I have written several posts in the past, suggesting that PAYD insurance will become popular in the future, but acknowledging that most traditional car insurance companies won’t like it. Shareholders will hate the concept, because the customers who have the most to gain are underwriting insurance company profits and funding those who drive a lot and have many accidents.
Since the COVID19 pandemic, it is likely that many people will be remote working at least part time if not most of the time and many have lost their jobs and will not be driving as much. They also won’t be able to drive much, having lost their primary source of income.
This opens up a great opportunity for new boutique disruptors to enter the market if the traditional behemoths don’t offer this type of service. I did a search in New Zealand and wasn’t able to easily find any company offering this service. This doesn’t mean it isn’t available and if you find someone who does offer the service, please leave a comment and link. I’m happy to support them in my blog.
In many cases, this might include the installation of a GPS vehicle tracking system into the car, but that has all sorts of benefits to it as well. If it were to be stolen, you can track it down. If you lend it to the teenager to pop down and see a friend, you can see if they are speeding or going somewhere they didn’t tell you about. Some also allow you to disable a car so it can’t be taken by a prospective thief, or include alarms. Vehicle tracking systems today are cheap and reliable.
During the COVID19 lockdowns, most of us did very little driving, but our car insurance premiums kept on coming out as usual. No one came to me and said “We will charge you less at this time, because we know many clients are experiencing financial challenges.”
Besides people who are now unemployed, there are also a large number of retired people who drive very little and don’t have many accidents. They also as a whole don’t have much disposable income.
Taxi companies complained when Uber came along and offered services people wanted, like being able to rate and see ratings of drivers, to agree on the price before being picked up and being able to see the location of the car on a map, to know how far away it was. Taxi companies have very sophisticated technologies, and it would have been so easy for them to add those features before disruptors took business off them. But they didn’t and in most cases still haven’t. It’s a shame because that industry won’t be doing very well right now because people aren’t keen on hopping into cars that have had many other passengers in them already.
Would you opt for PAYD if it was available to you?