How pay-as-you-drive insurance saves money

• The private and commercial motor vehicle classes of insurance - which contributed the bulk of premiums last year- brought in a combined Sh27.15 billion of the Sh60.66 billion gross written premiums accounting for 44.76 per cent of the business.
• According to the data from the Association of Kenya Insurers (AKI), the private motor vehicle class made an underwriting profit of Sh320.49 million for the first time in more than seven years after the new rules on premiums and underwriting were introduced.
• The new product seeks to make private motor vehicles profitable for the firm, offer consumers a new way of purchasing insurance, and save money for those who fit into the profile of the product.

A week prior to the release of the insurance sector’s full year results, Gateway Insurance, one of the small insurance companies in the country, launched a new pay-as-you-drive motor vehicle product.

The pay-as-you-drive product is popular in South Africa and allows consumers to buy insurance as needed.

The private and commercial motor vehicle classes of insurance - which contributed the bulk of premiums last year- brought in a combined Sh27.15 billion of the Sh60.66 billion gross written premiums accounting for 44.76 per cent of the business.

According to the data from the Association of Kenya Insurers (AKI), the private motor vehicle class made an underwriting profit of Sh320.49 million for the first time in more than seven years after the new rules on premiums and underwriting were introduced.

The new product seeks to make private motor vehicles profitable for the firm, offer consumers a new way of purchasing insurance, and save money for those who fit into the profile of the product.

READ: Firm launches mileage-based motor insurance

Godfrey Kioi, chief executive officer of the insurance firm, spoke to the Business Daily on the features of the new product and future plans for the company.

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What was the genesis of this idea?

The genesis of this idea was to look for something that others do not have. We have seen that 45 per cent of the sector’s premiums come from motor.

There is a lot of under-cutting because everybody wants to protect their market share. When you introduce a product like this one you change the rules of the game and you become the competitor to beat.

It is a product that appeals to certain clusters of individuals in a way that traditional insurance will not. Growth comes from identifying a new market, new customers and producing a service that differentiates.

How has the response been and what is your target market?

The response has been very encouraging. What we are trying to do now is to communicate to policy holders where the value is. It is not a cheap product so we are not using it to undercut traditional insurance but if I am a low mileage user, I can see savings.

The product is not for public service vehicles because at the end of the day, they do a lot of kilometres. It is, for example, for people who travel a lot and leave their cars for three months in a parking lot or those who use their cars over the weekend.