The “astronomical” cost of car insurance is driving UK customers to look at alternatives to the traditional insurance model, according to a pay-per-mile insurance start-up.
Car insurer By Miles, which says that lower-mileage drivers in the UK often end up subsidising the premiums of higher-mileage drivers, has recently completed the first beta trial of its pay-per-mile solution.
The trial, which took place between May and July this year, saw 101 participants use the company’s matchbox-sized telematics device along with a smartphone app.
99% of customers that test drove a By Miles policy rated the experience as the same or better than they were used to with their current car insurer, and the overall response from participants has been positive, according to Oliver Baxter, head of brand & communications at the insurer.
“People are just really positive about any way that they can potentially save on what are becoming astronomical insurance costs in the car insurance space, for a number of reasons. People are welcoming any opportunity to save,” Baxter told Insurance Business.
“In the way that all sorts of other areas of their lives are becoming more convenient, more flexible, more tailored to them, [customers are] looking for the same kind of thing with car insurance and they don’t understand why it doesn’t exist yet,” he said.
The industry has been slow to adopt new technologies such as pay-per-mile for a number of reasons, according to Baxter.
“The car insurance industry hasn’t changed for decades, so much like any other sector it’s ripe for disruption,” he said. Many industry players remain complacent, and customers, who have to purchase car insurance by necessity, are used to paying for annual policies.
In previous attempts at providing usage based coverage, the technology has not been quite developed enough according to Baxter, who said that By Miles will be the UK’s first real-time pay-per-mile insurer.
Ultimately, traditional policies are an unfair deal for some drivers he believes – a philosophy that is backed up by the results from By Miles’ beta trial.
“There is a direct correlation between higher-mileage drivers and how likely they were to drive at higher speeds, and their top speed recorded,” Baxter said of the findings.
“Lower-mileage drivers are subsidising costs for higher-mileage drivers, and this is just more to prove that low-mileage drivers are getting a bad deal at the moment – something needs to be done.”
Related stories:
Will driverless cars mean more expensive premiums?
Is telematics for fleets set to take off?
.jpg)
