXIBILITY
 STAKEHOLDER
 INVOLVEMENT
APPROACHES
BE TESTED
TO
converting automotive insurance from a fixed to a variable cost, the
same way they do to the increased per mile  cost of driving that results
from fuel price increases. As drivers begin to understand how their
driving habits affect their costs, it is likely that they will reduce their total
amount of driving time.

EPA is conducting an analytical study with the U.S. Dept. of
Transportation and the Insurance Institute for Highway Safety to test
the degree of environmental improvement that results from using this
insurance product. As this insurance program  becomes  available in
other geographic regions, Progressive will make available to  EPA
aggregated data on driving habits  of program participants. Personal
information, such as names and addresses of participants, will not  be
included in the study.  No regulatory flexibility is currently being offered;
however, if the study determines that superior  environmental
performance results from this insurance, EPA may, in the future,
consider offering flexibility to promote it.

The Department of Transportation/Federal Highway Administration, the
Insurance Institute for Highway Safety  and Environmental Defense
have contributed to the development of this project; EPA will  continue to
work cooperatively with these groups and  other interested parties
throughout the project's implementation.

     Will pay-as-you-drive auto insurance  alter driving habits, and
     reduce vehicle miles traveled?
  CONTACTS
    EPA Project XL:
    EPA Study Methodology:
    Progressive Insurance:
                             Janet Murray
                             Allen Greenberg
                             Bob McMillan
202-260-7570
202-260-0626
719-265-7488
FOR ELECTRONIC
INFORMATION
    More information about Project XL is available on the Internet at
    http://www.epa.gov/ProiectXL. or via Project XL's Information Line at
    202-260-5754.

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