Grab + AXA, good, but could easily be better

In Singapore, Grab and AXA have come together to offer a variable premium commercial policy that covers Grab drivers for third party liability, including passengers and property damage (http://news.asiaone.com/news/transport/grab-hopes-cheaper-insurance-will-see-more-becoming-part-time-drivers). This comes after grab offering free personal accident policy for Grab drivers and passenger across South East Asia as announced a couple of weeks ago (https://www.grab.com/sg/grab-provides-free-personal-accident-insurance-for-passengers-and-drivers-2/).

This is very good news.

One of the issues with taking rides from organisations like Uber and Grab was whether, as a passenger, you are covered in case of accident because remember, the car you are in might not have been insured for ‘business/commercial use’. The accident policy covers this and it seems all grab vehicles in the region are automatically covered from the moment the booking is confirmed until the passenger is dropped off.

Another concern was if you were in an accident involving (caused by) a grab vehicle, the variable premium commercial policy covers this, assuming grab ensures that all drivers are covered by the policy since it seems that the premium is to be paid by the driver.

The premium is variable in the sense that the driver pays 70% of the normal premium as a base, and a minimal amount (6 cents) per km driven as a grab driver (the commercial part), up to a total of the full premium. This is designed to attract part-time drivers – basically as long as you drive less than 15000 km per year as a grab driver, you pay a lower premium. (https://www.axa.com.sg/latest-news/2016/grab-and-axa-launch-first-usage-based-insurance)

Interestingly, according to the Straits Times, the policy can also cover cases when the driver is using rival platforms, such as Uber, but the deductible would be S$5,000 rather than S$2,000 if the driver were using Grab. This is a neat way for Grab to get a leg up on Uber, making the cost/risk of Grab, to the driver, to be cheaper than Uber’s. (http://www.straitstimes.com/singapore/transport/new-motor-insurance-for-part-time-grab-drivers)

Hence, to me, the key is whether grab will strictly enforce the need to covered by the commercial auto insurance on all their drivers. Apparently, as the law stands in Singapore, this is not mandatory (http://www.straitstimes.com/askst/askst-am-i-covered-by-insurance-if-im-a-passenger-in-a-grab-or-uber-car) although both grab and uber require the production of a commercial insurance at the beginning of the engagement, but this doesn’t really mean that the organisations monitor the status of their drivers  (https://www.grab.com/sg/driver/car/) (http://www.driveuber.sg/owncar/).

By the way, since ‘regular’ taxis are covered by the commercial vehicle license, this gives and advantage to taxi drivers who are also grab drivers, not only do they presumably not have to pay any extra for the coverage but the passengers safely know they are covered, albeit by the taxi company’s policy.

Interestingly, grab has also been playing with telematics in Indonesia and has applied it to indicate to the grabbike riders when they are breaking the speed limit, and this has apparently led to a 35% drop in such incidents. (https://www.axa.com.sg/latest-news/2016/grab-and-axa-launch-first-usage-based-insurance)

I think the collaboration between Grab and AXA is a good thing. There is much more that can be done.

 There is a project for anonymous collection of telematics data between AXA and Grab “to better understand driving speeds and patterns – these can include the average speed and distance travelled, the most traffic-congested days of the week or lull time belts throughout the day”.  (https://www.axa.com.sg/latest-news/2016/grab-and-axa-launch-first-usage-based-insurance)

But what this data should be used for is to set a baseline for the driving habits of the commercial passenger drivers. From there, monitoring drivers on a non-anonymised basis in exchange for behaviour based premium is just a small step away.

What I think is also very easy but still missing from the offering of companies such as Grab and Uber (especially Grab since the cost of the ride is usually fixed which implies an approximate route has been calculated in advance based on real time traffic conditions) is simply to inform the passenger and driver of the recommended route. This would be a simple safety measure for the passenger, in case the driver deviates unnecessarily from the route.

I am not saying the service provider to track whether the driver is deviating from the most efficient route (this would probably need further investment), but simply enhance the safety of passengers at virtually no cost to anyone.

It’s just a question of using existing data in a different way at virtually no cost on existing infrastructure.