Ticketfree Responds

I received the following email from?Kyle Tower, one of the lead members of the Ticketfree team, responding to my earlier post on speeding insurance:

Mr. Ayres,

First off I would like to apologize for the delay in responding to your e-mail. Since Ticketfree was first ‘”discovered” a few weeks ago our team has been bombarded with phone calls and e-mails. This wouldn’t have been a big problem, except that I actually got married and was out of the country as it all began. Due primarily to the fact that Ticketfree is not quite ready to be released to the general public, and that finishing the site was the main priority, the rest of the Ticketfree team ceased answering the hundreds of calls we got a day, as well as sorting through
the mass of e-mails. As the site was discovered while we were still testing and working through the idea, we did not have the people in place to handle the volume of inquires we received…especially with myself out of the country. My goal however, is not to make excuses, but rather to address the article you wrote.

I should probably start by saying that I greatly respect the issues and opinions that you raised in the article. In regards to the moral hazard of promoting an increase in speeding, we would argue, as you also mentioned, that the persistent deterrent of demerits and insurance costs would still have their effect on controlling speeding. Furthermore, we recognize that for the most part, people don’t intentionally want to get a ticket. Even if they know that the ticket would be paid for, the average person is not likely to start driving recklessly just because they can. Some individuals may chose to do that, but for most people, they aren’t willing to jeopardize their life or other drivers’, just because they can get a ticket paid for. Finally, we would also object by saying that most drivers are creatures of habit. An individual who isn’t a reckless driver, but does tend to speed 50-60% of the time may continue to do so with a Ticketfree membership, but they are not likely to speed everywhere all the time, because they already have an established driving habit.

In regards to Ticketfree’s criminal liability in the case of an accident, I once again recognize your expertise in this manner. However, it is important to note that in the process of developing this business concept, we consulted a wide variety of traffic, insurance, and criminal lawyers to determine if Ticketfree could be prosecuted in a criminal case. I will not pretend to be a lawyer, but we were counseled to develop the terms and conditions you quoted in order to prevent such a prosecution from taking place. Furthermore, we informed that Ticketfree could not be
called in a tort lawsuit if a Ticketfree member was involved in a serious accident or some type of fatality while driving. This is as a result of what Ticketfree actually covers and assumes liability for, which is simply
the payment of a ticket. Again trying to explain this as best I can, without a lawyer to translate what they originally told us.

The feedback we have received via e-mails or by reading blogs and comments has been mixed. When myself and the group of people I work with began discussing the idea of Ticketfree several years ago, we wanted to explore the viability of this idea both from a business perspective, as well as a moral, social, and legal one. The goal has always been simple: To provide a profitable service for people that would allow them to just drive and not constantly be checking over their shoulder for a cop, or slamming on their brakes every time they see a car on the shoulder of the road, or a traffic light that looks like it might turn red soon. We look forward to opening our doors officially for new members in September, and would like to thank everyone who has been participating in the blog dialogue! 🙂

Regards,
Kyle Tower
Ticketfree.org


Tzimiskes

Since the costs of tickets are so low in the US I'm surprised anyone would have much use for this service. I thought everyone was always worried about the points and what a ticket will do to their insurance costs. I don't see how this really solves those problems. Even when I was 19 and more prone to speeding it was the points and not the fine that concerned me, that would be far more the case today.

Now introduce day fines in favor of the current set rates and then there's some real added value.

LCD

What a joke of a company -- a legitimate business does not have their business plan "discovered" on the open web while it's still under development.

Additionally, Mr. Tower specifically says that one part of the ultimate goal of this company is to allow drivers to just drive without having to worry about whether a traffic light will turn red... It certainly sounds to me like they're promoting recklessness.

Tank

I agree that the fine is the least of my concerns. Insurance costs and time lost are far bigger issues.

GCG

A lot of people truly believe that they are better drivers that the rest of the world. They also believe that even at great speed their abilities would allow them to avoid collision or any such accident. People don't speed thinking they are endangering theirs and other people's lives, they speed because they like it and think they're in control of the situation. If they actually thought they endangered theirs and other people's lives by doing so most people wouldn't speed in the first place, hence speeding tickets wouldn't have been so necessary to begin with.

Since this clearly isn't the case and people have been speeding without serious consideration of their and other people's welfare, I don't believe the following argument of Kyle Tower holds truth:
"Even if they know that the ticket would be paid for, the average person is not likely to start driving recklessly just because they can. Some individuals may chose to do that, but for most people, they aren't willing to jeopardize their life or other drivers', just because they can get a ticket paid for."

People who speed thinking they drive better than the rest and don't put anyone's life in danger by doing so would maybe loose their best deterrent (a monetary penalty) and start speeding.

Read more...

Jesse

Not every state has points: Washington, for example, does not. And minor speeding infractions don't always affect insurance. Driving 68 in a 60 zone can get you a ticket, but in my experience many insurers are only concerned with speeding when it's more than 10 MPH over the limit.

Dave

In my city if you receive a moving violation, there are several options for payment of the fine, typically pay the fine and get the demerit points, pay more for a reduced charge and points, or pay even more, to have the charges reduced to a non-moving violation and no points. This is typically double the original fine.

I have no doubt that repeat offenders will gladly pay the extra dough to have the violation reduced - seems like a money maker for the city.

