Firm launches mileage-based motor insurance

• Gateway was the 14th largest company in Kenya in 2010 with one per cent of the market, according to the Association of Kenya Insurers.
• The insurance firm has launched a cover that will see motorists pay premiums based on their time on the road.
• Gateway chief executive officer Godfrey Kioi said the comprehensive insurance product charges premiums based on actual distances travelled.
• “The current pricing of motor insurance in Kenya is driven by the value of the car, multiplied by a certain minimum rate.
• This mathematical formula does not differentiate between high mileage drivers and low mileage drivers,” said Mr Kioi at the launch on Wednesday.
• The flat-fee product allows motorists to first pay for third party, fire and theft.

Gateway Insurance has launched a cover that will see motorists pay premiums based on their time on the road.

Gateway chief executive officer Godfrey Kioi said the comprehensive insurance product charges premiums based on actual distances travelled.

“The current pricing of motor insurance in Kenya is driven by the value of the car, multiplied by a certain minimum rate.

This mathematical formula does not differentiate between high mileage drivers and low mileage drivers,” said Mr Kioi at the launch on Wednesday.

The flat-fee product allows motorists to first pay for third party, fire and theft.

Additional payments for comprehensive cover are then charged based on intended mileage.

Distances not travelled can be carried over to the next insurance period where they can offset the third party charge or extend the mileage cover.

Mr Kioi said existing products do not differentiate between a regular driver such as a matatu operator and one who drives to work and back or a farmer who goes to the market once a week.

“When you go to the restaurant and order for steak, you do not get billed for a whole cow.

The more you drive, the more you should pay. The less you drive, the less you should pay,” said Mr Kioi.

The pay-as-you-drive model is popular in South Africa where vehicles are required to be fitted with a tracker to tame fraudsters.

In South Africa, some products have a reward system for drivers who do not make claims over a period.

“Recent changes in technology now make it possible to implement other ways of pricing vehicle insurance premium,” said Mr Kioi.

Gateway is using a tracking device that will enable it to determine where and when occurs.

The company said it would pay claims verified in five days.