Introducing Insurance by the Mile
Out of over 900 companies, MileMeter was selected as one of the 7 national finalists for the Amazon Web Services Startup Challenge. We will offer "auto insurance buy the mile", so people who drive less pay less for insurance. Customers will buy miles in advance and renew as needed - without vehicle tracking devices. With MileMeter's insurance by the mile, you only pay for the insurance you need. By rewarding reduced driving with lower insurance costs, insurance by the mile has the potential to reduce our environmental impact and to make insurance fair, accurate and affordable. We'll tell you more about that in a later posting.
For each finalist, a 2 minute film was produced by Snippies. We're very pleased by the results, and you can watch the video below.
We'd like to especially thank the folks who made the video so engaging and professional: Jeff Fellows, a friend with video experience who helped us avoid all manner of first-timer mistakes like wearing a striped shirt or switching one's visual focus between the camera and the interviewer; Laura Inserra, producer; Leslie Frances, video journalist; and the rest of the Snippies and AWS teams.
Comments
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On the video: 1. There are some good locutions on the video, such as "fair, affordable, and made sense." I think that the "makes sense" part is an attractive point and quite a contrast to the current premium structure. 2. Therefore, I suggest posting the video script to make the locutions more accessible. 3. It may be minor, but I know that video makers waste nothing. In the shot of the Margarita van rounding a city corner, I'd swear that it bumps over the curb slightly. Is it so? It does add interest.
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This is a genius idea!
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Great idea, but how about one step further? I'm probably the odd duck but I have several cars...an old pickup for chores, a sports car for summer, an older SUV that's in excellent shape but not worth trading in. I drive a company-provided car. So....I have very few miles on 3 cars but I pay as though I were three people. Any thought to insurancy by the person, not the individual cars? Jim
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Jim, Even though you have to have one policy per vehicle with MileMeter, you're not overpaying for insurance since your total premium is dependent upon miles driven. So with MileMeter you will not "pay as though [you] were three people" with your 3 cars, but rather you will pay for the miles you drive. The insurance is prepaid (you purchase miles of coverage), and getting a policy takes 3-5 minutes. Even if you purchased 3 policies to cover all three vehicles, the total purchase time should require less than 15 minutes (from quote to printing your liability cards). We also allow multiple household drivers to be associated with a vehicle. If you have other questions, just let us know. Thanks for reading the blog! -Chris
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Go! Go! Go!
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Even though I am an auto insurance sales person, I too think this is a wonderful idea. The correlation between miles driven and claims cannot be denied. My question is how is how are the states viewing this? If you purchase 5 thousand miles in advance and only use 2500 miles per year as a driver, do they require updating of proof of insurance annually? I can see where the administrative side of this could be cumbersome. One article I read gave an example of .03 cents per mile as an example rate. Is this example for liability only or also for the comprehensive and collision and all the other coverages that may be requested by an insured. I am very interested to see how this can actually work.
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Does MileMeter take into account driving record or ability? If I drive 1 mile to work each day at 100 miles per hour while drunk, then I would pay the same as my grandmother who drives 5 miles each day to church....right? Also, women drive less? I can tell you that my wife drives all over the place picking up and dropping off kids to practice, school, shopping etc. Meanwhile, my car sits in the parking lot 9 hours a day. It is a unique idea, but one that I think is flawed.
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Steve, I'm the Chief Technologist at MileMeter. Right now, we are set to go in Texas with other states soon to follow. Each state will have it's own regulatory challenges to overcome. In Texas, the insurance expires when you reach the miles purchased or 6 months, which ever comes first. Other states may vary depending on regulations. When you sign up, you have the option to choose additional coverages (physical damage, towing, pip, uninsured motorist) and different limits on bodily injury and physical damage. The rate of .03 cents/mile is for minimal liability coverage only. When signing up, we show the different limits of liability and optional coverages broken down into cents per mile. Hope this helps. Doug
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Wendell, If you are driving to work at 100mph drunk, you'll have alot more problems to worry about than who will pay for your auto when it gets crashed. With all auto insurance companies, individual drivers fall into different rate categories, we just happen not to use gender as a factor. Younger and older drivers will have different rates than middle-age drivers as well as drivers in rural areas vs. densely populated areas. The idea is that if you are only driving 6000 miles per year, why pay the same rates as people who drive 30,000 miles per year. When you purchase a policy from us, you purchase what you think you will drive and you will be covered for that block of miles. We don't think it's as flawed as your existing auto policy in which you drive to work and your auto sits there for 9 hours a day in the parking lot. If you are only putting a small handful of miles/day on your vehicle, this will certainly be worth looking into.
