The co-founder and CEO of the ‘pay-per-mile’ insurance offering believes technology can transform coverage without sacrificing consumer trust. It’s just a matter of when.

Fred Blumer is a serial entrepreneur and insurance-tech exec focused on the automotive industry. He’s used to seeing both industries stalled in traffic while digital transformation zooms past them. And that’s okay by him. 

Asked to peer into his virtual crystal ball to envision the insurance industry five years from now, Blumer sees gradual change. As he says this, Blumer’s Southern accent drawls out the word “gradual.” 

“I’d like to think I’m realistic,” says the CEO and co-founder of Atlanta-based Mile Auto, a pay-per-mile auto insurance company that primarily serves low-mileage drivers. “Insurance is a very slow-moving industry for a lot of reasons.”

Those reasons, according to Blumer, are a variety of factors that have created a traffic jam of institutional inertia. The industry is controlled by massive companies where things naturally move slowly. On top of that, the industry must navigate increasingly stringent government regulations. Then add the complexity of operating across what Blumer calls “50-plus different countries,” which is how he refers to the fragmented state-by-state regulatory landscape in the U.S.

“People who work in large companies can get fired for doing something innovative,” Blumer says. “The best way to get fired is to try something and fail. It’s not in the genetic makeup of big companies to move quickly. And insurance has plenty of reasons to move cautiously.”

This institutional resistance to change might seem insurmountable. But Blumer has built his career on finding technological solutions that work within these constraints. His latest venture, Mile Auto, founded in 2017, offers insurance based on actual mileage driven in addition to traditional risk factors. 

The concept sounds simple. But it required patented computer vision and machine learning technologies to execute without the privacy invasion that consumers fear.

Tying tech success to messaging

Blumer’s road to Mile Auto began with Hughes Telematics, a company he co-founded in Atlanta. It builds connected vehicle systems for automakers like Mercedes-Benz and usage-based insurance systems for companies like State Farm. When Verizon acquired Hughes Telematics in June 2012 – it’s now a part of Verizon Connect – Blumer found himself at the center of the connected vehicle revolution. He went to work co-creating a connected car system called Hum by Verizon. He ultimately earned 10 utility patents in connected vehicle data and auto insurance systems.

The telematics experience taught him something crucial about consumer psychology, introducing technological change, and, above all, timing. “Consumers were terrified,” he recalls. “The initial response was like, ‘Wait, Big Brother could be in my car?’” 

Blumer knew the solution wasn’t to abandon the technology. It was a matter of figuring out how to reframe it in terms of concrete benefits. He and his team focused on messaging that talked about “faster emergency response” and rewards for safe driving, along with personalized coverage options.

That insight has shaped Mile Auto’s approach. 

The mileage problem meets the privacy problem

So when his non-compete with Verizon expired, Blumer set out to solve what he calls the “mileage problem.”

Blumer pointed to an estimate that mileage accounts for about 75% of the underwriting algorithm in usage-based insurance programs. Therefore, if his technology could capture accurate mileage data without tracking, location monitoring, or any of the privacy-invasive elements that make consumers uncomfortable, both car companies and insurance carriers would respond positively to the offering.

“We came up with a number of patented technologies to do that using computer vision and machine learning,” Blumer says. The “patented computer vision” system enables users to report their vehicle’s mileage simply by taking a picture of the odometer with their smartphone. Users submit the image each month to benefit from the program. The system’s proprietary solutions validate the vehicle and the authenticity of the image data to determine how much someone drives without knowing where they go or how they drive.

Porsche and the trust solution

Perhaps no partnership better illustrates Blumer’s philosophy than his work with Porsche Financial Services. In January 2019, the luxury automaker approached Mile Auto with a challenge specific to Porsche drivers. 

“Porsche said to us, ‘We make high-performance sports vehicles that we expect to be driven as high-performance sports vehicles — and we don’t want to penalize Porsche owners for driving a Porsche like a Porsche should be driven,” Blumer recalls.

To be sure, the pay-per-mile concept is not new. Since the beginning of car insurance, insurers have asked customers to estimate how many miles they would drive in a year. Then they would set the premium for the next 6-month period. With pay-per-mile insurance of the last 15 years, telematics devices measure the miles driven and then adjust the monthly premium.

Mile Auto saw an opening with a valuable niche of consumers: affluent car owners. The company also  differentiates itself by offering pay-per-mile insurance with no tracking, no plug-in devices, no mobile apps to download, and no monitoring of speed or location, all in an effort to address what Porsche identified as one of their customers’ biggest pain points, Blumer says. 

“The worst part of owning a Porsche is the insurance claims experience,” Blumer notes. “They wanted to create an insurance product that really meets the needs of Porsche drivers.”

This partnership reveals something deeper about Blumer’s approach to spurring insurance innovation. To him, it’s not about deploying the most advanced technology possible; it’s about using tech to ease the friction when it comes to what consumers actually want.

AI as an innovation accelerator

 Blumer describes himself as “somewhat AI agnostic.” But he does view artificial intelligence as a potential catalyst for faster innovation in insurance. “AI does create opportunities to more rapidly test things,” he says, when asked what the best practical use cases for AI are right now. “You can test so many more things, so much more quickly.” For an industry where “you don’t know the cost of goods sold until two or three years later,” this testing capability is transformative, Blumer says. 

Instead of releasing products to market and discovering problems years later, insurers can now run pricing models and test scenarios on hundreds of thousands of cases using historical data.

“You can experiment without violating any consumer privacy on actual policies and claims that you’ve had,” Blumer says. This allows companies to discover insights about customer segments and pricing strategies that would otherwise take years to surface.

Selling trust

As for communicating these technological advances to consumers, Blumer returns to the lessons he learned with telematics. In that sense, he sees himself as an advocate for radical simplicity.

“I wouldn’t introduce something by starting with the term ‘AI’ because so many consumers have heard that and they’re thinking, ‘I know I should know what that is, but I’m not quite sure about what it means to me,’” he says. Again, it’s about outlining the concrete benefits as opposed to touting something being “AI-powered.”

“With AI, we can process claims 20 times faster than we have historically,” Blumer says. “You may be able to get a check the same day. We can run quotes for multiple insurance companies in a matter of seconds, and all we need is your name and address. That’s real value. It’s not abstract. It’s not jumping on the vague bandwagon of AI. A lot of companies fall into that trap.”

That detailed conversational style extends to how Mile Auto works with insurance agents. Instead of selling technology, Blumer is trying to sell marketplace differentiation. 

“Insurance agents like having a differentiated product to sell to their customers,” Blumer explains. “They like having something that’s not a traditional insurance product.” 

The most compelling endorsement came from Mile Auto’s largest agent, who told Blumer, “I don’t sell Mile Auto policies. You’ve given me a tool that helps me sell ‘trust’.” 

By proactively moving customers to lower-cost options even when it means less commission, agents build lifetime relationships.

Pioneering backed up by patents

As the insurance industry grapples with digital transformation, Blumer represents a particular type of innovator. He understands that lasting change often comes through persistence rather than disruption. His work with Mile Auto and Porsche Auto Insurance demonstrates that even in the most change-resistant industries, the right combination of technology and consumer understanding can create meaningful progress.

While insurance companies are focused on risk pools and standardization, solutions that lead with innovation can line-up traditional areas of concentration with client customization. That is what moves the industry forward, Blumer says. 

Even if it arrives at a characteristically measured pace.

“Anything that can enable a customer to buy something more tailored to their particular needs will be really successful,” Blumer says.