DK1

I don't think he quite grasps the real moral hazard here. I'm (sort of) willing to buy the argument that members of Ticketfree will not speed any more than they did previously. However, the real moral hazard is that the only people who sign up for Ticketfree to begin with will be people who, on average, rack up traffic fines in excess of the premiums charged by Ticketfree.

Based on my typical driving habits, if I expect to receive a $150 speeding ticket once every couple of years, I'm not going to pay $500 per year for Ticketfree. I'd sooner buy the extended warranty on a television.

Paul

I'm not a lawyer either, but two things come to mind:

1) This is isnurance and probably regulated by whatever State they wishg to operate in.

2) Isn't this of questionable legality, can you actual insure against your own criminal behavior? Which is what traffic violationas are afterall.

What's next Organized Crime insurance for your local mobster?

Joe

I have been driving in the US for 20 years now. In that time I have gotten 2 speeding tickets and 1 warning. On average I put about 15,000 to 20,000 miles on my car each year.

Do I speed? Yes, but just a little bit (5 mph over) and usually as a result of the traffic around me going much faster than the speed limit.

So, if I have only gotten 2 tickets, clearly this service is not for me. In fact it seems like you would have to expect to get at least 3 tickets per year to make this cost effective.

Who drives like that? If you drive like that, please stay off of my roads!

Kerry

It sounds to me like his lawyer made the legal issues sound much more black and white than they really are. No one really knows how the law would be applied to a novel set of facts until a court applies it. Furthermore, even if Ticketfree turns out to be very fortunate in terms of how courts view it, it will have to go through a lot of litigation to get there.

Ian

"What a joke of a company - a legitimate business does not have their business plan "discovered" on the open web while it's still under development."

Not true. When setting up a new ISP a few years ago we placed a test version of our website on an Internet accessible server so that we could test it from 'outside' our network. In the brief period that it was up Google found it and indexed it, thus leaking it to the world.

Descartes

If we're concerned about safety the primary stick used to punish speeders should be points and eventual revocation of the license. For some people a typical fine will be insignificant and for others it can be a big chunk of their paycheck - if we wanted to be fair and use the fine as a deterrent we would make the fine proportional to income (or net worth) as they do in at least one country in Northern Europe.

"the real moral hazard is that the only people who sign up for Ticketfree to begin with will be people who, on average, rack up traffic fines in excess of the premiums charged by Ticketfree."

That's not a moral hazard, but it would indicate a poor business model for Ticketfree. If it were true. However, their target market is going to be people who want to spread out the costs of tickets (which can be close to $500 in California, for instance) over time, rather than be hit with a sudden cost that will wreck their budget. Kind of like how people use almost all other kinds of insurance, in fact.

If we have a problem with this why would we allow insurance to cover the damage to your vehicle when you are at fault in an accident? People would drive a lot more carefully if they weren't insured against their own poor driving and this would be fairer since it would typically scale with income (higher income -> more expensive car).

Read more...

DK1

Doesn't insurance against speeding tickets already exist? People donate to the FOP and then prominently display their "supporter" stickers and medallions on their car.

I'd be curious to hear from traffic cops if that affects their decision to issue a ticket or only a warning. (Or do they cynically believe that people put those stickers on their cars only because they think it will get them out of tickets?)

Morrow

His reply that "individuals ... aren't willing to jeopardize their life or other drivers', just because they can get a ticket paid for" implicitly assumes that traffic fines have no deterrent effect whatsoever. If that is the case, then why have traffic laws at all?

David

@DK1 - As Descartes notes above, that is not moral hazard, you have described the problem of adverse selection.

NSK

Very interesting, but certainly not innovative! In Mumbai, where the local trains carry the vast majority of the city's population on a daily basis, this concept has been in vogue of decades.

Evrery station has ticket checkers who stand by the station exits and can demand any passenger to show a valid ticket (either a ticket purchased that day or a monthly pass). Passengers who cannot furnish one are fined.

The racket is that you pay a monthly amount that is smaller than the cost of the monthly pass for your daily regular commute to a ticket checker, as an insurance. Then you simply travel ticketless and, if you are fined, pay the fine. Show the receipt for the fine to "your" ticket checker, and he will simply refund you the cost of the fine.

The cost to the system is offset by the benefit to the ticket checker and the passenger.

Steve

"not constantly be checking over their shoulder for a cop, or slamming on their brakes every time they see a car on the shoulder of the road, or a traffic light that looks like it might turn red soon."

Are these remotely comparable?

The presence of a cop means you might get a ticket.

But a car on the shoulder means it's an unsafe situation that might involve people on foot.

And a traffic light that looks like it might turn red soon -- I call this "yellow" -- means there are about to be other cars in that intersection.

I don't think we have to guess whether driver behavior would change in the absence of consequences. I think we already know: http://www.nytimes.com/2006/11/17/world/europe/17moscow.html

Spooner

Hey, I have an idea. Instead of creating all these philosophical arguments to prove that this business will succeed or fail, let's just wait and see what happens. Then we can spend our time more profitably arguing about why it turned out the way it did.

Frisky070802

It would be poetic justice if the founder of this absurd company were the victim of the guy running that red light because he couldn't stop in time. But the world doesn't work that way...

What a schmuck.

Alan Gunn

This response is a nice example of how to think like somebody who isn't an economist. He talks about what "most" drivers or the "average" driver is likely to do, ignoring what is probably the key teaching of economics: incentives work by affecting behavior at the margin.

(Not an economist myself, but I took a course once.)