Chris Gay, the founder of MileMeter Insurance Co., said his experience as a frustrated consumer who had a "terrible experience" with a major carrier inspired him to build his pay-by-the-mile insurance company from the ground up.
MileMeter, which began offering automobile insurance in 2008, has been a "political success," Gay said.
"You're seeing an entire industry changing, and we and a few other people — we're the instigators of that change." Gay said.
As usage-based insurance goes, MileMeter's product is uncomplicated. People who drive less than 10,000 to 12,000 a year can save on their auto insurance with self-reported mileage verification.
Dallas-based MileMeter has "several thousand" customers, and most of them drive less than 8,000 miles a year, Gay said. The average premium is $200 a year, he said, with a statewide comparable average of more than $600 a year.
"The less people drive, the less they pay," Gay said.
MileMeter, which sells auto insurance only in Texas, had about $1 million in written premiums last year, Gay said.
Mileage can be verified through several means, including a photo which includes a picture of the policyholder's odometer and driver's license. Gay said his company doesn't verify mileage through telematic devices because of cost and privacy concerns.
While the company is profitable, Gay declined to disclose details.
"We've been working on this since 2004," said Gay, who prior to that made his living as a software writer for media and financial companies and as a consultant. "When we started it was heresy to say that insurance could be more affordable, more common sense or based upon usage. Now it's gospel truth. Along the way we've racked up quite a body of intellectual property and technology, and that's our focus now."
Gay said he is not "actively planning" expanding MileMeter into other states. "I'd much rather do so through a partnership or licensing model," he said.
The companies with the largest market share in the Texas private passenger auto market last year were State Farm Group, with a 20.25% market share;
Farmers Insurance Group, with 12.39%; Allstate Insurance Group, with 11.35%; Progressive Insurance Group, with 8.4%; and USAA Group, with 6.96%, according to BestLink, which provides online access to A.M. Best's database of insurance information.