Under the hood of Singapore’s first AI-powered pay-per-km car insurance

The Carro IQ device uses data analytics to easily calculate the vehicle’s lifespan.

Insurers usually solve multiple pain points when it comes to owning a car with multiple solutions. However, as the needs of consumers change, they demand more flexible and affordable services. Rising to the challenge of creating a solution with just one product, the Southeast Asia car marketplace launched Covered.

Covered is Singapore’s first artificial intelligence (AI)-driven pay-per-kilometre insurance and maintenance plan. It aims to offer drivers tailor-made insurance premiums and maintenance coverage according to their lifestyles, enabling them to get a car insurance plan better suited to their needs.

Distributed by Genie Financial Services, a subsidiary of Carro, and underwritten by NTUC Income, Covered is available for all types of cars including electric vehicles (EV). It is fully digital and contactless. Customers simply need to fill up an information form through the website to receive a Covered quotation and pay the annual coverage fee of S$150 upon acceptance of the quote. They will then be sent the installation guide and the Carro IQ device, an onboard telematics unit, handled by Carro’s technology partner, Quantum Inventions.

Once the device is installed, the device will begin to track the vehicle’s odometer data, which will be used to calculate usage-based insurance and maintenance charges. Data is collected, processed and forwarded by QI's scalable Fleet Mobility & Data Platform (FMDP) that ensures fast and accurate calculation of various information and alerts. Rates per kilometre are determined by the applicant’s age, type of vehicle and driving experience, with the average rate being 12 cents/km. 

To get to know Covered a little more, Insurance Asia had a one-on-one chat with Aaron Tan, CEO and founder of Carro.

How did this product come to be?

The collaboration started with NTUC income wanting to launch an all-inclusive solution for its customers. Covered was launched to be Singapore’s first usage-based insurance plan that uses AI-driven pay-per-kilometre plan. The product covers insurance per kilometre and maintenance per kilometre, which is the first of its kind in the market.

With the help of AI technology, the driving kilometre of a car’s lifespan and how much a driver will spend on maintenance can be easily predicted. The reality is that many drivers often end up paying more than what they need or will use during the car’s lifespan. 

Carro saw this challenge as an opportunity to create a solution that can solve all problems in one product—from insurance, maintenance to covering wear and tear, which is not common in other plans. Traditionally, insurance plans simply cover the warranty of the car, but our goal with Covered is to provide customers with a convenient, transparent, and hassle-free product that can be tailored to their lifestyle.

How did NTUC Income become involved in this project? 

NTUC Income needed a partner with the right technical capabilities to tailor their insurance premiums and maintenance coverage according to customer's lifestyles on a digital platform. This is where Carro comes in, where we leverage technology and data analytics to enable customers to enjoy more significant savings by tracking their mileage and calculating their insurance premiums for the month.    

In addition, NTUC Income required a partner who can easily adopt its digital transformation office into an existing system. There are not many companies in the market that can integrate directly into APIs, like what NTUC Income is doing. Even if companies have such a complex system, they don’t have the channels to market such an innovative product.    

What is the basis for the S$150 annual coverage fee, and can you give more details on how premiums will be calculated?

The annual coverage fee of $150 is based on NTUC Income’s policy of pay-before-cover, which is a regulatory requirement for the insurance plan to be implemented. Apart from maintenance, the amount also covers incidents such as hit and run, fire risk and theft, which are often classified as fringe situations.

How can this product help younger drivers, especially since they do not have to commit to a high excess compared to most traditional auto insurances?

Covered has a zero-excess policy which is a unique policy in the market. This means when a driver gets into an accident, they are not expected to pay third-party excess fees and can get their car parts easily replaced, fixed, or repaired. 

The concept of high excess is popular amongst the older generation as they prefer to have everything protected under one insurance plan, where reporting and servicing can be done easily under one roof.   

Plans like Covered are typically favoured amongst younger drivers who prefer to not commit to high excess, which requires significant cash. Covered is the only product in the market right now that offers no excess to customers.   

What has been your customers’ response to Covered?

The response has been extremely positive— with customers appreciating the simplicity and idea of being charged fairly. As Carro tracks the users’ driving behaviour and distance travelled through telematics, customers can experience full transparency on how much they are being charged based on their driving behaviour and lifestyle. 

Using telematics, Carro strictly charges month-to-month instead of making customers pay an upfront fee and then refunding them when they do not meet the distance capacity. This allows for fairer and more transparent pricing as drivers are charged based on the exact distance travelled, right down to the specific kilometre. For first time drivers, who tend to have high excess and lack the knowledge of how insurance services work, Covered services provide them peace of mind.   

As Singapore has targeted to phase out internal combustion engine vehicles by 2040, do you see yourself tailoring or creating more products for EVs as the date nears? If so, how different would it be to your current products?

The EV movement in Singapore and the region has been exciting, and I think it is admirable that the Singapore government is pushing for a clean transportation system. To cement this long-term investment, Singapore is phasing out policies and initiatives such as internal combustion engine (ICE) vehicles by 2040, Green Plan 2030, with sustainability being predicted to be a key economic theme for many businesses moving forward. As ICE vehicles are being phased out, we anticipate the demand for ICE cars will fall whilst popularity for EVs will slowly rise.   

As an automotive tech player, Carro’s role remains the same. We will continue to leverage technology and work closely with our partners to enable customers to make greener and wiser choices. We will likely see more activity on our platform towards the end of the phase-out exercise, where ICE vehicles are listed for sale at lowered prices. We predict that by 2035, most cars sold on Carro will be EVs.   

What’s next for Covered? Do you plan on expanding this to other markets?

The plan for Covered will be to further increase its adoption growth in Singapore in the next few months. We believe that customers have the right to have more transparent pricing, especially when it comes to insurance and financial schemes. We hope to expand to other markets in the future, with Indonesia being next to roll out Covered.