Crimson - How it works

Crimson calculates premiums in real time based on various factors, to provide customers with Pay-As-You-Drive (PAYD) insurance. So a driver, who drives more and is more prone to risks, pays a higher insurance premium. While the average motorist who drives less than average and is low-risk pays less.

The solution calculates premium balances in real time, based on distance, time and vehicle speed. It uses an on-board device that wirelessly transmits the data to an application in the backend. What’s more beneficial is that insurance companies can seamlessly integrate Crimson to their existing insurance application, thanks to its well defined open interfaces. Thus, optimising existing resources.

Under PAYD, insurance can be purchased in the form of rate plans based on a specific number of miles, quite similar to how a prepaid phone card is used. Users get periodic updates on their mobile phones via SMS texts regarding their premiums and the balance on the miles remaining as per the rate plan they have chosen. Once the vehicle has travelled the specified number of miles, the insurance coverage expires, upon which the individual can top-up or renew insurance again. The customer can renew the insurance by paying premium for another specific number of miles. He can even do so by SMS texts or online, while on the move.

The Crimson insurance premium has two parts:

• One is a fixed monthly premium that insures the user against incidents, such as theft, that can occur even if the user does not travel. This fixed premium is calculated on normal insurance factors such as age, address and type of vehicle 
• The second is a variable monthly premium based on the distance the user drives every month and the user's driving style. This premium is calculated based on real-time data captured by the Crimson on-board device

How does it help?

Such an insurance model allows insurance firms to trim down drastically on their compensation costs as well. This occurs because the PAYD system discourages vehicle drivers to drive rashly, and encourages them to confine limits to driving miles, thus indirectly reducing chances of accident risks. On the other hand, the model allows for Insurance firms to charge higher premiums from high-risk drivers who require driving long distances and so fall under the high-risk category.

Such a model makes auto insurance more affordable to lower-income individuals too, as a customer pays only as much as he utilises the vehicle. Plus it opens the untapped market of uninsured vehicle owners as well.

The end result is that Crimson indirectly catalyses reduction of traffic congestions, fuel emissions and road accidents, while addressing the concerns of insurance companies at the same time and optimising their business.