A view from one of our utilities specialists – Martin Alabone.

Let’s look at other utility models:

  • Domestic water in this country is largely unmetered, as the cost of installing the infrastructure is not warranted given the fact that one household consumes about the same amount of water as the next.
  • Domestic energy is metered mainly on a volume basis because, generally, we can’t/won’t regulate when we use energy. Economy 7 (night-time cheap rate) is about as sophisticated as it gets, but a lot of energy companies are trying to phase it out.
  • Telephone/mobile usage is metered and complex usage tariffs exist, as we all have very different usage patterns and we tend to regulate our usage.

I think car insurance is closest to the domestic energy model.  The insurance industry has already come up with the right tariffs for this model;  Social, Domestic & Pleasure unlimited, SDP + Business unlimited, limited mileage; and that pretty much covers it!

I ran a quote on coverbox for my main car.  All four quotes were either more expensive or about the same as my current non-PAYD insurer.  And I’m sure the quote for my weekend ‘fun car’ would be more expensive than my limited mileage policy.

Usage based insurance will only work if Big Brother forces it through legislation for road-use charging, or if it can be proved that there really is a strong link between knowing how I drive, what risk I therefore represent and how much I need to be charged.

Halve my insurance quote and I’m interested.  Knock £20-30 off…why bother?