New Developments in Mileage-Based Telematics Are Creating Engaging Programs for Auto Insurers

Mileage-based programs are seeing a resurgence. New developments in mileage-based insurance telematics are giving insurers an additional edge while being on trend with what policyholders are looking for.

The transformative digital age has already disrupted many industries from car-sharing to banking and more recently, insurance. The reality is that this digital shift is resulting in new and better solutions as well as new and better ways to do business. The net result is more value to the insurance consumer. Consequently, insurers know that in order to drive demand for insurance products that offer greater value, build trust with policyholders and provide rich, engaging experiences, it’s necessary to offer more personalized insurance programs and services to policyholders. Such programs that have seen tremendous reinvention and resurgence are mileage-based insurance telematics programs.

Mileage-based insurance programs are regaining traction with insurers who are looking not only to compete but thrive in developing innovative insurance telematics offerings in a mature market. Mileage-based programs are often referred to as the Pay-As-You-Drive model, a model where policyholders pay based on how many miles they drive. In the past, mileage programs simply collected data on a policyholder reported mileage. More personalization and new technology developments are now enabling these programs to vary greatly with respect to mileage context used, rate determination and billing model. As a result, they are quickly generating new interest as well as capturing market share. As an example, a policyholder can be charged a flat rate fee every month based on typical insurance costing factors plus an additional fee per mile driven, up to a certain number of miles after which point they may not be charged. Alternatively, they can pay for insurance by purchasing blocks of miles, similar to how consumers pay for prepaid cellphone fees.

Pay-per-mile programs offer auto insurers a number of benefits – they are quick to implement, offer more transparency and provide policyholders with options for insurance that meet their lifestyle needs and values. What is more, they also help increase policyholder retention and encourage safer driving through behavior-based coaching.

Furthermore, value-added services such as driver behavior coaching, roadside assistance, theft tracking and telematics-driven claims in particular, extend the benefits and opportunities for interacting with mileage-based policyholders. Encouraging safer driving behavior lowers the frequency and severity of accidents and claims which means safer policyholders and savings for the insurer.

The Emerge of the On-Demand Economy is Driving Interest in New Mileage-Based Programs 

While a pay-per-mile program may seem only of interest to low mileage older drivers, age groups such as millennials are also the target demographics driving the increased demand for mileage-based programs. This is because of a shift to an on-demand economy where services are increasingly on an on-demand basis as in the case of TV programs, ride-sharing and cellphone data usage.

Given this information, it’s no surprise that insurers are already re-thinking their insurance program portfolio and adding new mileage-based insurance programs as available offerings to their book of business.

Staying Competitive With the Latest in Mileage-Based Insurance Telematics Programs 

Post-COVID, remote working and fewer commutes remains the norm. Policyholders are shopping and looking for options to continue to beat inflation and offset premium increases. As a result, UBI and mileage-based programs are surging in demand.

However, the majority of mileage-based programs in market are limited and only track actual mileage travelled – but do not factor in safe driving behaviors including distracted driving. At the same time, you and other insurers also face increased cost scrutiny during this inflationary period and hardening markets – favoring solutions that enable scale and reduce cost.

Below is a breakdown of the different pricing structures that can be implemented in a mileage-based insurance telematics program, starting with a traditional “Basic Rate” pricing structure, followed by a “Personalized Rate” and finally, a more comprehensive “Variable Mileage Rate”:


In addition to the flexibility and personalization around pricing structures available, a variety of billing options also exist ranging from a traditional “Prepaid Mileage” plan to “Post-paid Recurring Billing” and finally, “Post-paid Ad-hoc Billing”. Here is a detailed breakdown:


Given the flexibility when it comes to pricing and billing structures, along with their proven capability to provide a richer experience to policyholders and as a result, attract and retain them, it’s no surprise why new mileage-based insurance telematics programs are ideal programs for insurers looking to drive more ARPU from their existing book of business and attract new consumers by offering what they are looking for in this new world of on-demand needs.

The world is changing – do you have the best options for your policyholders?

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