IAG has acquired a majority stake in car subscription and trading platform Carbar as it examines the impact of vehicle usage changes on motor insurance.

The insurer has combined with other investors in a $16.8 million capital raising that will fund the expansion of Carbar, which launched in Melbourne in 2016.

“The focus of our investment and the partnership moving forward will look at emerging mobility trends and providing new sources of value to our customers,” IAG EGM Innovation James Orchard told insuranceNEWS.com.au.

Carbar has tapped into demand for alternative forms of vehicle ownership and usage arrangements, reflected in the rise of car-sharing schemes. The service entered Sydney last month and plans to expand to new regions next year.

Motor insurance is provided through IAG’s CGU business.

Carbar CEO and co-founder Desmond Hang says IAG’s support will be instrumental in growing and developing the business and the investment is a good fit for both parties.

“We believe there is a change in mobility and traditional vehicle ownership and, being one of the biggest insurers within Australia, IAG wants to be at the cutting edge of the mobility sector and how best to create insurance products around it,” he told insuranceNEWS.com.au.

Subscribers to the service can pay an initial upfront $1000 for a reduced weekly rate, or pay regular weekly rates. The company also provides a platform for buying and selling cars.

Payments cover insurance, registration, roadside assistance and maintenance. Unlike vehicle leasing, there is no lock-in contract.