The spread of the Covid-19 pandemic has been unlike anything witnessed in living memory, as are the ripple effects that the near-global lockdown is having on almost every sector, from manufacturing to education.
The insurance sector is no different, as Barney Thompson, telematics insurance director at data specialist Trakm8, explains: “It’s unquestionable that the COVID-19 pandemic, and the ensuing measures put in place to safeguard against it, have pulled the insurance industry’s current underwriting model into sharp focus.”
“This was magnified even further in April, when several leading insurance providers announced refunds to their customers, due to reductions across the board in vehicle usage.”
The move has been welcomed by customers, who are encouraging other insurance providers to follow suit, and the announcement has left many wondering whether the current insurance model of paying for an annual policy will be as popular in the future, as people start to question their attitudes to mobility and begin exploring other options.
Barney continues: “The shift towards pay-as-you-drive insurance makes sense in this uncertain time, when unnecessary journeys are discouraged and organisations and employees alike are discovering the benefits of working from home. What changes to everyday life will remain when “normality” resumes – however this might look? Will insurance companies offer an alternative to the traditional model?”
One company seeking to answer that question is By Miles, one of the UK’s fastest growing car insurance providers and an outspoken proponent of flexibility for policy holders. The service that By Miles provides, enabled by Trakm8’s unique technology solutions, is based on three key tenets – fairer pricing (ensuring drivers only pay when their car is in use), total transparency (users can see the exact cost in insurance-terms of each journey) and ease of use.
James Blackham, founder and CEO of By Miles, explains: “It’s no surprise that the pay-as-you-drive insurance model has found itself in the headlines in the past few months. The lockdown has had a profound impact on our way of life, not least our driving habits, and it’s clear that a lot of these changes – greater emphasis on remote working, for example, leading to lower mileage driven on daily commutes – will continue for as long as social distancing measures remain in place. “Post Covid-19, we would expect the popularity of pay-by-mile to grow further still - for drivers of all ages. After all, people today expect flexibility in everything, from how they access entertainment to the energy tariffs they pay - why should car insurance be any different?”
Barney concludes: “No one could have predicted the scale and severity of the Coronavirus pandemic, yet it could be an opportunity for the insurance industry to adapt and evolve, to provide a new insurance model as people question their mobility habits and needs. Consumer appetite is changing, and the technology exists to support insurers in improving their customer offering. Is now the time for the industry to reconsider how it writes business and offer an alternative?”