Melbourne-based Eric Insurance will underwrite local start-up Koba’s pay-per-kilometre car insurance product, to be launched to market in October.

Koba says its innovative, telematic approach will change the car insurance industry as it pioneers a new user-based approach in Australia, based on data.

Founder Andrew Wong says the new partnership will allow Koba to “hit the market fast and meet customer service needs immediately”.

“Eric’s motoring expertise, experience over the last 20 years and collaborative approach is uniquely complimentary to a start-up like ours,” Mr Wong said.

With many car manufacturers launching connected models next year, Koba says it is uniquely positioned to introduce a switch from traditional to usage-based insurance.

“The OEMs will drive this change. It’s our opportunity as an insurtech to work with the change, not against it,” Mr Wong said.

Koba is testing its product and is on-track to launch to the wider market in October. It raised $525,000 from 160 investors to evolve its app and expand its team ahead of the launch, and aims to raise a total of $1 million.

“The support and funds raised have been incredible; and shows that people are behind insurtechs and ready for our new usage-based approach,” Mr Wong said.

Koba splits premium payments into two: a fixed premium to cover drivers while parked, and a per-kilometre rate, typically between 3-10 cents, while driving. In real-time, Koba measures the distance driven and only charges drivers by their use.

Eric CEO Malcolm Tilbrook says Koba has a great balance of experienced insurance veterans and proven start-up talent and Eric will help it navigate what is a highly regulated industry.

“We are throwing our full support behind them and are excited to see what they can produce,” he said. "It makes good business sense to explore new solutions.”