.
In the near future, everything you do will be watched and recorded...
Everything...
Drivers can save by letting Big Brother ride
Drivers can save by letting Big Brother ride | The Columbus Dispatch
Drivers can save by letting Big Brother ride
Sunday, April 17, 2011 03:15 AM
By Mark Williams
THE COLUMBUS DISPATCH
PROGRESSIVE Insurance
Progressive Insurance offers lower rates with the “Snapshot” device, in the man’s hand, which records driving habits.
David Bartlett knows he is a safe driver. The 24-year-old Short North resident doesn’t drive too fast or late at night and always wears his seat belt.
Now his insurer is convinced, too, and is rewarding Bartlett with lower rates.
Bartlett’s savings comes from Progressive’s “Snapshot” program, which the insurer says can reduce rates by as much as 30 percent.
Under the program, policyholders plug in a device — which fits in the palm of a hand — into their car’s diagnostic port, typically below the steering wheel. The device tracks drivers’ speed, miles driven, braking habits and time of day when driving takes place. That information then is sent to Progressive using technology called telematics.
Bartlett was able to cut his monthly insurance premium from $120 to $80. He also was able to score some additional savings because the company forgave a speeding ticket that he had on his insurance record.
This and other similar programs being rolled out by insurers figure to lead to big changes in how auto insurance is priced in the years to come.
Until now, insurers have based rates on generic factors such as age, gender, accident frequency, tickets, place of residence and credit scores.
Use of technology to base rates on actual driving habits is likely to benefit, for example, a young man who is safer than his peers or someone who might drive only on weekends.
“These things are very powerful, and they are coming,” said Brian Sullivan, editor of Risk Information, which publishes newsletters for the insurance industry.
In essence, the devices could do for drivers what the credit industry has done for consumers — create a score that will help determine how risky a particular individual might be to insure, just as a credit score indicates financial risk and determines whether consumers can get loans and how much interest they must pay.
The changes could alter driving habits for the better as people adapt their driving styles or even reduce the amount they drive to save money on premiums, experts say.
“This is the personalization of your insurance and also allows for behavior changes,” said Richard Hutchison, general manager of usage-based insurance for Progressive, which just began national advertising for its Snapshot discount.
Customers of Progressive, based in the Cleveland suburb of Mayfield Village, typically are saving about $150 per year, or about 10 to 15 percent, for participating in the Snapshot program, the company says.
The device has its limits in what it can track: It does not know who is driving the car or the car’s location, and the company says it won’t share the information unless it’s required as part of your policy.
The technology is not new, but the costs of building the devices and transmitting the information they generate have come down enough to allow insurers to begin using them extensively.
Progressive customers using Snapshot can go online after the device has been in place for 30 days to see what kind of discount they are earning and what they can do to rack up more savings.
The device is used for six months. After that, customers return it to Progressive and the company calculates the final discount that will be applied going forward. At worst, a driver’s rates will stay the same.
So far, about 250,000 drivers have signed up for Snapshot, the company said.
Progressive, second in Ohio with an 11.4 percent share of the auto-insurance market, is one of several insurers that have introduced or are planning similar programs:
• State Farm, the state’s largest auto insurer, has introduced its “Drive Safe & Save” program that allows some customers to save money if they drive less than the amount of miles estimated for their policy. The program is based on odometer readings that can be provided for vehicles equipped with OnStar.
• Allstate, the No. 4 carrier in Ohio, has introduced “Drive Wise,” using a device similar to the one that Progressive uses. The program is available only in Illinois for now, but the company is planning to expand it to other states beginning this spring.
• Safeco’s “Rewind” program allows drivers to eliminate an accident or traffic violation from their driving record if the data collected from the Safeco device shows safe driving.
In addition to these products, insurers have introduced an assortment of products that allow parents to track the driving of their teenage children from home.
The goal of these programs is simple for insurers: Keep their customers and add more as they look to boost their profits.
“We always get challenged by customers to come up with new and different ways to help them save,” Hutchison said.
At first, only drivers who are cautious, avoid dangerous situations and don’t drive much figure to embrace the devices because they could lower their insurance premiums and reinforce something they already do well.
Insurers say even drivers who log a lot of miles on their car still could come out ahead if the devices show they are safe drivers and spend most of their time behind the wheel at times of day when there are fewer crashes.
“It could still be awhile before it dramatically changes overall pricing behaviors,” said Jeff Rieder, president of the Ward Group, a Cincinnati consulting and research firm. “It is still a voluntary product, and many drivers don’t want Big Brother watching over them.”
Insurance companies stand to benefit by gaining and keeping safe drivers by being able to offer them lower premiums.
The devices also could reduce the number of crashes in the same way that the introduction of red-light cameras has caused drivers to become more cautious when they approach intersections with the cameras.
Additionally, the devices will produce vast volumes of data that show how drivers steer and brake, where they go and other driving habits.
The environment might benefit as well. A Brookings Institute study found a pay-as-you-drive auto-insurance policy would give motorists a reason to drive less, and that would reduce pollution and cut oil consumption.
Right now, no one loses as a result of these devices. Drivers aren’t forced to install them if they don’t want to.
But Sullivan thinks drivers eventually will pay for not taking part.
“By opting out, you’ll get a really high price,” he said, just as grocery customers who refuse to carry the store’s loyalty card lose out on discounts.
Installing the devices also means policyholders will give up more details about their driving habits that they might not want their insurer to know.
Bartlett said he didn’t feel Progressive’s Snapshot was intrusive.
“I knew what I was signing up for,” he said. “I can say I benefited from it, and I would definitely do it again.”
>
When one understands whats happening to us, then this doesn't seem so far fetched anymore...
Today
Other popular topics in this forum...
