Technology has infiltrated every aspect of the insurance industry, but nowhere is it as important han in the area of usage-based insurance. Insur- ers have been looking at telematics devices for
almost 20 years, but one carrier—Progressive
Insurance—has staked its claim as the clear
Through 2011, the biggest challenge Progressive faced with its telematics program was
finding technology that was inexpensive and easy
for customers to use to make it a viable product,
according to Dave Pratt, general manager of
usage-based insurance for Progressive.
The insurer first piloted a UBI program in
Houston in the mid-1990s. The idea was pretty
simple: If you could measure how people
actually drive it would be a fair way to set insurance premiums instead of using traditional
underwriting data such as age and marital status.
Progressive conducted a pilot program with professional-ly-installed devices that would measure how customers drove.
The data was good, according to Pratt, but the device was
expensive and involved too much work for the customers.
Progressive moved on to an OBD plug-in device and Pratt
explains customers were supposed to plug in the device, leave
it in for six months, and then find the plug the carrier sent
with the device six months earlier to plug it into
a computer. Again, too much was being asked of
Finally, Progressive developed an OBD
plug-in with cellphone technology built in so it
was easy for the customer to transfer the data,
according to Pratt.
“Plug it in and forget about it,” he says.
“After every trip, the device calls home and
sends the data about that trip. The testing on
that model showed it worked well. It was easy
for people to use. The next challenge was to explain this new technology to people. We spent
a big effort in marketing beginning in 2011
to advertise Snapshot and that built up an awareness of the
product and as that built up we’ve seen more people use it.”
Today, Snapshot is the market leader and while the
carrier has been able to attract good drivers to the program,
Progress on the
Progressive Insurance is far and away the leader in usage-based personal
auto insurance and has no plans to relinquish that position.
By Robert Regis Hyle