How much is it worth to let your insurance company keep a Big Brother-like eye on your driving? It’s apparently worth quite a bit to insurers like Progressive.
The industry giant says it will expand its auto insurance tracking program – even letting non-customers check it out – following studies that show the technology behind its “Snapshot” usage-based insurance is more than twice as accurate at discerning good drivers from bad – read: risky – ones compared to traditional methods.
A growing number of insurers have come up with methods of tracking driving behavior and then using it to set a customer’s rates. Progressive claims that 70% of its Snapshot customers have seen a drop in their rates compared to what it was charging before – a discount of about $150 a year, on average. That suggests the industry has been over-estimating the risks presented by the typical motorist, according to Progressive officials.
“For most, the rates they’re paying are higher than the risk they actually present –- and in many cases, much higher,” said Progressive CEO Glenn Renwick.
Of course, that leaves the 30% who have seen rates increase since switching to Snapshot, which uses a small data recorder that connects to the onboard diagnostics, or OBD, port found on all new automobiles – and which is normally used in the service bay to track such issues as the fault between a “Check Engine” warning light.
Programs like Snapshot have generated a fair amount of criticism from those who fear it leads to still more corporate, if not government, intrusion into individual lives. In fact, most vehicles also now come with some form of “black box,” or data recorder that can track such things as vehicle speed and whether seatbelts were in use at the time of an accident.
So far, such devices have largely been used by automakers trying to understand the cause of a vehicle problem or a collision but there have been some instances where the recordings have been used in civil or criminal court cases and that has generated still more concerns among privacy advocates.
But the promise of savings that work out to just $12.50 a month, on average, has nonetheless been willingly adopted by several 100,000 Progressive customers and the firm is betting even more will switch to Progressive if they can try Snapshot out and get a sense of whether it works to their advantage.
The nation’s fourth-largest auto insurer – which currently offers the data-based insurance in 42 states – will let any motorist try out the Snapshot recorder and then see if, after 30 days, they would achieve a savings.
“With the test drive of Snapshot, you do the 30 days, you’re not a customer, you can just see what your discount is,” said Richard Hutchinson, general manager of usage-based insurance for Progressive.
Expect to see Flo – the seemingly ubiquitous Progressive Insurance spokesperson – promoting the new test-drive program “everywhere,” Hutchinson said.
The insurance firm says Snapshot has proven twice as good as any other measurement method at weeding out bad drivers who, in turn, generate 2.5 times higher costs than good drivers.
Data-based tracking systems aren’t the only alternatives insurers are considering. They’re also looking at the benefits of mileage-based policies. Ford has been testing a program that could lower rates for some drivers by as much as 40%.
Drivers aren’t the only ones who see a potential advantage. Since such a policy would encourage drivers to reduce driving – by combining errands, for example – there are environmental benefits, a 2010 study by MIT suggesting such policies could reduce fuel consumption by as much as 9.5%.