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this is an incredible idea. I'm looking forward to checking into rates as I'm more of a mid-level driver (10k/yr) to compare to my current insurance. congrats on being a finalist.
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Chris I think you have found a great idea that will be highly accepted by the majority because being in Dallas myself I know that the insurance companies factor in a lot fo things when providing quotes. Good luck and I will continue to look for Milemeter in the coming months.
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hello, i live in detroit, and i cant wait for it to get here whenever that may be. i work at home, so its obvious no brainer for me. right now its all or nothing. several questions: 1. what factors aside from mileage will you include ie, i am looking at age, location, gender credit etc. in other words will it be exclusively by mileage? 2. what if a parked car that is covered by your policy gets hit, is that covered? someone else wanted to know that, but i cant imagine it wouldnt be. 3. this will be a prepay system? if so how small a block of miles could one purchase? or can say a thousand miles be paid in parts? 4. will you have to a system with mechanics to make sure people dont change the odometer? 5. are you asking anything of the general public to expedite bring your system to other states?
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SC, Excellent questions, and I will address a few of them here. I get the feeling you’re in the insurance business :)
- We use standard actuarial criteria to develop our rates, to include age, location, and vehicle. Pricing is per mile. We do not use credit-scoring, because you are not applying for a loan (indeed, you are paying us cash). Credit-scoring can be useful for actuarial purposes; however, in and of itself I personally think credit-scoring for insurance is invasive, dangerous (SSNs and identity-theft), and inappropriate.
- Your parked car scenario would be covered by Collision insurance coverage, which you would be able to purchase from us as an additional menu item. We try to make things convenient.
- MileMeter purchases are prepaid. You will be able to purchase miles in 1,000 mile blocks up to 6,000 at one time, with full payment made at the time of purchase.
- The general public can best help us by signing up for notifications (give us your email and zipcode) at our website. Armed with that information, we know which states are most interested in our product.
We will be in other states fairly quickly. If you happen to have friends or relatives in Texas, though, we’d appreciate it if you could let them know about MileMeter. Thanks!
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Dear Chris What a great ides,I live in Ireland where motor insurance is very expensive,my 19 year son,s annual motor insurance premium is over 5,000$ crazy. I am an entrepeneur and would love to look at bringing your product to Ireland. Look forward to hearing from you. Richard H Joyce Galway Ireland.
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Chris, I think this is an excellent idea! I only drive on the weekends since I take public transit to work. I don't generally look at my odometer to see how many miles I have driven. Is there something that alerts me that I have exceeded my prepaid mileage, and that I need to purchase another block?
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Ok...so, I live and work in Texas and I want to buy 6000 worth of coverage. I normally don't drive much, but, during the summer vacation period (and to beat the heat) I decide to drive to North Carolina in the mountains. I go to NC, drive around a week or so, and get back to TN and run out of mileage. What do I do then? Do I have to take the bus home? Or, do I call, give my cc number to someone on the phone and get more insurance?? This whole idea is about like "pay at the pump."
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TS,
MileMeter has nothing to do with "Pay at the pump." The latter, as a legislative initiative, failed for a number reasons, not the least of which is that it infringed upon consumer choice. MileMeter creates consumer choice.
In your summer vacation example, you could always purchase more insurance at anytime by calling us or by using the website. It's very convenient. Additionally, to help you avoid unexpected coverage horizons we send you renewal reminders.
As with all purchasing decisions, there are tradeoffs. MileMeter is doing its best to bring consumer choice, transparency, pricing fairness, consumer savings, and environmental/social benefits to market. On the flip side, consumers will have the responsibility of renewing/extending their policy when necessary (akin to remembering to change the oil in your car). We think this is a reasonable tradeoff. Obviously, those that disagree should not purchase MileMeter insurance.
Thank you for your interest in MileMeter, and I hope you have the chance to use our insurance on your NC summer vacation some day!
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I LIVE IN ENGLAND, WHEN WILL MILEOMETER BE AVAIABLE IN THE UK WONDERFUL IDEA KIND REGARDS STUART
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Very interesting concept! Is Milemeter the Insurance Company or do you use another insurance company's paper? Is your policy auditable or is there simply an exclusion if you surpass the mileage purchased? Do you handle your own claims or do you use a TPA? Do you have an AM Best, Standard & Poors or Moody's financial rating? Is there any consideration to using Independent Agents for product distribution?
