How does pay-per-mile car insurance work from an actuarial perspective?

Home Forums General Actuarial How does pay-per-mile car insurance work from an actuarial perspective?

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  • #1483
    loka123
    Participant

    How does pay-per-mile car insurance work from an actuarial perspective? If the lower risk/lower utilizing members pay less, who subsidizes the cost of the higher utilizers, riskier drivers? Or would the riskier drivers foot the bill?

    Or do insurance companies assume that there will be enough behavior change, such that premiums will be lower for everybody (so everybody wins)?

    #1626
    Sherwin
    Participant

    The annual claims frequency was divided into the monthly basis, and then the daily basis, and then the per-mile basis. No use, no pay  🙂

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