Despite current uncertainty caused by the Covid-19 pandemic, By Miles, an insurtech startup offering pay-per-mile insurance, has seen a surge in sales amid lockdown.
By Miles is the first in the UK to offer pay-as-you drive insurance, only charging customers for what they use (plus an upfront cost to cover the vehicle when it is parked).
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Investment in UK tech startups fell by 50% year-on year during lockdown, according to research by Plexal, but despite this, By Miles successfully raised £15m in a Series B funding round, led by CommerzVentures, which the startup said will be used to “scale the business to support growing consumer interest in flexible car insurance models during lockdown and beyond”.
Research from the AA revealed that weekday car journeys dropped by 60% between the start of lockdown and the middle of April. The AA also polled nearly 20,000 UK drivers and 22% said they predict they will drive less after lockdown.
By Miles leads insurtech innovation
With drivers rethinking how often they use their vehicles, new insurance models, and innovations in insurtech may be needed.
James Blackham, co-founder and CEO of By Miles, said:
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By GlobalData“This crisis has shown UK drivers what we’ve known for a while: the way car insurance works now isn’t working for everyone. They’re rightly questioning why they should pay for insurance they’re not able to use, and asking why traditional car insurers can’t provide a flexible alternative to meet their needs.
“Our pay-by-mile car insurance provides lower mileage drivers with a flexible, lower cost policy that drivers can track in real-time. We’ve already proved this is something UK drivers want, hitting nearly 39 million miles insured. And we only expect to see demand growing as driving habits shift while we work our way back to a new normal post lockdown.”
By Miles has already sold nearly 20,000 policies since its launch in July 2018, and saw its strongest ever sales week in April. Its target market is the 19 million low-mileage drivers in the UK who drive less than 7,000 miles a year.
With now-lifted lockdown measures limiting drivers to necessary journeys only, it is not surprising that paying for how much the car is used, rather than a flat rate has emerged as an attractive option at this time. Although it is currently unclear what long-term behavioural changes will occur after the pandemic has subsided, many may turn to insurtech solutions if a drop in car usage continues.
Bucking the insurtech funding trend
The world of insurance has been slower to adopt technology than the explosion of fintech in the banking sphere, but the industry is now growing. However, insurtech funding dropped by 54% during the first quarter of 2020 according to insurance company Willis Towers Watson.
By Miles utilises technology to simplify insurance, with customers able to track the cost of the miles they drive via an app, access a Car Medic feature if they have a problem with their car, and instantly make changes to their policy.
Paul Morgenthaler, partner at CommerzVentures believes that car insurance needs to innovate to keep pace with new automotive developments:
“Car insurance needs a shake-up if it’s going to remain relevant in a world of semi-autonomous, connected and electric cars. And in the current climate, insurers can’t ignore that – drivers want more flexibility and fairer pricing. By Miles is offering just that: a simple and transparent pay-by-mile model, exceptional customer service and significant savings via an easy-to-use app.
“Our job is to support the growth of companies with the potential to redefine and modernise insurance. I believe in By Miles we’ve found exactly that, and we’re excited to be joining them on the journey to transform car insurance as we know it, forever.”
Read more: Insurtech Sprout.ai nets $2.5m seed funding as Covid-19 accelerates automation demand.
