GrabCar drivers to save with new usage-based insurance policy

SINGAPORE — GrabCar drivers will now be able to pay for their commercial motor insurance according to the mileage on paid trips under a new insurance policy launched on Wednesday (May 11), paving the way for the use of driving data in motor insurance policies, and in encouraging safe driving habits.

This usage-based insurance policy, launched with AXA Insurance Singapore, is being touted as the first of its kind in Singapore and the region. It is expected to help private-hire car drivers who work part-time save up to 30 per cent off commercial insurance premiums and attract more to join the industry.

Commercial insurance can cost between S$2,000 and S$3,500 per year.

Speaking at the launch of the AXA Pay-As-You-Grab on Wednesday, Head of Grab Singapore Lim Kell Jay noted that more than 40 per cent of their GrabCar drivers ply the roads for less than 10 hours per week. This is a segment that needs “flexible safety solutions” to help manage their operational costs, said Mr Lim.

He added: “We are making it more affordable for new drivers who may be sitting on the sidelines.”

Under this policy, drivers will pay a flat rate pegged at 70 per cent of the commercial auto insurance base premium, and an additional 6 cents for each kilometre they cover — tracked by the GrabCar app — which is capped at 100 per cent of the base premium.

For instance, a 40-year-old private-hire driver who makes 15 trips a week — or about 7,800km — will pay S$2,568 under the usage-based policy, compared to S$3,000 for a regular commercial auto insurance policy.

Currently, commercial motor insurance premiums can cost 30 to 50 per cent more than the motor insurance covering private vehicles. Setting the flat rate at 70 per cent of the base premium means that if the driver decides not to drive his car for commercial use, he would be paying what he would have paid for private motor insurance, said AXA Chief Executive Officer Doina Palici-Chehab.

The policy will provide coverage for third-party liability, such as the injury or death of a third party, including the passenger. Payment can be made in installments over 12 months.

For GrabCar drivers who are also using other private-hire car platforms, the policy will still provide coverage in the case of an accident, but the deductibles will be higher if the accident happened on a non-Grab ride — S$5,000, instead of the S$2,000 if the accident took place during a Grab ride.

While the usage-based policy is currently exclusive to Grab, Mrs Palici-Chehab said AXA wants to continue working on telematics-based data to offer this model for both private and commercial drivers.

The use of telematics and big data for the industry was also discussed at a panel discussion on Wednesday, during which panellist Matthew Maguire, president of the Singapore Actuarial Society, suggested tapping telematics to encourage better driving behaviour.

“The potential there is almost limitless in that you can be giving feedback to drivers at the end of each trip on how well they have driven, you can be publishing safety scores on drivers,” he added.

To encourage safe driving habits, Grab and AXA plans to monitor and asses anonymised telematics data from Grab’s drivers to understand their driving speeds and patterns, such as the most traffic-congested days of the week.

The panel discussion also addressed concerns whether passengers are insured when travelling on these private-hire vehicles.

General Insurance Association of Singapore Chief Executive Derek Teo said minimally, the commercial insurance needs to cover bodily injuries of passengers and any third-party that would come into contact with the vehicle.

As some drivers only purchase third-party insurance, in March, Grab also announced a free group Personal Accident Insurance that covers GrabCar and GrabBike passengers and drivers in Southeast Asia against personal accidents.

GrabCar driver Alfred Cheong, 38, said one of his main concerns before joining the ride-hailing platform was the cost of commercial auto insurance.

As one of the few drivers who bought the new policy before its official launch on Wednesday, the part-time rigger for events paid about S$1,600 for the flat rate of the new premium.

“It’s quite worth it because I don’t really have to pay over S$2,000 in one time… so the rest I can pay in like installments,” he added.