General Insurance Article - 250 million mile report could change way cars are insured


 A report on the analysis of more four billion fields of data collected from 250 million miles of vehicle journeys looks set to change the way car insurance premiums are set.

 Insurance pioneer Johan van der Merwe, who acquired telematics-based pay-as-you-drive insurer Coverbox earlier in 2012, commissioned the report which has assessed the behaviour of tens of thousands of drivers since 2009.

 It will be presented to a select panel of leading insurance companies in March. Telematics records the movement of vehicles for analysis – including acceleration, braking, cornering as well as routes and parking location and other parameters - via GPS.

 "What it reveals is that there's an overwhelming case for changing the way the insurance industry sets premiums: we can record, analyse and compare driving behaviour as against applying insurance 'proxy ratings' - we get factual driving information, and base rates on driving style and location rather than lifestyle and home address," said Mr Van der Merwe.

 "Addresses are relevant to theft - massively less-likely with modern vehicle security - whereas driving style is relevant to injury or death, which obviously command much higher compensation payments.

 "A low mileage car 'living' in a proxy rating high-risk area may rarely move, and may even be driven very carefully, but a high mileage car whose owner lives in a proxy rating low-risk area may actually be driven very aggressively through many rush-hour accident black spots, or in dangerous 'super-peak' periods.

 "The report illustrates that both insurers and drivers will be better off if insurance is rated on driving style rather than lifestyle, and that good drivers don't suffer from the behaviour of bad drivers.

 "The beauty is the speed with which the system could be introduced."

 Coverbox pay-as-you-drive insurance allows drivers to take out comprehensive cover paid for by the mile, with the price per mile varying according to the time of the day or night: off-peak, peak or "super-peak" times.

 All Coverbox policyholders have a personal website enabling them to see precisely how many miles they are driving, and what the cost is. The technology behind Coverbox is based on proven equipment and technology.

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