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California's Revised Pay-As-You-Drive Insurance Draws Continued Objections 411

The EFF has restated many of their original privacy objections about California's latest revision to the Pay-As-You-Drive auto insurance proposal. Admitting that the amended bill is an improvement, privacy advocates are still uneasy about the surveillance implications of this program. "The proposal centers on a simple idea: infrequent drivers are less of an insurance risk. By pricing policies according to the mileage driven, insurance companies can offer discounts to lower-risk infrequent drivers, and put an appropriate cost penalty on heavy drivers. The state estimates that 30% adoption of PAYD insurance nationwide would reduce miles driven by at least 10% among subscribers, and save 55 million tons of CO2 over the next ten years. The benefits of such a system could be quite dramatic, as California Insurance Commissioner Steve Poizner is sure to emphasize. Such insurance plans first became available in 2004, and are now available as a limited option in 30 US states from insurance companies like Progressive and Liberty Mutual."
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California's Revised Pay-As-You-Drive Insurance Draws Continued Objections

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  • Bell curve??? (Score:5, Insightful)

    by Foofoobar ( 318279 ) on Friday July 17, 2009 @03:50PM (#28733979)
    How is someone who drives less better at driving? It would seem someone who drives less frequently is less practiced and would be a greater risk as compared to someone who is a regular driver. There must be some sort of bell curve where the people on the ends pay more.
    • Re: (Score:3, Informative)

      by SlashDev ( 627697 )
      It's not whether they are better at driving, it is that the risk of them being in an accident is smaller, as they interact less with other drivers, who maybe bad drivers.
    • Re: (Score:3, Informative)

      by Hope Thelps ( 322083 )

      How is someone who drives less better at driving?

      Not better at driving. Less of an insurance risk. At one extreme end of the scale you have the person who doesn't drive at all - just leaves his car in the driveway. Almost zero risk. At the opposite extreme end you have people who spend most of their lives driving - almost certainly higher risk of being in an accident even if it's a freak accident that you can't really blame them for. I don't have the stats so maybe I'm wrong but it does seem likely that you can identify a class of low freqency drivers tha

    • Re:Bell curve??? (Score:5, Insightful)

      by Anonymous Coward on Friday July 17, 2009 @03:58PM (#28734103)

      I know it is common practice on Slashdot to speculate beased on no more information than your initial gut reaction, but this sort of thing is actually the core business of insurance companies. They have people who are quite skilled statisticians, call actuaries, who fiddle over mountains of data to decide how much to charge who in order to maximize profit while still being able to offer comeptitive premiums.

      Because you know what a bell curve is doesn't put you in league with these people and your elementary passive aggressive questions do nothing to further anyone's understanding of anything. Not even your own.

    • Re:Bell curve??? (Score:5, Informative)

      by localman57 ( 1340533 ) on Friday July 17, 2009 @03:59PM (#28734117)
      Of course a driver who drives more is higher risk. Suppose that over my lifetime I drive one million miles. And my friend, who likes hugging trees, saving whales and composting his lunch leftovers in his pocket, only drives a lifetime total of 100k miles.
      Why would his first 100k miles be any less risky than my first 100k miles? The risk of my first 100k miles will not be lessened by the fact that I intend to drive more in the future.
      Therefore, unless I have zero risk of an accicident in my final 900k miles, my lifetime risks are higher than his, all other things being equal.
      • Because he's a hippy and doesn't a job. Those 900k extra miles you spend are driving to and from work, which is statistically when most people get into accidents because they are less alert due to the routine of that drive. When you drive spontaneously you are typically more alert and suffer less accidents.

        My insurance company already adjusts my premiums based on the distance between my residence and place of employment as well as the total number of miles I drive.

    • Re:Bell curve??? (Score:5, Insightful)

      by Sparr0 ( 451780 ) <sparr0@gmail.com> on Friday July 17, 2009 @04:00PM (#28734123) Homepage Journal

      Even if driver safety is inversely proportional to driving time, it is so at some ratio less than 1:1.

      That is, consider 3 people. Bob drives 1 mile a year, and has a 1% chance of getting in an accident for every mile he drives. Tom drives 100 miles a year and has a .1% chance of getting in an accident for every mile he drives. Jim drives 10000 miles a year and has a .01% chance of getting in an accident for every mile he drives.

