esuranceAllstate-owned Esurance has begun marketing auto insurance for which consumers essentially pay by the mile.

The new product is called “Esurance Pay Per Mile,” coverage enabled by a small telematics device that plugs into the OBD-II of a vehicle dashboard and automatically tracks mileage and GPS locations. How the policy works: there’s a low monthly base cost, with additional charges per mile driven, with a maximum charge of 150 miles in a day.

Customers who sign up receive instructions to log into their Esurance Pay Per Mile account, enabling them to set alerts and monitor their detailed driving history. Esurance said the policy offers coverage options equal to an unlimited-mileage policy.

Esurance is marketing the product in Oregon first, with a series of events in October and November to help promote its debut. Eric Madia, auto products VP at Esurance told Carrier Management via email that it is “looking to roll out [Esurance Pay Per Mile] to other states soon.”

Madia, in separate prepared remarks, explained that the pay-per-mile approach “is responding to customer demand for alternative insurance options for those who drive less, opting to walk, bike or take public transportation instead.”

Esurance has made some market gains in recent months. For the 2015 second quarter, it generated a 9.1 percent increase in net written premium compared to the same period in 2014. There was also a reduction in policy growth to 6.4 percent over the 2014 second quarter, part of Allstate’s “profit improvement actions.” Net written premiums also grew by 8.6 percent in Q2 versus the 2014 second quarter.

But the insurer remains unprofitable. As of the 2015 second quarter, the combined ratio landed at 110.2, a 2.1 point improvement, but still well above the below-100 number considered healthy.

Source: Allstate