A new pay-as-you-use motor insurance policy for private-hire car drivers was launched yesterday, to help part-timers lower their premiums and attract newcomers to join the industry.
Launched jointly by AXA Insurance Singapore and transport app Grab, it is targeted at drivers who ferry passengers for fares under the GrabCar chauffeur service.
It aims to encourage more private car owners to drive for Grab, by reducing upfront costs like commercial motor insurance, which can cost around $3,000 annually - about 30 to 50 per cent more than a regular car policy for private use.
Head of Grab Singapore Lim Kell Jay said commercial motor insurance need not be "prohibitive".
"We are making it more affordable for new drivers who may be sitting on the sidelines," he said.
While there are an estimated 6,000 to 8,000 full-time private- hire car drivers here, Mr Lim said part-timers can boost the "transient supply" of cars that ferry passengers during peak hours.
Called AXA Pay-As-You-Grab, the policy can help drivers save up to 30 per cent on their commercial auto insurance premiums, AXA and Grab said. Policyholders pay 70 per cent of the base premium, and another 6 cents per kilometre driven, capped at 100 per cent of the base premium.
Mileage is clocked using the Grab app whenever a driver takes on a GrabCar job, but not when he is using the vehicle for personal travel.
Citing an example of a 40-year- old private-hire car driver who does about 15 trips a week, AXA and Grab said he would pay only $2,568 a year for this commercial auto policy, instead of $3,000.
Experts see the new policy as a move by Grab to increase its number of drivers, as it continues to battle with main rival Uber. The policy does not stop GrabCar drivers from taking jobs on other ride-hailing platforms. However, if an accident occurs during a GrabCar ride, the deductible is $2,000, but on other platforms, it balloons to $5,000.
The deductible is the portion of costs payable by the driver when a claim is made against his policy.
Dr Walter Theseira, an economist at SIM University, said: "Since Grab is the first one to come up with this policy in Singapore, obviously it would structure the deal to its advantage."
"From Grab's or Uber's point of view, it's about competing for drivers and passengers. These kinds of moves are basically business decision to make driving for one or the other more attractive," he said.