Unlike other industries which are becoming more and more customer-centric, using technology and data to offer more flexible and intelligent pricing and services, car insurance hasn’t really changed over the decades.
This is according to James Blackham, co-founder and CEO of By Miles, a company leading the “pay-per-mile insurance revolution”.
Blackham is one of more than 20 start-up founders attending the annual Intelligent InsurTECH conference on October 3 in London. Click here to find out more.
Although every UK driver is required to have car insurance by law, traditional car insurance products are the same ones sold 40 years ago, explained Blackham.
One thing has become smaller though (and easier to install): telematics devices, something which By Miles is taking advantage of with its matchbox-sized Miles Tracker.
He added: “Products are inflexible and opaque, and unfortunately it’s the people that don’t drive much that are getting a raw deal. It’s just not fair. The fact is: if you’re not on the road very much you present a lower level of risk to an insurer, and your premium should reflect that.”
This is the sentiment behind By Miles—what Blackham claimed is the UK’s first pay-per-mile car insurer that operates in real-time.
Instead of paying for miles in advance or having to turn something on to start counting your miles, it happens automatically.
“While the first ‘pay as you drive’ policy was tried out in 2006, technology has changed so much since then – and we’re able to take advantage of that,” he said.
In 2006, the iPhone didn’t even exist, but now people are managing everything from their bank balances to their take-away orders on their smartphones.
“We’re able to bring a level of fairness and flexibility that traditional insurers just aren’t set up to offer yet,” added Blackham.
The start-up founder added that By Miles’s monthly rolling contracts are a “bit of a game-changer”.
Customers pay a monthly subscription fee to cover their car when it’s off the road, then a tailored per-mile rate is added for each mile they drive, essentially like a rolling monthly phone bill.
Blackham and Callum Rimmer set up the insurtech company when they realised it was vital for them to own cars, but they weren’t using them enough to warrant the hefty price tag of car insurance.
They began to recognise that as a low mileage driver in the UK, you’re “effectively subsidising the costs of premiums for the more risky, high mileage drivers”.
Factors like the change in the Ogden Rate earlier this year, along with higher insurance premium tax and an increase in the number of whiplash claims, meant that the “average cost of car insurance in this country was skyrocketing”, said Blackham.
He believes that insurers have made car insurance a commodity, where customers purchase the product and then have no contact with the insurer unless they need to make a claim.
“As a result, customers pretty much only care about one thing: finding the lowest price,” he said.
By Miles’ pilot scheme received a lot of positive feedback about having more regular contact with its drivers, according to the start-up founder.
This was complemented by the fact that By Miles provides an ongoing service to its customers that’s more valuable to their everyday lives than just having an annual renewal chat, said Blackham.
“We’d like motorists to be using By Miles to learn more about their cars and how they drive them so they can make smarter decisions on a daily basis – and hopefully they’ll save time, money and energy in the process,” he concluded.
By Miles is one of more than 20 insurtech startups attending Intelligent Insurer’s Intelligent InsurTECH conference on October 3 in London. Click here to find out more.
Insurtech, Motor insurance, James Blackham, By Miles, Europe, London