      Bob is going to get in one accident every 100 years. Tom is going to get in 1 accident every 10 years. Jim is going to get in 1 accident every year.

      To be more realistic I would say decrease the %s by a factor of 1000, and increase the miles by a factor of 10.

      Why does Bob's insurance cost almost as much as Jim's, currently?

      • Re: (Score:3, Insightful)

        by Foofoobar ( 318279 )
        This also depends upon the region in which you live as well. That same scenario would work for people who live in Iowa but place them in LA and that person who never drives has a much higher chance of getting into an accident VS the people who drive regularly.
        • by Sparr0 ( 451780 )

          Read my post again. I agree that they might have a much higher chance while they are driving, but they still drive less. If I get in 1 accident every mile and you get in 1 accident every 10k miles, then I have a "much higher chance" of getting in accidents than you. But if I drive 1 mile per year and you drive 100k miles per year you are still going to get in 10x as many accidents as I do.

      • Why does Bob's insurance cost almost as much as Jim's, currently?

        It probably doesn't, but are there things like comprehensive attached to the bill? If a tree falls on the car, is it covered? In that case, it doesn't matter how much the car is driven, both cars exist and thus have relatively the same chance of something happening to it while parked.

      • Re: (Score:3, Interesting)

        Why does Bob's insurance cost almost as much as Jim's, currently?

        Because Jim was born a girl.

    • Re: (Score:3, Informative)

      I do believe that is the etymology of the phrase "Sunday Driver." There were usually less cars on the roads on Sundays so those people drove as if there was no one else on the road with them.
    • Re: (Score:3, Insightful)

      "How is someone who drives less better at driving?"

      The same way someone who's learned how to ride a bike doesn't suddenly stop knowing how to ride a bike. Driving is not difficult, and I imagine if you did a study of infrequent drivers, there would be small re-adjustment period (for things like parallel parking, etc) before they reached the levels of long time drivers, but for regular driving their would be a negligible difference.

      • Re: (Score:3, Informative)

        by AuMatar ( 183847 )

        I tried to ride a bike for the first time in a decade a few years ago. I could barely get it to go forward, much less straight. Balancing left/right was extremely difficult. I knew what I had to do, but my physical reactions were too rusty to actually perform those actions. So yes, you do forget.

    • Re: (Score:3, Interesting)

      by pilgrim23 ( 716938 )
      You young whippersnapper! I have been driving for 96 years and never get into any of those accidents I always keep hearing right behind me the few times I drive. It is unsafe to drive any faster then my standard 15 miles per hour in the fast lane on the freeway so just don't do it. now I don't want to hear you anymore so I am turning off my hearing aid.
  • by daVinci1980 ( 73174 ) on Friday July 17, 2009 @03:50PM (#28733985) Homepage

    Why would anyone think that paying by the mile would reduce the amount I'm driving?

    I don't go on long jaunts around the town just for the hell of it, I go because I need to get somewhere, or pick something up.

    So pretty much what this would do is either be a savings for me--because it'd be less than my buffet style policy--or it'd be more expensive for me. I'm guessing that the majority of people, myself included, would fall into the latter category.

    • Re: (Score:3, Insightful)

      Why would anyone think that paying by the mile would reduce the amount I'm driving?

      I doubt anyone in this situation has concerned themselves with you specifically, but I imagine they base their expectations on the rise in gasoline prices a couple of years having shown that its price elasticity of demand wasn't quite what everyone thought. Since demand for gasoline dropped sooner than expected it is true that cost per mile will eventually force people to cut back on driving.

      • Re: (Score:2, Interesting)

        by plague3106 ( 71849 )

        Um, I believe the problem was that gas prices rose, people didn't (or couldn't cut back) and that this likely contributed to the recession. Remember, most agree it started in 2007, when prices were climbing. It wouldn't be suprising that as people were paying more for gas they were spending less on everything else (and the oil companies pocketed the profit).

    • by Sparr0 ( 451780 )

      Assuming that market forces remain in action, causing the profit margin of the insurance company to remain constant (if their average policy price increases, they will lose more customers than they gain), they will have to lower some policy prices as others raise.

    • Why do people buy pay-as-they-go cellphones? Who knows, but clearly some people use them.

