The first of October marks exactly 7 years since the inception of mileage-based car insurance. And that’s why Pillow insurance company has decided to make this day the Czech pay-per-mile insurance day.
It all started in 2016
Jakub Strnad, the founder and current chairman of the board of Pillow insurance company, came up with the revolutionary idea. “It is clear to any mathematician that the probability of a traffic accident depends both on the driver’s skills and on how much the vehicle is on the road,” explains Jakub Strnad, who came up with the idea for the new insurance. In the Czech mileage insurance system, the client simply takes a photo of the odometer once a year and sends the photo to the insurance company; no installation of the telematic device is needed.
The insurance product found its clients immediately. “Generally speaking, for vehicles that drive up to 12,000 kilometers a year, mileage-based insurance is more advantageous,” explains Marcel Beno, board member and process architect at Pillow insurance company. “The amount of savings can be up to 35 % compared to conventional insurance without mileage dependency.” There are at least 2 million passenger cars with this mileage in Czechia and the total annual savings on insurance for all vehicles is more than CZK 1 billion.
New version of insurance and covid period
In 2020, Pillow insurance company has launched an improved version of its insurance that informs clients of the price per kilometer immediately before they sign up. This makes it easy for customers to calculate how much the insurer will pay back if they drive fewer kilometers than estimated during the year. “Another improvement is the possibility to arrange insurance by kilometers also for motorbikes and also to send a photo of the odometer via the mobile app,” says Marcel Beno. “Everything is set up automatically, so clients are often surprised to receive a bill for the past year within seconds of sending their mileage.”
Czech customers discovered the benefits of mileage-based insurance during the epidemic of Covid, when cars could not be driven as usual. While regular car insurance products did not return a single crown to their clients, mileage insurance was fair. A large number of clients received part of the money they paid back. Statistics from the Czech Insurers’ Bureau confirmed the growing interest of Czechs in insurance by kilometers not only last year but also this year. Among the three fastest growing insurance companies are both insurance companies offering motor third-party liability insurance with a price according to kilometers driven.