April 16, 2021 by Adam Malik
Pay-as-you go insurance demonstrates that auto insurance clients can’t be grouped into a one-size-fits-all solution, says an insurance company exec.
CAA president Matthew Turack believes his company’s MyPace product, in which insurance coverage is based on distance driven, shows that customers want to go beyond standard auto policies because they all have different needs. When presented with an opportunity to buy a product that better suits their particular needs, clients will jump at the chance to take advantage.
“It tells me that people have a variety of different life stages and different usages for their car,” he told Canadian Underwriter. “It tells me that you could drive one car for longer distances and the other car you drive very short distances, or it’s sitting in your garage or driveway. Some people just use their cars to go for groceries or short visits to families. Other people have more than one car and one of them is their ‘joy car’ that they take out on the weekends. The other one is what they drive more for the commute back and forth to work.”
These types of clients with specific driving habits are gravitating to the MyPace program, Turak observed, noting that the use of the product has grown by 300% over the past year. This may have been partly to do with the impact of pandemic-related lockdowns, which reduced the distance many people were driving.
As a result of these circumstances, Turak said, consumers either don’t want or need a standard auto policy. And so pay-as-you go insurance products give “people the options to have different lifestyles and customize their insurance for each component of it.”
Such product flexibility is available in other financial sectors as well, including banking and life insurance. So it’s natural that when auto clients see a similar opportunity, they’re going to take advantage, said Turak. “People really are receptive to it.”
MyPace was launched in Ontario in 2018. It expanded to Nova Scotia last year. It’s targeted to low-mileage drivers, those who will travel fewer than 9,000 km. Drivers buy insurance in 1,000-km increments.
Turack said the age of people interested in pay-as-you-go insurance is wide-raging. “It’s not one [age group],” he said. “It really does span through a whole bunch of different age groups, depending on what their individual situation is. You could be 30 years old and live downtown and [maybe] you drive a bike, or take public transit, or walk to work. [But] you have a car, and you use that car sporadically depending on where you’re going.”
The point of insurance is to serve all of these varying needs, Turak said. A product such as pay-as-you-go insurance “really allows people to adapt insurance to where they are and what their needs are. And that’s a perfect way of saying it’s not a one-size-fits-all. Insurance has to adapt to really be there for different stages [of a customer’s needs].”
Feature image by iStock.com/Delpixart