Insurer offers deal: monitoring for discounts
Progress, the auto insurance company with the ultra-chirpy television pitch woman, has virtually built its business around the word "discounts."
Now it's going to offer its Maryland customers a discount deal that could produce cuts of up to 30 percent off its regular rates. What you have to do to get them is let the company monitor your driving electronically for six months.
The new program, called Snapshot, replaces an 2008 plan called MyRate that also involved installation of an electronic monitor. But where the old one carried the risk of a rate increase if the results proved unfavorable by the company's standards, the new on has no downside risk, according to Progressive. And where the MyRate program involved monitoring for the life of the policy, with Snapshot, it's six months and out.
Under Snapshot, approved by the Maryland Insurance Administration last fall, Progressive will offer customers or prospective customers the option of installing the device in the data port standard on cars manufactured since 1996. The company says the device will monitor the number of miles driven, the time of day the vehicle is on the road and the number of instances in which the operator hits the brakes hard.
The theory is that risk increases with the number of miles the car is on the road, the amount of those miles driven during the more dangerous nighttime hours and the frequency with which the driver has to mash on the brakes -- Progressive's measure of how well a person drives. (The company explains that one won't lose points for that one hard braking incident that prevents a crash but will if there's a repeated tendency to make quick stops.)
And in the insurance industry, it's all about predicting risk.
According to Progressive, the device will send a wireless signal to the company, which will compile the state. After the first 30 days, customers will receive whatever preliminary rate they're entitled to. After 6-months, the company figures it will have all the data it needs to set a more-or-less permanent rate. The customer can then mail the device back to the company.
According to Progressive, discounts under the program could go as high as 30 percent.
The company is assuring customers that the technology does not use GPS and will not allow the company to track where customers drive -- just how many miles. Nor will the data be used to drop coverage on drivers that don't qualify for discounts, Progressive says. Customers will be able to track their individual results online, the company says.
This attempt to more precisely assess the risks of insuring a particular driver reflect a growing trend in the industry toward what is known as usage-based insurance.
Certainly there are upsides for some customers. If you drive only a few miles a week -- to the grocery store and to church on Sunday -- and if you seldom venture out in the wee hours, you have two of three factors going for you right there. And if you're a 20-year-old male who drives very carefully, seldom mashes the brakes and doesn't go clubbing at night, the program could be a counterweight to the negative stereotypes driving up your rates now.
But the potential downsides are also there: How voluntary is the program really? How do you know what the device is really telling the company about you? Does the company's theoretical model really reflect the risk of insuring you?
Getting There would be interested in hearing from readers about whether they would take Progressive up on its offer. Does the penalty free nature of the offer make it more attractive than MyAlert? How much of a discount would persuade you to allow such monitoring?
Please post your thoughts or send an email to michael.dresser@balltsun.com. If you send email, please add a phone number if you're willing to answer follow-up questions.
Comments
Isn't it Progressive, not Progress in the first sentence?
Posted by: Monty | January 7, 2011 9:58 PM
Some companies offer discounts to motorists who drive a lower than average number of miles a year. Low mileage discounts can also apply to drivers who car pool to work. "Clearance Auto Insurance" is the place you should be if you need auto insurance at the best price
Posted by: carolcampo8 | January 8, 2011 1:52 AM
I had the MyRate device in my car in Baltimore for about 18 months. During that time, I did notice that my driving habits changed. I tried to take as few trips as possible and paid attention to my braking, top speeds and time of night I got in the car. I never drove during the week because I took the MARC to work.
Despite this curtailing, I didn't notice a really significant change in my insurance bill. Compared to my insurance now (from Travelers), Progressive's rates were extremely high. I'd say that my average discount was 15-18 percent each six months. And my rate wasn't decreasing each six months, because Progressive was basing my discount on what my new premium would be if I didn't have MyRate.
I guess with the new program, you could potentially save a lot of money if you really cut back on driving for six months. But if you drive to work, take a few road trips of 200-plus miles, drive during rush hour (or late at night, which are the times that Progressive called "risky" with MyRate), or drive on the Baltimore or Capital beltways and have to brake hard often, you should just explore a cheaper insurance company to begin with. At least with MyRate you had the option of changing your driving patterns to improve your rate. With the new system, it's all or nothing.
Posted by: andrew | January 10, 2011 10:38 AM