Why is Ford partnering with insurtechs on car insurance?
Mile Auto was founded in 2017 and recently secured US$10.3m in seed funding to expand across the US.
Part of the increasingly popular ‘pay-per-mile’ auto insurance sector, which has gained momentum since the pandemic, the company estimates that it can save customers up to 40% on their standard annual rate (assuming they drive less than 10,000 miles per year).
Users simply take a photo of their odometer every month as confirmation of their mileage and Mile Auto then charges a small per mile charge in addition to an agreed base rate.
Ford: CX beyond products
In September 2020, Ford announced that it was partnering with another leading pay-per-mile company, Metromile, with a view to incorporating its technology into certain models.
As such, it’s clear that the motor giant’s focus on enhanced CX has moved beyond simply focusing on cars and instead shifted to the whole ownership experience. Tim Meek, North America Digital Insurance Manager, characterises this as a focus on ‘connectivity.’
"Today, some of us are spending less time in our cars and keeping an even closer eye on ownership costs as a result. Our relationship with Mile Auto provides connected Ford customers with a better way to align their auto insurance expenses with actual usage and is part of Ford's commitment to customer experience innovation through connectivity."
Although currently only available in Arizona, Georgia, Illinois, and Oregon, Mile Auto has stated that its intention is to cover 25 US states by the end of 2021.
Car insurers grapple with pay-per-mile
Despite being an innovative cost-saving option for less peripatetic customers, a recent report from By Bits indicates that car insurers are encountering significant hurdles when trying to integrate pay-per-mile into their product portfolios.
Among the challenges cited were:
- Speed of deployment
- Time to market
- Cultural resistance to automation
- Overall cost of deployment
- Lack of customer confidence and appreciation of its benefits
“While it’s understandable that insurers are somewhat hesitant and uncertain, most of these barriers are easily addressed with the right approach and support,” commented Callum Rimmer, Founder and CEO of By Bits.
“The fact is that it has never been easier to introduce a usage-based offering. The technology is there, and so is the consumer demand, and there is now a huge window of opportunity for those insurers brave enough to get on the front foot and make it happen.
