Progressive Insurance is extending its MyRate program to drivers in the state of Rhode Island – adding to the 15 states already participating. This behavior-driven car insurance program offers customized rates to customers based on how safely, how often and when a car is driven. How does Progressive get such detailed information on how you drive? By asking you to install an electronic device that monitors your driving habits. The MyRate program has been more successful for Progressive than past attempts. Earlier methods of tracking by satellite made drivers nervous about their privacy. This device only tracks time, mileage and movement – not a vehicle's location. This change is expected to ease consumer worries and to help drivers realize big discounts of up to 25 percent on car insurance coverage. Safer drivers save Progressive so much in claim payouts that insurance companies can offer deep discounts and still realize greater profits.
The goal is to encourage better and less frequent driving. Unlike some car insurance technology, the driver, not a mechanic, installs the MyRate device. The consumer then must pay $30 every six months to cover the cost of the device and data transfer expenses. Most drivers on the MyRate® program save between 10 and 15 percent on their premiums. At a cost of $60 per year, even a 10-percent savings on a car insurance policy of $1,200 per year would pay for the cost of participation two-fold.
There are some disadvantages to the program. Drivers participating in MyRate also face the risk of increasing premiums if their driving habits turn out to be worse than average. For this reason, Progressive lets customers out of MyRate if it begins to look as if rates will increase. Drivers will be able to get an idea of how they're doing after their first 30 days by going on line and viewing the tracking data.
Progressive isn't the only insurer looking to leverage technology for profit. Car insurance companies like Travelers and The Hartford are testing technology that uses wireless communication to transfer information called telematics. Travelers has been trying out a device that must be installed by a technician, but offers discounts to consumers for participating in the program. The Hartford's telematics program is still in the phases of research and is based on GPS technology. Eventually, the company may develop a "pay as you drive" product. GMAC Insurance is utilizing OnStar technology to offer 13- to 54-percent discounts for its customers in some states. The advantage for GMAC is that no separate device needs to be installed in the vehicle.
It seems car insurance companies are eager to utilize a more technology-inclusive, and more efficient, product to their policyholders some money.
