New Pay How You Drive Motor Policy Could Help Reduce Accidents

21 Aug 2009

An innovative Pay-How-You-Drive motor insurance policy known as PHYD has been launched by Acorn Insurance and Financial Services.

PHYD is easy to understand and is based on one premise, the way a person drives impacts on the risk they pose to their insurer. In other words, better driving habits should earn a lower premium.

The policy is aimed at lowering accident rates among motorists by allowing them to actively view reports on their driving behaviour and adjust bad behaviour accordingly. It will initially be sold through Acorn Insurance's call centre and plans are in hand to make the policy available on line.

Research by Acorn Insurance identified that existing pay-as-you-drive motor policies are very difficult to understand. They are generally based on a cost per mile driven and as a result it becomes impossible to predict how much insurance will ultimately cost. In response Acorn Insurance has adopted a unique approach based on charging an up front premium on a presumed level of risk that a driving style poses to the insurer.

"Total miles driven, is only one of four items Acorn considers when evaluating driving style. In the event of driving style not suiting the risk profile sought, then Acorn gives the driver a chance to amend driving style including paying a top-up fixed amount for additional mileage requirements (if needed)," commented Alan Keating of Acorn Insurance.

Using technology supplied by Airmax Remote, Acorn's insurance product is built around a similar points system used by the DVLA. A driver gets points for breaching pre-defined limits (speed, night time driving and continuous driving). The points remain for two months before dropping off. If the driver accumulates twelve points at any one time the policy is cancelled with immediate effect.

The technology used can also substitute for a tracker device and so if a policyholder's car is stolen, it can be located and hopefully retrieved regardless of where it is in the UK. Points (if incurred) get allocated daily and policy holders can be advised of points incurred by email or SMS.

The Acorn Insurance and Financial Services web site www.payhowyoudrive.co.uk also provides policy holders with their points score and other relevant driving data. This information is accessed through the use of a secure password log-in issued to the policyholder at start of the policy.