      • Re: (Score:3, Informative)

        by Sparr0 ( 451780 )

        Because no provider offers a 100 minute plan. I use less than 100 minutes per month. At 10 cents per minute and $1 per day used I spend about $20/mo. I could get a LOT more minutes for $40/mo, but I don't need them.

        • If I ever get a job again where I can carry a cell phone I'll probably get a pay as I go phone. When I had my phone I don't think I ever came within less than 200 minutes of my 500 minute allowance. If I want to talk to someone I'd much rather do it face to face or through written correspondence of some sort. The only times I can remember enjoying talking on the phone is when there were raging hormones involved.
  • by MoFoQ ( 584566 ) on Friday July 17, 2009 @03:50PM (#28733989)

    just don't know how it can save "55 million tons of CO2 a year"....people who drive a little will continue to drive a little with this insurance or not.

    I hate it when they fudge numbers and try to draw a causation out of it.
    A chicken didn't lay an egg because there was a law passed that gave tax incentives to the chickens to lay eggs....

    I hate it even more when politicians take credit for something that has nothing to do with anything.

    • just don't know how it can save "55 million tons of CO2 a year"....people who drive a little will continue to drive a little with this insurance or not.

      The idea is to make insurance costs like gas costs. People are generally aware that driving more uses more gas, which costs more. Insurance is a bill, paid at verious intervals, which bears little relationship to the miles I drive. Yes, I might have told the insurance company that I drive 15k miles per year, but, with this insurance, I know that the 15 mil

      • Re: (Score:3, Interesting)

        Why don't we just add it to the gas prices then? gas price + sales tax + insurance + road tax
        We'll have insured cars driving on paid for roads that help pay for police and schools while reducing CO2

    • I hate it even more when politicians take credit for something that has nothing to do with anything.

      If politicians stopped taking credit for things like that, most politicians would have nothing at all to their credit.

    • Eh, I believe the estimated savings in pollution production were projected as a benefit of some people driving less. Those people they think would drive less because they would be more concious of their driving habits costing them more money and possibly cut back on the amount of driving they are doing. It's not that ludicrous of an idea.

      We don't know how our individual insurance rates would be affected by going to this plan. It's entirely possible that many of us would end up paying less for insurance than

  • by werdnapk ( 706357 ) on Friday July 17, 2009 @03:51PM (#28733991)
    Couldn't you say that a driver who drives less has less driver experience than somebody who drives more? Therefore the driver who drives less could be a higher risk?
    • Less experience driving means for traveling a given distance there is a higher likelyhood of an accident. But if one is traveling a lot less, then the overall risk might still be lower. That's presumably what is going on here.
    • Re: (Score:3, Insightful)

      by drsmithy ( 35869 )

      Couldn't you say that a driver who drives less has less driver experience than somebody who drives more?


      Therefore the driver who drives less could be a higher risk?

      Not necessarily (and apparently not - unless you can think of a good reason why the insurance companies would lie in a way that would cost them more money by misclassifying risk).

      Remember, what an insurance company considers "risk" and what you (as a road user) consider "risk" are not the same thing. The insurance company is conc

  • by StikyPad ( 445176 ) on Friday July 17, 2009 @03:51PM (#28734005) Homepage

    I don't drive very often, but when I do drive, I always have a case of Dos Equis with me.

  • People that drive less are less of an insurance risk? Perhaps as the time driven approaches zero ... but I would think people that drive well are way less of an insurance risk. This assumes of course that they only need to pay out when at fault. Shouldn't this at least be weighted by some sort of driving test that evaluated real-world conditions?
  • by geekoid ( 135745 ) <`dadinportland' `at' `yahoo.com'> on Friday July 17, 2009 @03:52PM (#28734015) Homepage Journal

    but it lacks any practicality fo California.

    All this will do is make insurance unaffordable to low income families that have toi drive due to the distance they must commute. Meaning more uninsured motorists.

    They al ready take it into account some what, and that's enough.

    This is just attempt to squeeze another dime out of people who must have this service.

    Quite frankly, if the Government is going to mandate insurance, then it should also offer a base insurance program, at cost.
    Just one that covers the minimum insurance levels. If you want more, then you can buy more from an insurance company.

