Hollard South Africa's Pay As You Drive

The following is an infomercial from Hollard in South Africa. A 2 minute infomercial that explains some details around how the product works.

Brand new "Pay How and Where You Drive" product from MiWay

A brand new Pay How and Where You Drive (PHWYD) product has been launched in South Africa. It is called MiDriveStyle and is by a company called MiWay. They’ve got a highly entertaining advertising campaign.

There are a number of things that are interesting about the product:

1. It is device based, with a GPS.
2. The device has a peculiar name. It is called a Zhaker(!?).
3. The device does emergency management. So when you are in an accident it “calls home” and gets help.
4. The device also lets you know if you run low on battery.
5. The most peculiar thing about the device is that it emits a noxious gas when tampered with or when it loses power! So it tells you you’re running low on your battery, and if the battery runs out… Bad smell. I am not so sure about that feature.
6. You can use the Zhaker to “red-line” areas. So you can tell the device that you don’t want your daughter to go anywhere near the house of that annoying boyfriend…. Interesting.
7. The information can be used to fill-out your tax returns. That will be neat in Australia.
8. You can check on the website where your car is. That clearly comes with all the privacy concerns that haunt location based devices.

The website is still quite uninformative otherwise. It is not clear as to how the pricing works. The device I hear is very expensive, and has an ongoing monthly cost, which will eat into potential savings.

MiWay is an innovative company. It will be good to see how this product develops.

It is well worth a look: MiWay.

Progressive news item on MotorWeek

This clip was on MotorWeek, and discusses Progressive's MyRate product. It is a good clip to watch. It goes into quite a bit of detail on the product itself, and the consumer dynamic with the actual customer is informative. I also thought the web interface with the feedback on driving behaviour is very interesting.

nuride - What a fascinating concept!

nuride is a US online community that has already built up a base of 40,000 members. The premise of the community is that you register, and then record trips you have saved by either car pooling, taking public transport, riding your bicycle or even telecommuting. For each trip you score reward points, which you can redeem for discount vouchers, tickets to shows, etc. 

The practical use of the site is to connect to other people that have the same commuting needs as you, and car pooling with them. It looks like it is a particularly useful tool for large employers with many staff in one place. So you go onto the site and say you are traveling to say Swiss Re's offices. You link up with someone in your suburb that also travels to the same place that you did not know of. So obvious.

The reward benefits are sponsored by companies. I assume they do that either for getting feet through the door or out of a concern for the environment.

The cool thing about the site though is the connection to other commuters for car pooling purposes.

I hope their members know about Pay As You Drive insurance....

Coverbox discussion

There is a blog entry on Smart421 that discusses Coverbox and the implications for commoditization through Coverbox. It is a good perspective and a worthwhile read.

The blog posting is here.

Pay As You Drive in India

Three insurance companies are talking about launching Pay As You Drive in India. As with all things in India, there are a large number of cars. There are also massive insurance companies, most of them previously owned by the government. In the article below it describes what two of the companies are talking about doing. HDFC ERGO talks about a product similar to the Real Insurance product, but with a device monitoring mileage. ICICI Lombard points to a product more similar to the "paused" Norwich Union product. 

Source:

Motor cover convertibles on the way
Customers opting for this usage-based insurance will be asked to shell out an advance premium and indicate the number of kilometres they were likely to drive during the period of the cover, usually one year.


Have you felt cheated about the thousands of rupees you forked out as motor insurance for your car all these years when it barely stirred out of the driveway? Have you been frustrated by the one-size-fit-all nature of most motor insurance products, but had little choice other than put up with it?

That may be about to change, as rising competition forces insurance companies to try and distinguish their policies from those offered by rivals. Usage-based insurance is all set to debut in the Indian motor insurance market soon, as the country joins developed nations such as the United States, Europe and Japan in introducing what can be simply put as pay-as-you-drive (PAYD) insurance.

As the name suggests, the way this insurance product will work is simple; much like a pay-as-you-go or pre-paid mobile connection.

Customers opting for this usage-based insurance will be asked to shell out an advance premium and indicate the number of kilometres they were likely to drive during the period of the cover, usually one year. Once the originally-indicated distance is travelled, customers will have the option of topping it up further, and if the distance is less, the customer is refunded the extra payment.

“We are working on a number of add-on covers, including PAYD,” Ritesh Kumar, MD & CEO of HDFC ERGO General Insurance, told ET.

Add-ons are additional insurance that can be bought for a little extra premium on the basic premium.

For PAYD to work, the insurance company will ask customers to pay a premium based on the distance they are likely to drive during the year and install a small black box type of gadget inside the insured vehicle which will track the distance actually travelled.

“After a year, the individual will be either asked to pay an additional premium if he has driven more or we may refund him the extra premium if he has driven less. However, if there is an accident during the cover period, the insurer will pay the sum assured for repairs,” said Richard Wulff, HDFC ERGO chief underwriting officer.

HDFC ERGO is not alone in thinking about such a product. General insurers such as ICICI Lombard and Bajaj Allianz are also examining similar policy products.

“We are also evaluating the product which is very popular in the US. Under this system, every car will have a global positioning radio system that will send data, including average speed, the types of roads on which it runs and the driving pattern. The premium will be based on all these parameters,” said N Eswaranatarajan, head of motor insurance at ICICI Lombard.

