A few years ago, the web revolutionized the auto insurance business. Now it’s the cloud’s turn. 

Milemeter Insurance Company, which uniquely sells auto insurance based on how many miles a customer drives, operates entirely in the cloud. Speaking to 125 property casualty executives late last year at the 2010 Property Casualty Insurers (PCI) Information Technology Conference, Milemeter CEO and founder Chris Gay made the following statement. 

“We use technology so efficiently that we are competing as a direct carrier against companies like Geico — with a coffee budget and only five full-time employees,” Gay was reported as saying in a Milemeter press release. Milemeter caters to drivers who drive less than 12,000 miles and claims it is the only auto insurer with a “pay as you drive” model.

Also speaking at the conference at the same conference was Ben Moreland, a senior analyst at Celent, who said one of the three major trends among PCIs was movement to the cloud (the other two trends were core system modernization and a movement toward social media and mobile technologies.)  

Milemeter’s cloud runs atop of Amazon Web ’s Web Services. Seemingly, it’s approach to auto insurance is as forward thinking as its IT strategy, but for now only operates in Texas which approved selling insurance by the mile in 2001. Milemeter claims to have 100 patents pending.

The hurdles PCIs face in moving to the cloud are security risks, loss of control, lack of availability and data reliability, according to Moreland’s presentation. But these concerns could be mitigated by the industry’s three main business drivers: lower IT costs, growth and ease of doing business.

Unlike most PCIs, Milemeter is only a few years old, operates in a single state and started from scratch in the cloud. Most PCIs such as GEICO operate are much bigger and older. And many of those are innovative in their own right when it comes to managing their businesses and customers on the Internet.

However, Milemeter’s embrace of the cloud and an ultra-low cost model could very reset the PCI bar for staying competitive.     

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