    • Re: (Score:3, Interesting)

      by ceoyoyo ( 59147 )

      They do that here in Quebec. A level of liability insurance is provided by the province and is bundled into your car registration fee. I think some of it is also built into your drivers license fee, which is interesting, because it means you effectively pay a base insurance premium to have a drivers license, and a higher premium if you also have a car of your own.

    • Don't be absurd man! If the government offered insurance to people at cost then it would be cheaper then any private insurance company. Soon Big Government insurance will drive all the other insurance companies out of business!

      Really! I mean it!

      Please just ignore all the money insurance lobbyists are paying me.


    • by Ichijo ( 607641 )

      All this will do is make insurance unaffordable to low income families that have toi drive due to the distance they must commute. Meaning more uninsured motorists.

      No, only those families who continue to drive more than the average will have higher insurance premiums than they do today. Those who drive less than the average will automatically have lower premiums, and those who drive the average will modify their behavior to take advantage of this new incentive by driving less.

      In the end, most people will pay

    • Quite frankly, if the Government is going to mandate insurance, then it should also offer a base insurance program, at cost.
      Just one that covers the minimum insurance levels. If you want more, then you can buy more from an insurance company.

      No, please no. Or at least, raise the insurance requirements in California first. The current requirements are 15/30/5 (one person injury/more than one person injury/property damage). In today's world, that covers nothing. In a serious accident, today's average car won't be paid for with that, nor will anyone's medical expenses be covered. With government provided insurance, we'd have even fewer people having higher coverage limits. They don't need to be 100/300/100 (like I have), but they need to be much h

  • by hypethetica ( 739528 ) on Friday July 17, 2009 @03:52PM (#28734025) Homepage

    I'd always thought it would be a neat idea to roll auto insurance in at the gas pump. No more uninsured drivers, plus it would be an incentive to reduce driving. obviously LOTS of holes in the plan, but it would eliminate the big brother aspect of this proposal.

    • On the surface, that sounds good. But how do you differentiate between drivers and their rates? Should a driver with a 20 year perfect record pay the same as a 19 year old with 4 speeding tickets and 2 serious accidents? Or differentiating between different cars. A VW Beetle vs a Mustang Cobra. Same insurance rate at the pump?
    • Re: (Score:3, Insightful)

      "but it would eliminate the big brother aspect of this proposal."

      It wouldn't, you'd just replace one big brother (government) with another (corporation) it amazes me that americans think private corporations have their best interests at heart, ever looked at the kind of security and monitoring equipment in many modern businesses? The analyze everything about you're shopping for instance.

      Quite frankly there is no privacy once you walk into a corporate building or store for instance.

  • I don't get it (Score:4, Insightful)

    by mcgrew ( 92797 ) on Friday July 17, 2009 @03:53PM (#28734033) Homepage Journal

    Insurance companies already charge more if you drive more; all of them that I know of ask how much you drive. I actually started to RTFA, but there's little to no explanation of what the "pay as you go" does, and as I don't live in California it's not likely to affect me unless it's adopted by other states.

    Can anybody clarify for me?

    • by garcia ( 6573 )

      The difference is a few dollars at most so unless this really changes the pricing structure (it won't unless mandatory caps are set, which won't happen) then this is nothing but political fluff.

      BTW, I saved $12 a year by telling them that we drive less than 20 miles weekly. I am now at the lowest cost insurance for my age bracket and insurance coverage. A whole $12, wow.

    • I know! Personally my rates are pretty low since I drive only once or twice a week. I'm under the impression that they verify with the DMV here (we have yearly emissions inspections that also verify odometer readings) that the car is only traveling my self-rated low mileage per year.

  • by Gonoff ( 88518 ) on Friday July 17, 2009 @03:53PM (#28734035)

    Sunday drivers have got to be the most dangerous people on the road.

    Someone who drives 100K miles a year is going to have a lot more miles between accidents than someone who does 5K.

  • Choice (Score:2, Insightful)

    I would have no problem with this if people were actually given the choice of whether to sign up for a pay-as-you-drive plan, but as it stands, this hurts consumer choice without any real benefits. It is unlikely that people will really drive less, because they still need to get to their jobs and to stores that are miles away from their homes. If we want people to drive less, we should be investing in mass-transit systems which will help them do that, thereby increasing consumer choice rather than decreasin

  • I can see health insurance companies adopting this logic:

    People who frequently exercise are less of an insurance risk. By pricing policies according to the amount of physical activity a person gets, insurance companies can offer discounts to healthier people, and put an appropriate cost penalty on basement-dwelling nerds, obese people, and other physically-unfit people.