A PAYD system has mixed success globally. While Mr Eswaranatarajan pointed to the policy's popularity in the US, Britain's biggest insurer Norwich Union dropped the policy last year after tepid response from customers.

Customers who joined had a gadget fitted inside their cars which constantly fed back data on where and when they were driving using satellite technology. This was found too intrusive by some customers.

Insurance industry officials in India said while legal decks were also cleared for insurance companies to launch such policies in India, there remained significant roadblocks, not least the effective monitoring of the mileage the vehicle has driven.

“There are two typical problems - our market, which is not very mature, may have issues with checking the mileage the vehicle has done initially when the product is sold and the subsequent monitoring. Additionally, prices for some makes of popular car models are already low. We are trying to work our way out of these problems,” said Vijay Kumar, head of motor insurance at Bajaj Allianz General Insurance. “We are deliberating on the PAYD policy,” he added.

Coverbox - A Pay As You Drive Aggregator!

One of the interesting things about the UK insurance market is the success of aggregators. An aggregator is an intermediary that sells you insurance from a number of different companies either over the phone or the web. It is not quite a broker in a traditional sense, but similar.

Aggregators have been highly successful. And an aggregator has a compelling consumer proposition, as the consumer can get a number of prices from one place. So for one investment of say 10-15 minutes, the consumer can get a number of different quotes, instead of calling around to many different companies to get the same result. But more on aggregators and specifically aggregators in Australia at another time.

In the UK Coverbox now provides Pay As You Drive insurance on an aggregator basis. The product is a telemetry-based product: They fit a black box to your car, and then charge you retrospectively for when and how far you drove your car. The black box is also a theft recovery device, and they claim 98% recovery within 24 hours. It would be interesting to know how much of that 98% is joy riding and would have been recovered anyway.

The product therefore at first glance seems similar to the Norwich Union product (which the press release says was very "popular"...).

The branding is good. The name "Coverbox" is highly descriptive of what they do. They currently have 4 insurers on their panel (The Co-Operative, Allianz, Equity Red Star and Groupama). They say they will add 2 more.

I hope they do better than Norwich Union. The concept of an aggregator Pay As You Drive certainly has consumer appeal.

The description of what they do (from the coverbox.co.uk website) reads as follows:

You could save money with Pay As You Drive (PAYD) comprehensive car insurance from coverbox. Coverbox treats the insurance cost like a utility bill. At certain times of the year you will drive more miles than forecast and at other times less, just like you use more water in the summer than in the winter. You can control your costs once we install a free coverbox device in your car, still paying for your insurance monthly or annually. Get a quote from our panel of leading insurers to see if you could save money. Coverbox also gives you theft tracking - 98% of cars stolen are retrieved within 24 hours.

The article from myfinances.co.uk is below:
Pay-as-you-drive' insurance policies are about to take UK motorists by storm, according to one provider.

Although the concept of using a 'black box' in-car tracker to measure mileage has been around for a while, take-up has been slow and pioneer Norwich Union 'paused' its policy last year due to the cost of providing the service.

More Than still offers a similar policy for young drivers, Drive Time, but until now consumers have had limited alternatives.

However, new technology with the added bonus of theft-tracking means several insurers are now offering policies through Coverbox, giving consumers more choice.

Customers logging onto the site receive a selection of quotes from insurance companies offering the service, including The Co-operative, Allianz Insurance, Equity Red Star and Groupama Insurances.

Coverbox said insurance will ultimately be offered by six big insurance brand names, with the remaining two insurers to be confirmed shortly.

Sandy Dunn, chairman of Wunelli, the company behind Coverbox, said: "We believe both the consumer and the motor industry are now truly ready for pay-as-you-drive insurance.

"Others have tried before with older generation technology but our solution is new-generation, highly-capable and based on integrated security solutions specified and proven by the leading car manufacturers in Europe and Japan."

Coverbox calculates the cost of insurance based on the driving habits of the customer, then fits a box to their car that will calculate the actual mileage.

The customer then receives monthly bills based on their usage.

"In summary, it will work very much like a monthly utility bill - the key difference, though, is that low risk drivers who use their cars little and in off-peak periods are not penalised by the actions or accidents suffered by higher risk drivers driving at higher risk times," Mr Dunn added.

"We believe a significant number of Coverbox customers will save a great deal of money compared to the cost of 'traditional' car insurance premiums."

James Harrison, chief executive of comparison website Insurancewide.com, said: "Coverbox could be a good deal for younger drivers with low mileage. This kind of scheme didn't work for Norwich Union because the take-up was lower than expected, possibly because drivers were wary of the Big Brother type tracking device.

"However, Coverbox's impressive claim that its own device will recover 98 per cent of stolen vehicles will attract great interest and it may be far more successful. It's also flexible in that there's no age restriction and you can specify likely peak and off-peak mileage.

"For older drivers with average mileage, there are no clear advantages through Coverbox and drivers should compare its offer very carefully with other providers by scouring the market online. Comparing like-with-like is the absolute key to getting good value, it's not just about the lowest price."

Norwich Union said it currently has no plans to bring back its own popular pay-as-you-drive policy.