How Insurance Companies are Doing Pay-Per-Mile Car Insurance Globally (With Case Studies)
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Details regarding the pay-per-mile auto insurance policies being offered by Nationwide’s SmartMiles, Allstate’s Milewise, Mile Auto, and UK’s By Miles are provided below. These companies have also made partnerships with different companies. Nationwide’s SmartMiles partnered with Toyota, Allstate’s Milewise partnered with Ford Motor, Mile Auto partnered with Porsche, and By Miles partnered with AXA UK. Details regarding these partnerships are also outlined below. The pay-per-mile auto insurance industry has also launched several unique technology solutions. These include Allstate’s telematics data and analytics that allow a weekly per-mile rate, Mile Auto’s patented computer vision technology that provides security to drivers, Metromile’s new app that allows users to see the potential cost savings before switching, artificial intelligence technology that has been at work in Metromile’s insurance products, and Just Auto Insurance that uses an advanced in-house telematics model.

Nationwide’s SmartMiles

  • SmartMiles is a pay-per-mile car insurance solution designed to help low-mileage drivers save money. It was launched by Nationwide in February 2019 and now serves 32 US States. Nationwide, a Fortune 100 company with a base in Columbus, Ohio, is one of the strongest and largest diversified insurance and financial services companies in the US. It offers a full range of financial services and insurance products with auto insurance being one of those.
  • SmartMiles offers a flexible car insurance policy that is based on the number of miles driven. The rate has two parts which are the variable rate (or the cost per mile) and the base rate. The variable rate is based on mileage which varies each month depending on the number of miles driven. It also offers a safe driving behavior discount, online access, and convenient mileage tracking.
  • Nationwide has partnered with Toyota to offer its auto insurance products including SmartMiles to Toyota car owners. The partnership entails offering Toyota customers who buy an insurance policy and who share their driving data to automatically have a 10% participation discount. When the collection of driving data has been completed for 90 days, customers can then receive up to a 40% final discount. The partnership is geared towards providing a “telematics offering that uses driving data collected from the connected Toyota vehicle to provide a discount based on the customer’s driving behavior.”
  • According to Kirt Walker, Nationwide’s CEO, “Consumer expectations for insurance solutions that are fast, simple and add value continue to grow. Nationwide and Toyota believe that customers should benefit from their personal data. We are excited to partner on the introduction of a new solution that will make the process even easier.”

Allstate’s Milewise

  • Milewise is a pay-per-mile insurance policy that is being offered by Allstate particularly for drivers who don’t drive very often. Milewise’s rate also has two parts: a per-mile rate as well as a daily rate. Milewise policyholders can then track their mileage and driving habits through the Milewise mobile app. It also uses the OBD-II plugin to track the mileage. Allstate’s Milewise is available in 14 US states such as Arizona.
  • Milewise introduced a twist to its program in Arizona as it now offers weekly car insurance premiums in that state, making Allstate the first and only insurance company that offers weekly premiums. According to Allstate, “in Arizona, drivers are charged a per-mile rate that changes week-by-week based on driving habits.”
  • In March 2020, Allstate has partnered with Ford Motor Company so that Ford car owners will be allowed to share data with Allstate through a telematics program. As part of the partnership deal, Ford vehicles and Lincoln’s 2020 model lineup that have embedded modems can now be connected with Allstate’s Milewise program.
  • According to Kari Novatney, FordPass mobile program’s chief operating officer, “Connected vehicles have the potential to deliver new benefits to Ford customers, including the ability to help lower their insurance premiums.” Ginger Purgatorio, Allstate senior vice-president of product management, said that “the agreement with Ford will give drivers more control and customization over their auto insurance like never before.”

Mile Auto

  • Mile Auto is a pay-per-mile insurance company that offers policies “underwritten by an AMBest ‘Excellent’ rated national insurance company and backed by one of the world’s largest reinsurers.” It is based in Atlanta, Georgia and the company “uses patented computer vision technologies to help low-mileage drivers save money.”
  • Mile Auto helps low-mileage drivers save 30-40% of their existing non-pay-per-mile rates. This is also beneficial for those who drive less than 10,000 miles a year.
  • Mile Auto’s policyholders only pay for the miles they have driven on top of a low monthly base rate. Both the per-mile rate and base rate are based on standard insurance variables such as location, driving history, vehicle type, vehicle use, age, gender, credit history, years of driving experience, coverages, and deductibles. This is available in Oregon, Illinois, and Georgia.
  • In January 2019, Mile Auto partnered with Porsche Financial Services, Inc. to deliver an innovative solution that satisfies the unique needs of Porsche owners. Through this Porsche branded insurance product, auto insurance costs will be limited to the actual miles driven, using a secure digital application. Customers of this Porsche auto insurance will also be given exceptional service, tailored rates, and full transparency regarding mileage data collection. Instead of using always-on smartphone apps or “black box” tracking devices, Mile Auto’s patented computer vision technology enables the mileage and vehicle to be verified through a photo sent from customers’ smartphones.
  • According to Ross Dupper, CEO and president of Porsche Financial Services, “We know that many Porsche drivers exhibit low-mileage driving habits, making them a perfect fit for a pay-per-mile model with non-invasive technology.”