    • Except that we do know this to be true... its been proven in scientific studies. Do you have a study that shows driving more increases your risk for an accident?

  • by RayMarron ( 657336 ) on Friday July 17, 2009 @04:00PM (#28734121) Homepage

    You think insurance companies will lower prices for the average Joe with this? I think not. Their claim experience isn't going to change, and they need to charge X dollars to all customers combined so they make a profit. They're still going to need to charge X dollars, so what's going to happen? Heavy drivers will pay *more*, and everybody else will pay about the same as they are now. Bah!

    • Re: (Score:3, Insightful)

      by hb253 ( 764272 )
      Exactly. The "discount" they're talking about wil be about $50 off a $2500/year policy. Big deal
  • I mean, it sorta makes sense... but then again it also doesn't.

    First I would point out that someone who drives 20k miles a year for 5 years drives 100k miles. A person who drives 5 k miles a year only drives 25k miles. So essentially, the 20k miles driver has 75k miles more driving experience than the lower milliage driver....

    I would expect that sort of difference to start to really add up.

    That said, the point of insurance is to mitigate risk by spreading it over many individuals. While it makes some amount

    • by JustNiz ( 692889 )

      >> So essentially, the 20k miles driver has 75k miles more driving experience than the lower milliage driver....

      Yeah they might be more experienced as a result of driving 3X more miles, but they're also 3X more exposed to the risk of an accident caused by someone else too.

      You can't directly calculate experience and ability (not least because even for a given driver they're not constant over even a single day or journey) so basically they jsut use a formula like 'n accidents occur per mile driven as a

  • by jtownatpunk.net ( 245670 ) on Friday July 17, 2009 @04:02PM (#28734177)

    WTF? Am I missing something? Last time I got insurance for a vehicle (in California!), the guy writing the policy asked me how many miles I expect to drive per year. They have a number of mileage brackets that are used in the calculation of your premium. The more miles you drive in a year, the more money you pay. Back in the before time, I had a classic car that was a weekend ride. Insurance was cheap because it was classified as "pleasure use" and driven less than a thousand miles per year. I don't think I've ever had a situation where the estimated annual mileage wasn't used to calculate the premium.

  • I thought the point of insurance was to distribute risk and cost over a group for both the insurer and the driver so that no single individual would be overwhelmed from unexpected expenses. This plan reduces the risk and cost to the insurer but transfers cost from one group of drivers to another group of drivers. It's another step toward customizing insurance plans to a single person customized insurance plan--rendering insurance worthless for those at high risk, yet it's required by law. If one were to app
  • The annual estimates used by my current insurance provider seems to work well enough. And if that isn't proof enough, they could simply track my odometer readings when they do the emissions inspections or something.

    Being an infrequent (and thus probably inexperienced) driver doesn't necessarily make you less of a risk. My car insurance is currently pretty dirt cheap ($400 / yr.) due to many factors (it's our only car, we're married and over 25, and our speeding and accident record has been clean for the p

  • The Federal Highway Administration is already suffering shortage of funds due to fewer vehicle miles driven [dot.gov]. There's been talk of more toll roads, increasing the gas tax, etc.

    As I see it, encouraging people to drive even less will further decrease the revenue collected for road repair- which could mean fewer repairs, more time between repairs, and/or an incentive to raise the gas tax or invent new "usage fees". This could end up increasing the total cost- even though you're paying less for insurance, you're

  • OK so assume CA mandates this and then follows up with mandating a law that requires every vehicle in CA to be fitted with some kind of GPS or similar tracking device:
    1) What happens when the tracker in my car suffers some kind of *mysterious* electronic failure? Am I going to be fined?
    2) Who is going to pay for the tracker and the installation?
    3) What happens when a faulty tracker drains the battery? (Oddly enough I've seen this happen in a fleet vehicle)
    4) How do I get the lucrative contract to maintain

  • by Wisconsingod ( 995241 ) on Friday July 17, 2009 @04:46PM (#28734823) Journal

    MyRate by Progressive (as mentioned in the summary) has been around for quite some time (in select states) and I am a longtime customer. Here is how it works:

    You get a computer chip that installs on the ODBCII port on your computer. Every 6 months (when you renu your policy), you pull out the chip, plug it into your computer via USB, and upload the data with your policy renewal request. You can view charts of your driving speeds, times, etc.

