A route-based incentive program is introduced in which drivers are rewarded for taking the safest routes. The program is operated with an incentive structure by a logistics company and a variable insurance premium scheme by an insurance company. The logistics company offers incentives to its drivers to follow the safest routes and by doing so expects to pay lower insurance premiums for its vehicles. The insurance company charges a discounted premium for vehicles that follow the safest routes, while expecting to pay less for potential accident claims. The theoretical framework, including the setup of the incentive structure and the variable premium scheme, is presented in this paper. Conditions for the existence of a win-win situation are established in which drivers, the logistics company, and the insurance company all benefit from the program. Optimization of the incentive program is also formulated as a bilevel programming problem. An online before-and-after survey is conducted to assess drivers' response to incentives. Forty-five Dutch professional drivers participated in the survey. The results show that drivers tend to ignore safety-related information in making their route choices; however, the incentives have some significant effects on these choices. The incentives therefore present an effective way of influencing drivers' route choices.
ASJC Scopus subject areas
- Civil and Structural Engineering
- Mechanical Engineering