Industrial Alliance has a program in Quebec, and Aviva Canada ended a five-year pilot of its Autograph program in 2010.
Aviva Canada introduced Canada’s first pilot pay-as-you-drive scheme in 2005, with 22 brokers participating in distributing the product. The ‘Autograph’ program lasted until 2010, at which time Aviva ended the pilot without commercializing the product. Among the reasons for cancellation, the insurer cited high support costs to maintain the program.
Canadian insurers have been calling on brokers to get comfortable with the notion of usage-based auto insurance for some time. But brokers by and large are skeptical about the durability of the product, often citing concerns about the sustainability of the product’s pricing.
“If it’s a user who is hardly using the car, you’re not going to get enough premium for it,” said Brad Jefferson, owner of Rand &Fowler Insurance in B.C. “It takes as much to write that policy as it does to write a policy where you know what you are insuring.”
In a conventional insurance product, everyone knows know how much the client is going to use the car, and how much the client is going to be paying, Jefferson said. Everybody knows the risk, and the premiums being collected for the risk.
“In this [pay-as-you-drive] case, the client may only use the car a little bit, and you’re picking peanuts up all day long,” he said. “Then he has a claim and you’re really backwards that way. So that’s why I don’t like it.”