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Pay as you drive, or pay how you drive? • londonbusinessblog.com

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After speaking many insurtech investors lately I’ve been thinking about usage-based insurance (UBI, which in this case doesn’t refer to universal basic income). On the surface, this approach makes a lot of sense: for example, why should drivers pay the same premium regardless of the number of kilometers they drive? But distinguishing users also raises all kinds of questions about what is fair and where UBI is going. — Anna

Stop paying for others?

“There has been a lot of noise around UBI […] In recent years. It should have been the next big thing, but it hasn’t really taken off yet.” New alpha asset management associate Clarisse Lam told londonbusinessblog.com.

AV8 VC‘s partner Amir Kabiro agreed with Lam, noting that there are issues between startups and legacy insurers: “Early startups exploiting the UBI space had a hard time creating a meaningful moat,” he said. Meanwhile, he added, “established companies have been in the UBI space for decades and have not yet seen major adoption.”

Coincidentally, or perhaps not, one of the insurtechs hardest hit by the stock market sell-off was Metromile, which went public in 2021 and saw its valuation plummet by more than 85% before being acquired by fellow former Startup Lemonade. Metromile’s focus was on car insurance per kilometer, a self-explanatory concept where drivers pay less if they drive less.


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