AMA launches pay-as-you go auto insurance

By Al Beeber - Lethbridge Herald on April 17, 2024.

LETHBRIDGE HERALDabeeber@lethbridgeherald.com

The Alberta Motor Association has introduced pay-as-you go auto insurance to the province.

It’s the first prodeuct of its kind in Alberta and the AMA says it’s already saved Albertans more than 40 per cent off their premiums.

“AMA MyPace is a groundbreaking, distance-based insurance product where, alongside a fixed fee for things like theft and hail, policyholders only pay for the number of kilometres their vehicle is driven, says the AMA. The product is offered the Alberta Motor Association Insurance Company which is a subsidiary of the AMA.

AMA says MyPace can offer significant savings to owners of vehicles driven fewer than 9,000 kilometres per year, making it an option for residents who work from home, or work less frequently in the office or those who use transit. Retirees and households with more vehicles than people can also benefit, says the AMA, which found that almost 60 per cent of participants in a survey drive 9,000 or fewer kilometres each year. More than 30 per cent of AMA members drive less now than they did pre-pandemic, according to survey responses.

And commuting distances are also dropping with 57 per cent of Canadians saying they commute fewer than five kilometres per day, up from 45 per cent in 2018.

With the pay-as-you-go system, a vehicle’s driving distance is recorded by a device that plugs into a port and customers are billed monthly based on the kilometres driven the previous month. They are also charged a fixed amount to cover hazards when parked.

Recent trips and monthly kilometres can be viewed in the MyPace app.

James Setch, VP of Underwriting for the AMA, said in a Tuesday interview the idea for the product came from a sister organization in southwestern Ontario that implemented a comparable one a couple of years ago.

“We’ve certainly seen a significant shift in driving trends since the pandemic. There’s a non-insignificant number of people who work remotely now and we think this is a brilliant product for those folks that just don’t drive as much as they used to,” said Setch.

“There’s a bunch of vehicles just sitting on driveways nowadays and I think a better way to insure them is to have the technology installed in the vehicle,” allowing owners to get in them whenever they want and just pay for usage,” said Setch, noting customers are regularly asking why they are paying for insurance on two vehicles when they can’t drive them at the same time.

“I think this is a solution that helps deal with that problem.”

The equipment utilized is “very small and non-invasive,” said Setch. An OBD-2 telematics device is installed into the OBD port in a vehicle, that port being the one mechanics use to do diagnostics. The device has a cell chip in it that transits back to the AMA the distance driven on a per-trip basis and the AMA consumes that distance to create a variable insurance rate based on distance travelled in a month.

Customers are required by the AMA to retain full coverage, including liability, collision and comprehensive. Comprehensive, which covers fire, theft and other matters which can happen when a vehicle is parked is billed at a non-variable rate, said Setch.

For people who drive fewer than 9,000 kms, there is “a great opportunity save some money,” said Setch.

Drivers don’t have to be AMA members to apply for the coverage. Customers will talk with an agent in Alberta about the kilometres driven in a month. If it’s determined a customer will be a good candidate, devices are shipped from Calgary to that person’s home address after a policy is purchased. And the customer pops the device into the port.

“It’s very, very easy to install these things,” said Setch. Instructions and a QR code with video are shipped with the device, as well, to assist people, he added.

Some vehicles won’t qualify for the coverage with OBD ports being installed in vehicles around 1996. Older vehicles don’t have those ports, said Setch.