With fewer car journeys in lockdown, Luke Holloway examines pay-per-mile cover and other motor insurance developments
The UK’s first pay-per-mile car insurance company now allows drivers with low annual mileages to save on motor insurance.
By Miles is aimed at drivers who cover fewer than 7,000 miles a year – roughly 140 miles a week. Customers pay a flat-rate annual fee to insure the vehicle against theft or damage when parked and are then charged a variable rate based on how much they drive.
James Blackham, CEO of By Miles, describes car insurance as “a product that’s barely changed in 30 years”.
And in recent months, as the Covid-19 pandemic has meant more people working from home and less daily commuting, the policies have become widely popular. “We’ve seen demand for our pay-by-mile policies continue to increase as UK drivers look for more flexible insurance cover that better fits their needs post-lockdown,” says Mr Blackham.
“This crisis has shown UK drivers that traditional car insurance models don’t work for everyone. It doesn’t make sense to pay the same price month on month if your driving habits keep changing, so insurance needs to evolve to work in this new world. It’s time to move towards car insurance that offers more flexibility and actually encourages people to drive less.”
Insurers in the UK do currently provide cover for low-mileage drivers, but these typically charge by the day or by the hour, or require consumers to predict how much they will use their cars.
Matt Cullen, head of strategy, data and analytics at the Association of British Insurers (ABI), says: “The motoring environment continually changes and motor insurance adapts to meet changing driving habits and consumer needs. This takes the form of innovative policies to cover ‘on demand’ motoring, telematics devices and smartphone apps.”
In the motor sector more widely, 2021 will see the continued development of automated vehicles and the rollout of micromobility devices – in particular e-scooters.
The connected and autonomous vehicle market is estimated to be worth £41.7bn by 2035
Source: UK Gov
The motor insurance market is working alongside the UK government to help realise the safety benefits automated vehicles can bring; understand the limits of the technology; and deliver the right levels of protection for users of micromobility devices and other road users.
Jonathan Fong, ABI policy adviser of general insurance, says they are supportive of new technology and mobility concepts that can help ease congestion, improve air quality and expand transport systems, but safety must always come first.
“Micromobility devices are becoming increasingly common and are already being used on roads and other public places. E-scooter trials are taking place across parts of the UK and insurers are closely monitoring the progress. If these types of devices are to be used on the roads, it is imperative that a robust regulatory framework is introduced that allows for safe and legal use.”
But he warns: “We strongly oppose the implementation of any framework that could result in liabilities falling onto the Motor Insurers’ Bureau and, by implication, premium-paying motorists, if a corresponding insurance requirement for micromobility devices is not established.
“Existing infrastructure may not be suitable for all types of devices. Should the government decide to legalise the use of private micromobility devices on roads following the current rental e-scooter trials across the UK, a controlled and considered rollout to mitigate against potential negative safety implications is necessary.”
The full economic value of self-driving vehicles in the UK was revealed in January, as transport minister Rachel Maclean unveiled a report setting out that the connected and autonomous vehicle (CAV) market could be worth £41.7bn by 2035.
The report, conducted by researchers at Connected Places Catapult, Element Energy and Cambridge Econometrics, forecasts that in 2035, 40% of new UK car sales could have self-driving capabilities, with a total market value of £41.7bn – setting the future of self-driving vehicles “further within Great Britain’s grasp”.
“We are on the cusp of a driving revolution,” says Ms Maclean. “Not only could this tech unlock vast opportunities for the UK economy and jobs market, it could significantly improve the safety and efficiency of how we travel during the coming decades.”
The UK government has already invested £200m into CAV research and development, helping British startups develop technology for use both in the UK and internationally.
The ambition to make the UK a prime location to deploy CAVs is also being realised through work to update UK law and regulations to make sure that the technology can be safely used on UK roads. In August 2020, the government announced a consultation to enable the use of automated lane-keeping systems – an early form of automation in vehicles – on UK roads as early as 2021. The response to this consultation is set to be published by spring this year.
Lord Grimstone, minister for investment at the Department for Business, Energy & Industrial Strategy, says: “Self-driving vehicles represent a huge economic opportunity for the UK, unlocking much-needed jobs and economic growth. Government is backing business to realise this – driving forward the future of the UK’s automotive and technology sectors and helping us build back better.”
Luke Holloway is editor of The Journal