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June 15, 2006 Pay-As-You-Drive: Dynamic Insurance Emerges In Europe by Ricardo Arruda with Martha Bennett, Cliff Condon, Ashara Giordanelli

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Executive Summary

Pay-as-you-drive schemes rely on GPS technology and mobile phone networks to track individual car usage and determine tailored motor insurance premiums. Insurers were initially reluctant to launch this product as it challenged established pricing models and involved high implementation costs. But pioneers like Progressive Casualty Insurance showed how pay-as-you-drive schemes could yield significant business and customer benefits. Led by the largest insurers and government authorities, pay-as-you-drive schemes are now appearing in European insurance markets from the UK to Italy. These emerging pay-as-you-drive schemes will create a dynamic insurance market that gives consumers greater control of their own premiums and sets insurers powerful new challenges and opportunities.

TABLE OF CONTENTS

• Technology Drives New Customer-Centric Insurance Models
• The First Pay-As-You-Drive Insurance Models Are Emerging In Europe
• The New Dynamic Insurance Market: Insurers Face New Challenges

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This is an excerpt