Hawaii Greenlights State’s First Usage-Based Insurance Program

Following what it sees as a “growing trend,” Hawaii on Tuesday approved the state’s first usage-based insurance (UBI) program.

Regulators there announced that DTRIC Insurance Underwriters received approval to sell its UBI program using a device from Akamai Rater. Such devices are typically installed in a diagnostic port in the car and then transmit data about how the car is used, including when brakes are suddenly applied, how far the car is driven and when it is driven.

The biggest draw of UBI programs is the possibility of cheaper rates. Program enrollees usually have access to summaries of driving data and their eligibility for discounts on auto insurance coverage because of that data.

“Unsafe driving behavior can put a big dent in your wallet as well as your fender,” said insurance commissioner Gordon Ito in a statement. “Now these device-related programs create more incentive to drive safely and help save money for consumers who do so.”

Tracking behavior behind the wheel provides stronger “predictive” power over the cost of claims than other factors typically used by insurers like ZIP code and car model, according to a study from Progressive released early last month.

The insurer released the study in tandem with an announcement that shook up the UBI market: its flagship UBI program, called Snapshot, would be available to competitors’ policyholders as a 30-day trial.

Progressive’s joint announcement of its study and trial offer sought to pry customers away from insurers in an increasingly competitive marketplace. Over the following weeks, several other major insurers and companies kicked off campaigns to expand and publicize their UBI offerings.

In mid-July, Sprint publicized the success of its UBI partnership with Esurance after the insurer launched its first UBI program in Texas. Sprint called the partnership a “success” serving as a lead-in for its own expansion in which the telecommunications company would offer its UBI tracking technology to insurers as a three-month “jump start trial.”

The following week, an Allstate executive said in an interview that the insurer’s UBI program, Drive Wise, would expand to seven more states nationwide as the insurer’s employees and agency owners test the product.
Hawaii’s first approval of a UBI product clears the path for a burgeoning market, according to Ito.

“This type of program is a growing trend on the mainland, and we anticipate that other insurers will create similar programs here,” he said in a statement.

According to Hawaii Insurance Division’s most recent available data, DTRIC was the 8th-largest insurer in Hawaii in 2010, when the company insured about 30,260 cars.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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