Insurtech Gateway Australia is planning a pilot launch of a pay-as-you-drive motor insurance product next January, as the London-based insurance incubator looks to shake up the market here.

The motor product is a partnership with a Silicon Valley start-up specialist, and is one of two investments that the incubator has made since it launched here a year ago. The other investment focuses on developing a bushfire risk model.

Insurtech Gateway Australia says the “connected” motor cover will be a first for the local market, with premiums charged according to kilometres travelled that are recorded in real-time through an on-board diagnostics (OBD2) device.

“Connected means you have a little OBD2 device connected to your car and that communicates directly with your smartphone and you get data on the kilometres driven,” CEO Simon O’Dell told insuranceNEWS.com.au.

“Australia is yet to introduce a connected pay-as-you-drive model to the market but we think that that will explode soon and you will see some of the mainstream insurers start to offer that over the next few years.”

He declined to reveal the amount that has been invested in the two ventures, but says the pandemic, which has caused widespread business disruption, has also created opportunities for the incubator.

“Before the downturn happened, the price, the valuations that you pay are highly inflated so it’s not as favourable,” Mr O’Dell said. “We have definitely seen a few bargains around at the moment and we are wanting to make the most of that.

“So as far as we’re concerned we’re open for business as usual.”

The incubator is stepping up its growth plans for Australia, expanding its team with the recruitment of several insurance executives to join the business.

Former IAG Firemark Ventures managing general partner Ron Arnold has joined as Associate Partner while marketing solutions expert Gil Snir has been appointed Tech Innovation Adviser.

The gateway has also unveiled a mentoring panel including Willis Re Researcher James Hutchin, Envest Chief Technical Officer Luke Saxby and Insurtech Australia co-founder Brenton Charnley.