Pay-per-mile auto insurance company launches in Portland

Pay-per-mile auto insurance company launches in Portland

Metro Mile-2

This little device plugs into you car’s diagnostic
port and then records mileage and other trip data.
(Photos © J. Maus/BikePortland)

MetroMile, which launched in Oregon today, is the first company in the nation to offer pay-per-mile auto insurance. The company is targeting its services at the growing number of Americans — particularly those under 40 — who are driving less.

While company CEO Steve Pretre hails from Redwood City, California, he and his partners have decided to base the company here in Portland.

Why Portland?

“What brought us here was here initially was the bike community,” Pretre shared when I met with him last week. During one of his many visits over the past several months he went on a run and got caught at a bridge lift on the Hawthorne Bridge. “While I was waiting there, there were probably close to 100 bikes waiting with me to get across. I realized right then that this was the right place for us to start.”

Metro Mile-4

CEO Steve Pretre.

MetroMile is based on the fact that many city dwellers — especially in low-car meccas like Portland — don’t actually use their cars all that much. In fact, recent numbers from ODOT show that in 2011 the amount of miles driven by Oregon residents dipped to its lowest level since 1997. Since insurance companies base their monthly rates on averages, many policy holders end up subsidizing the driving habits of others.

“There is a widening gap between high mileage and low mileage drivers,” says Pretre. “Millions of people are making conscious decisions to bike, walk and use public transit more often… Traditional car insurance pricing takes the money those people should be saving based on their reduced driving and uses it to subsidize people that drive more. That is unfair and we are setting out to change it.”

Pretre says his goal with MetroMile is to figure out, “How do we encourage or reward that driving less behavior? And make sure that when people are making those tradeoffs, they are getting fully rewarded for it, instead of just being asked to subsidize someone who is driving more?”

A typical MetroMile policy runs about $30-40 per month and then customers are charged a few cents per mile once they hit a certain limit. MetroMile is targeted at people who drive less than 10,000 miles per year (the national average is 13-15,000). The company estimates people will save about 20-50 percent on average.

MetroMile is all about data. One of Pretre’s partners in this venture (which is funded in part by $4 million from venture capital firms) is an ex-Google employee that started a crop insurance company that crunches weather data to forecast climate trends.

Metro Mile-3

Data analysis is key to the MetroMile business model and mission. When you sign up, you get a device that plugs into your car’s diagnostic port. The data is then fed into your online profile (which looks similar to Strava, a popular bike trip tracking app). Mileage, trip length, distance, and so on are all displayed in easy-to-read graphics.

The idea is that making people more aware of the type of trips they’re taking, and allowing them to compare trip data to others, will be a powerful way to influence behavior. And for Pretre, he hopes it encourages people to drive less. “We’re actually encouraging a behavior we think is really good and people should be rewarded for making those kinds of choices.”

For those concerned about privacy, Pretre says people can easily turn off the GPS data collection.

And why would a company that sells auto insurance actually want to discourage driving? “If we are going to talk the talk, we have to be willing to walk the walk,” Pretre says.

Whether or not this takes off remains to be seen. But it seems like it could be a potentially powerful force in changing behavior and getting people to think more about how often they drive and what type of trips they take — both of which could help curtail car overuse and ultimately encourage more bike trips.

MetroMile plans to eventually expand the service to more low-car cities.

What do you think? Is this something you’d be interested in?

— Note: I’m proud to announce that MetroMile will be the presenting sponsor of our Ride Along series. Stay tuned for the next installment coming later this week.

UPDATE: For more details, see the comment below just written by CEO Steve Pretre.

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