A Glimpse at the Future of Personal Auto — Today

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I recently wrote about the future of personal auto in the aptly named “The Future of Homeowners and Personal Auto Insurance” (http://www.novarica.com/report_future_homeauto.shtml).  In that report, I wrote at length about pay-as-you-go insurance and the importance of getting out in front of this trend.  However, the sense of urgency should perhaps be even greater than what’s conveyed in the report.  A UK company, Coverbox (http://www.coverbox.co.uk), was created as a joint venture of a telematics provider and what appears to be a broker.  Coverbox provides comparative estimated rates based on your projected peak and off-peak mileage, and appears to give the telematics box away (though they charge for installation) when you buy a policy from a participating carrier.  What’s fascinating about this model is that carriers in the comparative rating system agree to standard contract wording and get standardized data from the boxes.  This is somewhat game-changing, as it removes a major barrier to entry and a major switching cost.

While this is a further challenge for carriers, it will almost certainly push more consumers in the UK market towards pay-as-you-go.  And since the US has pretty closely shadowed the UK market on this technology/business model, carriers here should take notice!

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