Let's face it; there is something wrong with the way car insurance premiums are calculated. If your car decreases in value every month and with every kilometre you drive, shouldn’t your premium decrease along with it?
What happens if your car suffers minor damage that reduces what your car is worth even more? Shouldn’t you get a discount on your insurance? After all, it was calculated on the original price or market value of your vehicle when you committed to the policy, and that’s what determines the premium you will pay. Doesn’t sound very fair, right?
Your insurance is supposed to cover the current value of your car, and not the amount you originally paid for it.
It sounds only logical that your premium would decrease along with the car’s age and condition. That’s what Gideon Galloway, the CEO of King Price Insurance, had in mind. To offer drivers a fair insurance plan that decreases every month.
In an interview on Moneyweb, Mr Galloway explains his thoughts:
“It just isn’t fair for car owners. Why should they have to be paying the same premium on their older car as they did when it was brand new? Some insurers say that they’ll review your policy after a few years, but that is solely at their discretion when they feel like it, and for an amount that they might or might not determine,” said Gideon. “It’s all pretty vague, and as a car owner the odds are stacked against you.”
So how does King Price profit if prices go down monthly? When asked about how he plans to keep his business profitable while prices decrease every month, his answer was just not what we expected to hear.
“If you treat your clients fair, you will keep them longer than your competitors and be able to decrease your premiums every month. Our profitability lies in the fact that our churn rate is very low,” Galloway continues. “We can comfortably be 15%-20% cheaper than our competitors and still be profitable because although we might be making less margin per policy, we are maintaining the volumes longer.” “And by making customers for life, our business is a lot stronger, and on a better footing, than by trying to charge as much as we can month by month.
Gideon summed it all up when he said: ”We’re in this for the long haul, not the short-term, and our clients really appreciate it. It's a win-win situation.”
If you want to see how much less you’d be paying every month with King Price, just click on the button below.