Intact Financial leads investment in pay-per-mile auto insurance provider
Published: July 24, 2018
Usage-based insurance (UBI) through telematics device monitoring is already available from limited providers in Ontario. Drivers use a device to monitor their habit and receive discounts for safe driving behaviour and for how much they use the vehicle. Intact Financial, the country’s leading P&A is expanding its interest in the technology.
Intact Insurance already uses telematics and has recently discussed how well the technology has worked. Now the company is part of a consortium of investors giving funds to auto insurance start-up Metromile, a US-based company that specializes in pay-per-mile car insurance.
The San Francisco company wants to use the $90 million Serie E funds to expand its model into new US markets and leverage artificial intelligence (AI) for processing claims. Currently available in Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia, and Washington, the expansion would see Metromile arrive in more states.
Investors in the round included Section 32 and Index Ventures, but Intact Financial and Japanese insurer Tokio Marine Holdings were co-leads in the investment. Could this mean Intact is boosting Metromile ahead of helping the company eventually expand into Canada?
That may be a long way off, but it is an obvious eventuality for an insurer enjoying growth in the United State. Intact Insurance would be a big asset to development of a Metromile solution in Ontario.
Metromile is a policy that charges customers specifically per mile, usually less than 1 cent for every mile they cover in their vehicle. The policy from Metromile means drivers can pay for their limited use and in effect are not offsetting the higher premiums for more frequent car users.
“It’s fairer,” says Metromile CEO Dan Preston. “We found, in our recent survey, that more than 60 percent of Pennsylvania drivers drive less than 20 miles per day, and are considered low-mileage drivers who drive less than 10,000 miles per year. Our survey also showed nearly 48 percent of Pennsylvania residents drive less than 10 miles per day.”
The survey Preston references was published in 2015 and included the following information:
- On average, they found a 6 percent decrease in driving after they switched to per-mile car insurance.
- Overall, 54 percent of test-drivers drove less after switching to pay-per-mile insurance.
- Looking at users who drove more than 20 miles per day, more than 80 percent drove less after switching.
- They would help save
- There would be 60 million metric tons less of carbon dioxide emissions.
There would be 150 billion fewer miles driven.