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| Story on per second billing ... in Africa |
| 06.10.04 (12:18 pm) [edit] |
Per second billing comes to car insurance…
Following on systems currently mooted in the USA and Europe, Per Kilometre billing is set to find it’s way onto the SA insurance landscape. While not quite ‘per second’, the principle is similar to that introduced by South Africa’s leading cell phone companies. We looked at the idea and will follow up with an in-depth article in next month’s RESOURCES.
HOW IT WORKS:
Per Kilometre billing is based on the principle that those drivers who travel less than average pose a lower risk to insurers. The savings for low kilometre users can be significant. Of course the risk profile of the policyholder still plays a significant role in risk evaluation.
Industry experts we spoke to voiced their doubts as to the sustainability of the product in South Africa. How it works overseas: a driver will purchase cover based on his estimated distance traveled each month. When that distance is reached the policy lapses until he ‘tops up’ the cover. Given the generally long distances covered by South African motorists, as well as our high rate of hijackings – most of which occur close to home – it remains interesting to see how the calculations will pan out. The first company to introduce per kilometre billing is Nedbank insurance brokers. Keeping tabs on actual kilometers traveled is the tricky part of the system, overseas insurers opting for expensive GPS tracking systems. With their affiliation to Nedbank, the first SA model links the policy to a garage card, which records mileage every time the vehicle is refueled. The product is geared at users who travel less than 1500 kilometres per month.
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