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I thought of this idea several years ago when I moved to a small town from Kansas City, and a little more than a year ago I decided to do some quick internet research. That's when I learned of the pilot program being tested in Texas (evidently your company was partial to that test). My annual mileage is a small fraction of what it was, moving from a sprawling metropolis to a small yet mostly self-sufficient city, the number of accidents is substantially less, and the speed and distance traveled and the level of traffic are all less here yet insurance rates are HIGHER than they were when I was in Kansas City! I learned that the insurance companies not only structure insurance premiums on risk issues, they are also based on competitive issues. I.e., "all" the national carriers want to maximize their customer base in places like KC, so they offer the best price they can - a price war if you will. The problem is, they bilk the customers in places like here where driving is a bit safer and results in fewer claims, and we end up subsidizing policies written in those larger more competitive (and dangerous) markets. If your company will take the high road and abstain from this UNFAIR practice when structuring your rates per mile, then you will earn my business, and my blessings! Instead of being that (insert your favorite expletive here) insurance company, I might just add you to my favorites list. By the way, if you contact me I'll like to see what you think about an add on product that you can offer, something that would be beneficial to your company and the customer both. I think you'll see the value and appropriateness almost immediately.
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Have you given any thought to franchising or licensing local "brick-and-mortar) agents to sell PAYD insurance. I think the lower income demographic will definately buy this concept. They are accustomed to pay-as-you-go celluar phones, land-line phones, and rental(by the week)furniture,appliances, and electronics. Daily, the courts are filled with cases of drivers driving without insurance due to financial reasons. That demographic along with senior citizens will be harder to reach by internet sales, i think. Local entreprenuers will gladly inform them of and offer Milemeter at no additional expense to you. Plus, you will get a visual periodic reading of the odometer, if desired. If something like this is in the works, please put me on the list to be an agent for the Memphis, Tennessee area. Thanks...
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Stuart: Offering the MileMeter product outside of the United States will take some time; however, we do have some plans in process.
KG: I can't answer most of your questions in a public forum at this time, but I can tell you that the answers to them will become public knowledge when we begin selling insurance this Summer.
Marty H.: We've worked to make a product that is transparent to consumers (no black box pricing silliness) so that consumers have the power to make a rational purchasing decision. How and why we arrive at a price will be plain and simple. As an aside, we were never part of the pilot program you mentioned -- MileMeter has not received any government subsidies. Thanks for the encouragement, and please send us an email to our public address on the Contact page of our website.
Patrick: I agree with (most) of your analysis. We are very familiar with the non-standard insurance market, and would like to make our product available to most market demographics. Patrick Butler at centspermilenow.org has done some excellent research showing how distance-based insurance would be economically beneficial to lower-income drivers. Please stay tuned to our progress.
To all, thank you for your interest in MileMeter!
Sincerely,
Chris Gay
CEO, MileMeter
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How do you verify and keep track of a person’s odometer setting. I know it’s human nature for people to lie so how do you keep that under control?
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This is the most innovative and sensible idea that has come along in decades The whole concept should turn the auto insurance industry on its head! I can anticipate a lot of opposition being mounted by the conventional auto insurance industry. As a retired family my wife and I own two cars one of which is a 17 year old luxury car which we only drive when both of us need to be in different places at the same time. That happens maybe a half dozen times a month at the most. otherwise it set in the driveway sucking up money and rusting. We otherwise drive our Honda Civic everywhere we need to go. The by-the-mile model is exactly what we need. What can we do to help get this in the Virginia Commonwealth? SOON?
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I live in Washington State U.S.A. This is a very innovative idea. I'd love to save a lot of money on auto insurance as I drive less than 1,000 miles per year.
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Thanks for the information and head up on service in Texas. As a Biochemistry PhD student at UH I ride the metro bus most of the time so paying by the mile makes a lot of sense. I would love to try this out and pass on the word to other Houstonians wanting to make the switch to commuting. This could be a win-win-win (me-you-planet). John
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Yes, a very interesting idea so please inform me about your overseas program is available. Ernest
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How will you handle claims? will you use independent adjusters or will you have your own people on the ground?
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Excellent idea! I bicycle everywhere and rarely drive. But I love my old Audi and can't bring my self to sell it. I've considered registering it non-operational to save on insurance costs. Your service is a perfect fit. Hopefully it will come to California soon.