A Goldman Sachs executive turned tech entrepreneur behind the UK's first pay-as-you-drive insurance product has vowed to shake up the car insurance sector after securing a £1 million investment.

James Blackham is co-founder and CEO of London-based By Miles, an insurtech start-up which has recently launched a flexible, pay-as-you-drive insurance policy aimed at people who travel under 7,000 miles a year.

By Miles charges car owners a fixed annual fee to cover their vehicles while parked and then bills them monthly based on the number of miles they drive.

A matchbox-sized device called 'Miles Tracker' measures the distance travelled and relays the information to a smartphone within minutes after a journey is completed. Users are then able to access the cost of each trip through an app.

"We started By Miles two years ago because we believed drivers like us were being charged way too much to insure cars they rely on but don’t drive that often, so we built a simpler and smarter way of pricing car insurance," said CEO James Blackham, who established the business with co-founder Callum Rimmer.

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Blackham is a former managing director at Goldman Sachs, and was previously the head of the EMEA Insurance structuring team at the company; while Rimmer has been developing software for over 15 years, having worked as a consultant for companies including Goldman Sachs, Deutsche Bank, Orange and Tesco.

The pair set up the business two years ago and have since secured investment from InMotion Ventures, Jaguar Land Rover's venture capital fund; and InsurTech Gateway, the insurance-focused incubator set up by investor Hambro Perks and Lumleys.

By Miles has now closed a £1 million funding round led by JamJar Investments, the venture capital fund of the innocent drinks founders and backer of brands including Graze and Deliveroo. The existing investors also participated.

The investment follows a successful beta trial of By Miles' new insurance product, after which over 4,000 people have joined a waiting list.

"Following our recent launch, this new round of investment means we can continue to improve the features in our app, making car ownership even easier for people that don’t drive much," Blackham said.

By Miles claims that its product could help millions of Britain's low-mileage motorists make "substantial savings" each year.

Annual charges start at £150 a year and driving is billed from 3p a mile, meaning that someone driving 4,000 miles a year would pay theoretically pay £270 for a year's fully comprehensive cover. 

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The By Miles smartphone app also gives drivers other reminders and tools to help make owning a car much easier, including MOT and car tax reminders, a 'find my car' feature and 'car medic', a diagnostics tool that scans a vehicle for mechanical issues and error codes.

"As soon as we heard about By Miles, we knew we wanted to get involved," said JamJar co-founder Jon Wright.

"Although car insurance is not exactly a purchase everyone looks forward to making, the team at By Miles are changing that: their pricing is smarter, their customer service better, and their app gives you useful driving tools as well as a policy with added benefits. They’re set to shake up the car insurance market."

By Miles policies are underwritten by AXA Insurance UK and the company is authorised and regulated by the Financial Conduct Authority (FCA).