By Miles

  • By Miles is a pay-per-mile insurance company that is based in the United Kingdom. By Miles uses a mobile app and a matchbox-sized Miles tracker plugin to track the car mileage. It offers a 24-hour claims line, instant self-serve policy changes, onboard mechanic, live chat customer service, and capped mileage costs among others. This is beneficial for those who drive less than 7,000 miles per year. In this insurance policy, there’s a fixed yearly cost to cover parked cars then there’s a per-mile rate to cover driving.
  • In 2018, By Miles partnered with AXA UK which is one of the world’s largest insurance companies. With this partnership, AXA made the commitment to “provide the insurance for By Miles’ innovative pay-per-mile product.”
  • According to James Blackham, By Miles’ chief executive officer and co-founder, “We created By Miles to help UK motorists take back control of their car insurance, combining smarter and fairer pricing with a better and more personalized service. AXA is one of the most experienced insurers in the world, and welcoming them as our underwriting partner will give our members the peace of mind that they’ll be protected by the best if the worst happens.”
  • Also, Neil Mercier, AXA UK’s head of motor, said “Our partnership with By Miles fits with our focus on finding innovative ways to reach customers – especially those whose needs differ from the wider market. By Miles will benefit motorists who spend less time behind the wheel, allowing them to pay for their insurance based on their usage and take control of what they pay for their cover.”

Press Releases Surrounding Technology Solutions

1. Allstate’s telematics data and analytics allow a weekly per-mile rate

  • According to Ginger Purgatorio, Allstate’s senior vice-president, “Both of the programs (Drivewise and Milewise) stem from the telematics data and the analytics that Allstate has behind them, and both are contributing to safer drivers in general. With Milewise, the customer’s behavior impacts the weekly per-mile rate, and now the customer can observe their behavior and get an immediate reaction to behavioral changes.”
  • Purgatorio added, “Telematics, in general, is viewed as more fair to customers, eventually moving away from proxies that the industry has used to develop premiums. We have had several conversations with departments ahead of filing, getting feedback before we actually file. They have come along as companies have proved that the data has merit and is predictable.”
  • Purgatorio also said, “This pay-per-mile personalized pricing program further increases the control and transparency that customers have over their insurance pricing, based on how they drive and how much they drive. Our focus at Allstate is really about changing the value proposition that we bring to our customers and changing that relationship so they understand it’s a risk management partnership.”

2. Mile Auto’s patented computer vision technology provides security to drivers

  • Mile Auto’s patented computer vision technology is a non-invasive technology that tracks the number of miles driven but not the car’s location. This is unlike the plugin tracking devices of other pay-per-mile auto insurance companies.
  • Fred Blumer, Mile Auto’s CEO, also said “Where you go is your business, not your insurance company’s. We only track the miles you drive, not where you drive them, because we want you to enjoy driving your Porsche with peace of mind.”

3. Metromile’s new app allows users to see the potential cost savings before switching

  • According to a press release last October 2020, ” Ride Along (Metromile’s new app) allows drivers to get a free insurance quote based on their driving without signing up to Metromile.” When drivers download the app, it will monitor the number of miles driven for 17 days.
  • Using the acquired data within that 17 days, Metromile then calculates the drivers’ potential monthly bill and the amount of savings that they can have if they were to become a Metromile customer. This Ride Along app feature is designed to increase Metromile’s customer acquisition. It is a free “no strings attached” avenue for drivers to have an idea of the tangible benefits of having a Metromile pay-per-mile policy.

4. Artificial intelligence technology has been at work in Metromile’s insurance products

  • Metromile’s claims assistant, called Ava, uses “artificial intelligence to verify claims within seconds and guide drivers through the claims process, finding repair shops and scheduling a rental car when relevant.” Aside from that, Metromile allows customers to avoid parking fines as it sends a street-sweeping alert in selected cities. This technology also allows Metromile to assist its customers in finding their stolen or lost car. Metromile takes pride in its record of a 92% stolen car return rate.
  • Metromile’s artificial intelligence technology is also used in providing real-time, sensor-based pricing.

5. Just Auto Insurance uses an advanced in-house telematics model

  • Just Auto Insurance is a recently launched telematics-based solution that targets lower income consumers through a quick prepaid product. This allows the company to calculate premium based on individual risk instead of on demographic correlations. The company claims that it is able to predict individual risk with higher accuracy as it combines driver telematics data with contextual data such as traffic flow, driver fatigue, weather, and distraction. The company’s pricing model is based on an advanced in-house telematics model that uses high-resolution data from more than 12,000 drivers.
  • According to Robert Smithson, Just Auto’s CEO, “Lower-income consumers are the people who are most likely to be discriminated against as part of the traditional auto insurance quote process. They’re more likely to live in zip codes with high auto insurance rates, and they’re also likely to be more dependent on their car rather than less dependent because they’re unlikely to be able to afford other transportation options like Uber.”
  • Smithson added, “Last year, we paid 12,000 people to drive for us for about four months so we could collect high-resolution telematics data to build a pricing model. One thing we discovered, which I think is very interesting, is that while many existing telematics products looked only at whether you were speeding or going a certain amount above the speed limit, we found there was no meaningful correlation between people who sped from time to time, and people who had accidents. The reason a driver might not speed is because the roads they travel on most days are busy, and so they have no chance to speed.”
GLENN TREVOR
Glenn is the Lead Operations Research Analyst at The Digital Momentum with experience in research, statistical data analysis and interview techniques. A holder of degree in Economics. A true specialist in quantitative and qualitative research.

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