Hollard Insurance subsidiary Real Insurance has launched a “pay as you drive” policy, under which qualified motorists pay only for the kilometres they plan to travel.

Real Insurance CEO Roger Grobler says the structure of the current system is set up so that low-mileage drivers are simply subsidising the cost of insurance for high-mileage drivers.

“Current car insurance pricing is inefficient and unfair,” he said. “Drivers should not have to pay the same as their neighbour who may be driving four or five times the distance.”

But Mr Grobler says the policy caters mainly to low-kilometre drivers because the system relies on odometer readings.