Behavioral Design in Action: Pay-As-You-Go

Financial Health Network research has found that among people who had either dropped or replaced an insurance policy, over half (54%) did so because it was too expensive.³ Scarcity mindset can make it particularly challenging for people facing tight budgets or income volatility to commit to the upfront cost of insurance premiums. However, a research study found that drivers were more than twice as likely to opt for a pay-as-you-go insurance plan than a traditional policy that required three months of premiums upfront. Additionally, drivers were 89% more likely to take up any type of auto insurance when offered the pay-as-you-go option in addition to traditional contracts. Smaller quantities of auto insurance may be more affordable to customers, especially those who drive less often or are uncertain of whether they will be able to comfortably afford premiums in the near future.