    Progressive then offers you a discount percentage off of your base premium. They have an explicit policy that utilizing this chip cannot INCREASE your premium, only give you the option of a discount (in other words, we overprice our policy, but give you an option to recoup it if you drive less)

    The discounts are as follows:
    5% = participation discount
    5% = safety discount (stay below 75mph and the discount is yours)
    up to 10% = based on driving time / milage.

    The 10% is calculated roughly as such.
    At the beginning of the tracking period, you are given a 10% discount. then for every mile you drive, that percentage is reduced by a fraction. That fraction (something around 0.0006% per mile) is determined based on the time classification you drive. they have 3 classifications of driving time, low, medium, & high. High are times such as rush hour, and overnight, medium are weekends & lunch hour, low is everything else.

    Ultimately, with both the safety discount and the amount I drive, I end up with somewhere around a 16% discount off my policy renewal.

    It can be compared to the california policy, but in reality the current offered program seems quite different from the proposal.

  • Rush Hour? (Score:4, Insightful)

    by Jaeph ( 710098 ) on Friday July 17, 2009 @04:54PM (#28734907)

    The premise is faulty. Open highway driving is far safer than inner-city rush hour traffic.

    You need to consider the conditions, not just the distance.


  • by bcrowell ( 177657 ) on Friday July 17, 2009 @05:10PM (#28735091) Homepage

    I've combed through the 108 comments so far that have been modded 2 or above, and not a single one of them shows any awareness of what the article actually talks about. Has anybody actually read the article? Oh, wait, this is slashdot...

    The article helpfully explains that the main issue being raised by the EFF is privacy. Um, it's not exactly subtle...the article has a big image of a poster with a man's face, with the slogan "BIG BROTHER IS WATCHING YOU."

    What the EFF is objecting to is the idea of using electronic monitoring to measure the number of miles driven. The article (remember that article thingie? it's got that little underlining thingie, with the text in a different color, so you can click on it, and it's, like, a hyperlink, so you can go and read it?) lays out some objections to this, such as the tendency the government has demonstrated since 9/11 to go nuts with intrusive monitoring of its citizens. The concern is that the government will then be able to tell where every citizen drives. That's pretty darn scary, if you think about it.

  • NO! (Score:3, Informative)

    by kheldan ( 1460303 ) on Friday July 17, 2009 @05:50PM (#28735449) Journal
    Said it before, I'll say it again: I will NOT consent to tracking devices of ANY sort installed on ANY vehicle I own. Period. They can kiss my ass.
  • by cyn1c77 ( 928549 ) on Friday July 17, 2009 @06:19PM (#28735693)

    It's good to see that California isn't letting their impending bankruptcy hold back their socialist agenda.

    I lived in LA for 6 years. California is probably one of the worst places to try to implement this program as: (1) they have a massive amount of urban sprawl, (2) Los Angeles has incredibly inefficient public transportation, (3) and there are broad swaths of the state where driving is almost a necessity for people who can't afford to live in the communities that they work in.

    Is this really such a problem that is needs to be addressed right now? As others have said, there are going to be no deals here. Insurance companies will make sure that they profit over this little experiment. Furthermore, the state officials may mean well, but the federal government has shown that they will not hesitate to violate our privacy. Why give them another mechanism to do so?

    But what really puts the cherry on the cake are the little comments that this will reduce CO2 emissions. Newsflash: Most people don't drive more than they need to, and the ones that drive for fun are just going to pay the tax and keep driving. Why does every method for reducing CO2 emissions have to involve punishing people while giving money to industry for absolutely no innovation? Do you think I like sitting in traffic with 3 other carpoolers? Build some efficient public transportation that actually works and people will take it. Reduce urban sprawl by not allowing people to build homes anywhere they feel like. Those are the techniques to reduce driving. Look at NY city. Look at all of Europe.

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