Road still a rocky one.
See story: Wunelli ready to give PAYD another go
Did pay-as-you-drive (PAYD) insurance drive Norwich Union round the bend?
Well if it did, other insurers aren’t taking any notice and believe they are in for a far more comfortable ride.
UK-based firm Wunelli say it has insurers onboard for their Coverbox product, the latest design in cutting edge telematics.
It will work on a PAYD basis - a driver’s length, time, duration and even whereabouts are tracked by a small device in the vehicle.
The insurance company then uses the information to negotiate a PAYD premium.
So if you are 18-years-old and are driving at 2am in the morning, it’s going to be an expensive trip compared to middle-aged mum-of-two on a 3pm shopping journey.
Ideally, the insurer saves money and mr driver slashes his premium costs.
So where’s the catch?
Norwich Union will not be ‘re-entering the market’. It failed to get a target 100,000 customers and decided the two-year scheme wasn’t cost effective.
If it is to work, insurers have to be more confident of their business model.
The Coverbox system will probably see the driver pay around £30 for the device, so that’s good news for insurers looking to save money.
Next, insurers will have to hope enough customers take up the scheme.
Most importantly, they will need to be sure the decreased claims’ payouts will be profitable against the expense of lower premiums and charges from the data collection companies. Tricky work.
On top of all of that, they will have to hope the press do not seize on this as another example of Big Brother society and give the concept a dirty name.
But even if the scheme gets off the ground and looks good, they must pray the Government doesn’t seize on PAYD under the guise of anti-terror or for congestion charging.
As Ronald Reagan once said, the ten most scary words in the English language, are ‘hello, I’m from the Government and I’m here to help’. For PAYD, the road ahead is still a rocky one.
