ausauto News Article

US drivers to get pay as you drive insurance

US drivers to get pay as you drive insurance

Fourteen American insurance companies will be offering motorists pay-only-as-you-drive (PAYD) insurance policies before the end of next year, reports CollisionWeek.

Public policy advocates see PAYD as a green product that creates incentives for driving less, resulting in less accident claims, pollution, oil dependence and public infrastructure cost.
Some drivers see it as a way to save money on their premiums.

In response, some U.S. insurers are moving fast to introduce PAYD.

Exigen Insurance Solutions polled 163 insurance company representatives from 91 companies attending a PAYD webinar in November.

The survey indicated that 59 percent of respondents have investigated/considered offering a PAYD product.

The top market driver for PAYD introduction was readiness to respond to protect their book of business from competitors.

Entering a new market to grow revenue was second ahead of entering the market to gain market perception as exercising corporate responsibility with a green product.

Nearly half of respondents considered the cost of implementing core systems for PAYD products as the major barrier to introduction. This compared with 20% for consumer privacy concerns, 18% for the cost of telemetry devices, 14% for state insurance regulations, and 4% for existing PAYD patent infringement.

"The results indicate that U.S. insurers are adopting a follow-the-leader approach to PAYD that is defensive rather than aggressive.

"They are clearly monitoring PAYD market developments closely, concerned that if competitors begin to offer a PAYD product they will have to act swiftly to protect their book of business," said Fazi Zand, VP, marketing and business development for Exigen Insurance Solutions.