Smart tech could help keep your car insurance premiums down, says KOBA CEO

Woman stands in street holding smartphone and smiling.

KOBA chief executive Andrew Wong says that if cars are getting smarter, then insurance should be too.

The question is, how?

We spoke with Wong about how KOBA’s smart tech could help save Aussie drivers money on their car insurance

Car insurance needs a glow up

Wong says that car insurance really hasn’t changed much in the past 30 to 40 years. “The one big difference for customers is that you can now buy it on the internet,” he says. 

It looks like the industry is about to experience a shake up though, as investments in insurtech have surged in 2021. Insurtechs bring together innovation and efficiency from current insurance models in an effort to create savings. Global investments in insurtech reached 7.4 billion USD in the first half of this year, more than the total number of such investments made in the whole of 2020, according to insights from risk advisory Willis Towers Watson.

Wong says this is a sign that investors around the world are picking up on the fact that car insurance is an industry ready for change. But how exactly does KOBA do things differently

KOBA’s real time car insurance

When applying for car insurance, traditionally drivers will be asked a long list of information before being provided a quote. This information includes things like driving history, the car itself, the driver’s age, where they live and so forth. All of these details help an insurance provider work out how high or low the risk is of that person being involved in an accident.

Wong says KOBA does something similar, but splits payments. "We ask very similar questions on driving history, where you live etc, but when it comes to the premium price, we break it up into two." These are a "fixed premium" and a "driving premium."

Wait, there are two premiums? Yes there are and you might be thinking, but doesn’t that mean more money? Well, no KOBA breaks the traditional annual premium into two to help save low usage drivers money. 

How the fixed and driving premiums work

The “fixed premium” provides cover for events such as theft, fire, malicious damage, hail and so forth. Things more likely to happen while your wheels are stationary. Meanwhile, the “driving premium” covers potential risks while driving, such as accidents on the road. The idea is that while your car is parked, you shouldn’t have to pay to cover it for things like collisions.

This differs from the traditional car insurance model, which will work out a customer’s overall risk factor and charge a set price. Wong says, “A traditional car insurance provider may assume you drive an average number of kilometres per year (around 13,000km**) and work out your annual premium price based on that.” Wong says in this way, car insurance providers right now are charging drivers a price that works for the company's overall portfolio and risk management, not a price that is ultimately determined by the customer.

"So say we agree to charge you 5c per kilometre," he says. "Right now if you’re in lockdown, you might only be driving to the supermarket once a week and wind up only doing 100km in one month. At 5c per km, that would be $5 for the month."

The fixed premium is a set price which can be paid annually or monthly. If the fixed premium is $300 per year, that’s $25 per month. So in this scenario the monthly bill could be around $30.

What if you drive a lot though? The good news is that there is a limit on the number of kilometres KOBA will charge you per day and per month. The limit per day is 250km and the limit per month is 1750km. That means that if you drive 300km in one day, you won’t be charged for the last 50.

Connecting to the KOBA app

The number of kilometres you drive each day is calculated by KOBA's smartphone app. The app works with a small device that is plugged into the car and the technology it runs on can be compared to other smart devices such as doorbells, home security systems, refrigerators and even energy usage apps. With these types of devices, data is passed back and forth to make things more convenient, smarter and more cost effective for the user.

From day one KOBA's app will have a trip tracking capability to help determine your driving premium. However, Wong says the start-up has a number of useful features it intends to develop for the app over the next 12 to 24 months. These include reminders for when your car is due to be serviced, a ‘find my car’ tool, a carbon emissions tracker and crash detection.

Of course, connections and tracking will keep evolving - it’s expected that most new cars will be pre-connected to the internet by 2030. Wong says self-driving cars will probably be another 10 or 12 years beyond that. "The connected car future is something we are putting a heavy bet on. The nature of how people connect with their cars is going to change in a couple of years and we really want to be positioned to drive that conversation and be part of that change."

Well we will continue to keep readers updated on how KOBA tracks over the next few years. The insurtech is set to launch in October this year, but super keen beans can pre-register right now. 

If you want to read more about similar usage based cover, check out our guide to pay-per-km car insurance. Some other car insurance providers with usage based policies include Huddle and Poncho. 

Or, if you want to switch car insurance policies right now, take a look at the deals on offer below and click through for a quote.

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    **According to ABS statistics, the average vehicle drove 12.1 thousand kilometres in the 12 months to 30 June 2021.

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