Pay-As-You-Drive Service Set to Reduce Emissions and Improve Road Safety in Europe

LONDON, September 17th, 2008 - The pay-as-you-drive (PAYD) service is gaining increasing acceptance in Europe as it has significantly brought down the insurance premium for drivers. PAYD was first introduced as a measure to reduce insurance fraud and having proved its insurance premium benefits for the end customers, the insurance companies are now emphasising on the benefit of reducing the emission and improving the road safety.

New analysis from Frost & Sullivan, An Update of European Markets for Telematics-Based Pay-As-You-Drive Vehicle Insurance, finds that the market earned revenues of €18.64 million in 2007 and estimates this to reach $141.81 million in 2015.

If you are interested in a virtual brochure, which provides manufacturers, end users and other industry participants with an overview of the update of European markets for telematics-based PAYD vehicle insurance, then send an e-mail to Anna Anlauft, Corporate Communications, at anna.anlauft@frost.com, with your full name, company name, title, telephone number, company e-mail address, company website, city, state and country. Upon receipt of the above information, an overview will be sent to you by e-mail.

Certain sections of customers, mainly low-mileage drivers and young drivers will be able to save up to 30 per cent on the annual premium due to PAYD. Besides, PAYD is predicted to reduce vehicle travel by a considerable degree, effectively reducing emission and improving road safety. This may influence governments to provide certain tax discounts for insurance companies and customers adopting this method.

“PAYD reduces the risk for insurance companies by providing huge incentives for users altering their driving pattern positively, thereby reducing the risk of accidents and claims,” notes Frost & Sullivan Research Analyst Mohamed Mubarak M. M. “Moreover, PAYD enables insurers to calculate risk more accurately and this will help them to price the service aggressively.”

However, developing region-specific tariff model for different customer segments is a major challenge for insurance companies and system suppliers. “Currently, certain insurance companies demand the customers purchase the hardware unit (telematics box) to avail of PAYD service,” says Mubarak. “The high cost involved in purchasing such units is also a significant restraint for the uptake of PAYD services.”

Going forward, the emergency call (eCall) voluntary agreement is expected to push vehicle manufacturers into integrating standard telematics hardware. This will provide a standard and an open platform on which various value-added telematics services developed and offered. The open telematics platform will standardize the data transfer methodology. Other telematics services such as stolen vehicle tracking (SVT), remote vehicle diagnostics (RVD) and eCall can be packaged with the PAYD service and offered in the same telematics hardware unit. This is a definite revenue-generating model.

An Update of European Markets for Telematics-Based Pay-As-You-Drive Vehicle Insurance is part of the Automotive & Transportation Growth Partnership Service programme, which also includes research in the following: strategic analysis of the Pay-As-You-Drive, Pay-How-You-Drive and other telematics systems. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants. Interviews with the press are available.

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