Written evidence submitted by By Miles (SDV0032)
Executive Summary
By Miles welcomes the opportunity to respond to the Transport Select Committee scrutinising the development and deployment of self-driving vehicles for use on the roads.
Given the obvious safety benefits that connected and automated mobility (CAM) cars present, we believe it’s important that the Government continues to encourage, and incentivise, uptake of these features. This submission sets out By Miles’ assessment from an insurance perspective of how to make a successful shift to CAM.
In 2019, By Miles launched the UK’s first connected car insurance policy[1], and this year extended the product to cover rolled this out across a further 10 major car brands. We believe that the role of insurance to enable CAM is critical.
About By Miles
By Miles is Europe’s largest real-time pay-by-mile car insurance provider. Our members pay a fixed fee upfront to cover their car while it’s parked, and then a few pence per mile for what they actually drive.
The premise behind the policy is simple: if you drive less, you pay less for your car insurance. A car that’s not being driven won’t have an accident, making it less likely that the owner will need to claim.
Through our innovative model, we incentivise and reward customers today for driving less (with associated environmental and safety benefits) as well as giving our members access to fairer insurance based on a more accurate understanding of their risk, as we base their price on actual, exact mileage. This is particularly relevant in times of increased working from home and higher cost of living.
Since 2018, we have used a small, matchbox-sized Miles Tracker that plugs into our members car to accurately collect mileage data, but more recently have developed a method of getting this information directly from Connected Cars themselves via our Connected Car insurance policies.
In a world where cars are getting increasingly safer and smarter, our vision is to reduce the cost of insuring a car journey to zero for the driver, in order to incentivise their use of improved safety features by reflecting their reduced risk in their insurance pricing. Earlier this year, we launched our connected car insurance policy across a further 10 major brands, including Mercedes-Benz, Ford, Stellantis Group and BMW/Mini.
- Progress of research and trials in the UK and abroad;
1.1. By Miles is supportive of the Government’s plans to introduce self-driving cars to UK roads, and applauds the ambitious timescale. We hope to be able to encourage take up of CAM cars and functions by incentivising the use of this technology with reduced insurance premiums in real-time. Given our plans and timetables with our partners, we hope that the cadence of Government support for CAM continues at a similar level. However we note that while insurance is a critical enabler of CAM, it has not (yet) had the attention and focus from the Government on the other aspects of CAM .
1.2. In April 2022, we launched our By Miles Connect[2] platform, across 10 major car manufacturers. As part of our relationship with these brands, we are receiving data directly from their vehicles to understand the mileage of the car in real-time. By extension, we are also able to receive data about the usage and fitment of safety features, with the intention of being able to reduce the per-mile cost for drivers who engage these features.
1.3. Additionally, in the case of some manufacturers[3] who are required (or willing) to accept legal liability when the car is in self-drive mode, we hope to be able to reduce the cost of the insurance to zero for the driver, and charge the manufacturer directly.
1.4. Our vision for interactive car insurance, much like with Vitality’s model[4] in the health insurance domain, is that those sharing more data that proves they are exhibiting safer behaviours on our roads should be rewarded financially for doing so (see diagram in references). This, in turn, should play a part in ‘nudging’ others towards participation in using CAM technologies that make both them and the roads safer.
1.5. We note that many other traditional insurance providers are not openly considering the issue of ‘split liability’ (where a driver and a car may be liable at different times in a journey), and many of the products currently available are not adaptive in real-time.
- The role of Government and other responsible bodies, such as National Highways and local authorities; and potential effects on patterns of car ownership, vehicle taxation and decarbonisation in the car market.
2.1. According to the Department for Transport, 85% of accidents on the road are down to human error[5]. It makes sense that if you reduce the amount humans are doing the driving, then you reduce accidents, you reduce claims - and, you can reduce insurance costs for motorists.
2.2. Additionally, a November 2021 white paper from LexisNexis[6], showed the effects of having ADAS features engaged can result in: 23% reduction in Bodily Injury loss cost; 14% reduction in Property Damage loss cost; and 8% reduction in Collision claim loss cost in ADAS-equipped vehicles compared to non-ADAS vehicles.
2.3. However, a recent AA survey[7] of 13,746 drivers found that many keep these functions switched off: only a third of drivers who have adaptive cruise control ever use it, and less than a third who have speed limiters use them.
2.4. From this data, it’s clear that when new safety features exist, they are not being incentivised enough to enable widespread uptake.
2.5. Uptake needs to be both in the form of the customer of the vehicle deciding to pay extra for a safety feature, and in them using (and trusting) that feature.
2.6. We note the updates to the Highway Code to allow for self-driving vehicles, but there must also be a financial benefit to engaging this technology, as safety alone is not enough of a driver for many[8].
2.7. By Miles is actively trying to use insurance as a ‘nudge’ for drivers, and will be able to incentivise safety features being engaged in real-time[9].
2.8. The Government is at risk of seeing its strategy for adoption fail, if drivers aren’t able to see a monetary benefit for purchase and engagement of CAM technology.
2.9. Traditional insurance keeps the price fixed for the year regardless of usage. Currently, telematics insurance providers are the only ones with a product that is able to:
- use data from Connected Cars to change the price of a policy based on real-time usage
- contain workflows for customers to consent to sharing their data and;
- reward and incentivise customers for using new safety features.
2.10. We believe that reducing the rate of Insurance Premium Tax (IPT) for telematics insurance policies will incentivise investment in building this kind of technology, and create an environment in which these savings could be passed onto motorists through lower premiums. This would greatly increase the innovation within these types of products - and therefore benefit drivers, increase the uptake of new safety features, and ensure the success of the CAM rollout.
2.11. IPT is currently levied at a flat-rate on every car insurance policy, but by altering the rate for telematics insurance products you would be able to instantly see a financial benefit passed to drivers.
2.12. Existing R&D funding for CAM has focussed on the development of the new technology and has largely ignored innovation in enabling products such as car insurance.
August 2022
References
Endnotes