Insurance premium according to distance and time driven… PayG option…. ?
Dublin: A notable portion of the Irish populace is contemplating the potential introduction of a novel motor insurance model known as “pay-as-you-go” (PayG), wherein premiums are determined based on kilometres travelled. This innovative system, prevalent in countries like the UK and US, offers insurance coverage tailored to the duration and distance of vehicle usage, with an additional provision for addressing theft or other related concerns during parking, typically incurring a nominal fee.
Under the PayG framework, a compact tracking device would be installed within vehicles to monitor mileage and usage duration, enabling insurers to calculate monthly premiums accordingly. This approach particularly resonates with individuals aged 55 and above, who typically log fewer kilometres compared to their younger counterparts. The inherent advantage lies in affording drivers who cover shorter distances the opportunity to secure insurance coverage at a reduced cost, reflecting a more equitable pricing structure.
The spokesperson for People Insurance underscored the cost-saving benefits of this model, emphasising that policyholders need not bear the burden of insuring unused kilometres—a compelling proposition, especially for seniors whose travel patterns tend to diminish with age. Presently, traditional insurance schemes often impose uniform premiums irrespective of actual mileage, thereby potentially disadvantaging individuals who drive infrequently.
A recent nationwide survey conducted by People Insurance, polling 1,000 respondents, revealed considerable interest in this alternative insurance model. Six out of ten participants expressed favourable views towards the concept, with a third expressing support for both distance-based and hourly-based payment options. Moreover, a quarter of respondents indicated a willingness to explore the benefits further before making a decision.
Data from the Competition and Consumer Protection Commission highlights that while private cars in Ireland average approximately 10,000 miles annually, a significant proportion of vehicles are driven sparingly. Despite this, individuals who cover shorter distances may still face relatively higher premiums under conventional insurance structures.
Although the PayG option remains unavailable in Ireland, People Insurance advises consumers to explore alternative insurance avenues that better align with their usage patterns. This burgeoning interest underscores the potential for innovative insurance models to enhance affordability and fairness within the motor insurance landscape.
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