Grab and AXA launch pay-as-you-go car insurance to get more drivers on the road

Head of Grab Singapore Lim Kell Jay and CEO of AXA Singapore Doina Palici-Chehab at the partnership signing event. Photo credit: AXA Insurance Singapore.

Southeast Asian ride-hailing stalwart Grab and international insurance firm AXA today announced the launch of a usage-based commercial motor insurance for Grab’s private-hire car drivers in Singapore.

Part-time drivers can save up to 30 percent of the commercial car insurance premium.

The scheme is called Pay-As-You-Grab (PAYG) and, as its name implies, it lets drivers pay insurance premiums that are calculated based on how long they’ve driven in a professional capacity. That means ferrying people around for a fee, rather than using their car for personal reasons.

This is the second collaboration between Grab and AXA after the launch in November 2015 of a personal accident insurance scheme that covers Grabcar passengers for personal injury at no cost to them.

In Singapore, like many other countries, car owners need to have insurance in order to drive.

Any driver must be covered at least for personal injury to others. And of course, any driver who uses their car to carry passengers as part of their job needs commercial insurance, which is a lot more expensive.

Both Grab and Uber, the premier private-hire ride-hailing apps operating in Singapore require their drivers to have commercial insurance, especially after Singapore’s General Insurance Association expressed concerns last October that a lot of these drivers operate without having a proper policy.

The meter’s running

Grab’s PAYG scheme allows private-hire car drivers who work part-time to pay a flat premium, which AXA claims is 70 percent of the cost of a commercial motor policy. This allows them to use their car for private purposes like driving their family around.

When they pick up passengers, the rest of that 30 percent kicks in, charging drivers per kilometer driven until it reaches 100 percent of AXA’s commercial insurance premium – at which point it’s capped.

AXA and Grab bring as an example a 40-year-old driver who drives for Grab less than 10 hours per week. Where a normal commercial car insurance would cost $3,000, the driver pays a flat premium of $2,100. After driving about 15 trips per week, he racks up mileage charges (at 6 cents per kilometer) of $468. His premium ends up at $2,568, saving $432. But even if he racked up more than $3,000, that’s the maximum he would pay.

Panel discussion during the partnership signing event. Photo credit: AXA Insurance Singapore.

The figures are based on Grab’s estimation that 40 percent of its Grabcar drivers in Singapore drive for less than 10 hours per week – which is about 15 trips.

Encouraging better driving