Progressive Expands Snapshot into Illinois

Progressive announced Wednesday that its Snapshot program is now available to Illinois drivers, spelling another chapter in a continuing war between major insurers that are each pushing their own usage-based offerings.

Snapshot utilizes a plug-in device to track driver behavior including distances driven and how hard brakes are applied. The in-car device plugs into the car’s diagnostic port.

Participating policyholders can obtain a usage-based discount on auto coverage linked to safer habits behind the wheel and can monitor car usage online in real time.

Progressive says that Snapshot can save a policyholder up to 30 percent on coverage and can’t result in raised rates if the poliycholder displays bad driving habits.

Snapshot is currently available in 43 states. It is still unavailable in Alaska, California, Hawaii, Indiana, North Carolina, Tennessee and Washington.

Major Insurers’ Programs Face Off in Illinois

With its latest move into Illinois, Progressive enters a crowded marketplace where State Farm and Allstate both already have similar programs.

While Progressive is far more widely available than Allstate’s Drive Wise and State Farm’s Drive Safe & Save, all three programs are now available in the Land of Lincoln.

Currently, Drive Wise is available in 10 states: Arizona, Colorado, Florida, Illinois, Michigan, New Jersey, New York, Ohio, Oregon and Pennsylvania.

Drive Safe & Save is available in 16 states: Alabama, California, Colorado, Florida, Georgia, Illinois, Indiana, Iowa, Michigan, Minnesota, Ohio, Pennsylvania, Texas, Utah, Virginia and Washington.

Like Progressive, Allstate has expressed interest in widening its grasp on the usage-based market as Drive Wise expanded into the Northeast and Midwest last month.

“Telematics technology and capabilities are expanding rapidly, which may lead to greater adoption in the industry and further capabilities in the future,” Laura Strykowski, a spokeswoman for Allstate, told Online Auto Insurance News (OAIN) at the time, adding that further expansion is planned in 2013.

With a bevy of commercials hitting the airwaves, including Progressive’s Test Drive campaign, a customer base more familiarized with UBI offers insurance providers plenty of opportunities in the future.

“As consumer comfort levels with this technology grow, the potential for new features will expand,” Strykowski said.

Competition Kicked into Overdrive with Progressive’s Test Drive

This year has been one chock-full of developments around pay-as-you-drive (PAYD) and usage-based (UBI) programs, both of which base insurance coverage rates on how drivers use their cars.

Progressive debuted a campaign dubbed Test Drive this summer, allowing consumers at any insurance company to test Snapshot for a month free of charge.

Progressive sees Test Drive as a bid to snatch customers from other major insurers, according to CEO Glenn Renwick.

According to the most recent rankings from the National Association of Insurance Commissioners (NAIC), Progressive places fourth among all auto insurers in the U.S. with nearly 8 percent of the auto coverage market.

The insurer trails GEICO and Allstate, which have just over 9 percent and 10 percent, respectively. State Farm has a firm lead over competitors with more than 18.5 percent of the auto insurance marketplace.

“I would expect to get market share from companies that, perhaps, maybe had more entrenched customers—and that seems to be happening,” Renwick told investors about Test Drive’s performance during a quarterly conference call.

But Renwick also said that Test Drive produced “a mixed bag,” increasing awareness within the consuming public about Snapshot but falling short on bolstering business volume.

“While there is a general understanding, there is still a fair amount of ambiguity as to exactly what to do about it and what it will do for me,” he said during the conference call.

The marketing tactics around Snapshot will see a major shift next year, Renwick said, as the insurance carrier tries to capitalize on “clearly something that is very exciting.”

A Busy Year for UBI, PAYD Programs

Other developments for UBI and PAYD programs include Allstate, State Farm and even Sprint, the telecommunications conglomerate.

After partnering with Esurance, an Allstate subsidiary, in testing its UBI product—named Drive Less, Save More—Sprint announced that it would make its Integrated Insurance Solutions (IIS) product available to any insurer as a three-month “jump start trial.”

The IIS trial allows smaller-scale insurers to test the technology behind UBI and see if their business fits the relatively new type of insurance coverage.

“Sprint has assembled all the necessary components together so that insurers have a single point of contact for all UBI-related needs,” Matt Carter, president of global wholesale and emerging solutions at Sprint, said in a statement.

Meanwhile, larger-scale insurers continued their foray into the UBI market.

In May, State Farm announced a partnership with Ford, pairing its Drive Safe & Save with the automaker’s SYNC technology. Through the partnership, Drive Safe & Save would be available in SYNC-equipped Ford, Lincoln and Mercury models as a part of the connectivity system’s diagnostic tracking; SYNC also powers other features like voice commands.

At the same time, lawmakers and state officials across the U.S. are catching up fast-moving UBI developments.

The Washington state Legislature passed in April a bill that, among other things, protects the rating formulas insurers use to price UBI coverage.

In August, insurance regulators in Hawaii announced approval of the state’s first UBI program for DTRIC Insurance Underwriters, with commissioner Gordon Ito calling UBI a “growing trend” that provides “more incentive to drive safely and help save money for consumers who do so.”

Still, not all states are convinced.

California regulators approved Esurance to begin selling its PAYD program there in September. PAYD and UBI programs differ because PAYD programs focus their discounts on distances driven that are measurable through an odometer reading, while UBI programs uses an in-car device to take other behaviors into account such as when a vehicle is driven.

The California Department of Insurance (CDI) has not authorized any UBI programs to operate in the state or begun to create regulations for the UBI market, largely based on “concerns about the technology” and consumers’ privacy.

Other concerns hover over the relatively new technology, according to CDI spokeswoman Pat McConahay.

“There are concerns that insurers might penalize drivers for factors outside of their control,” she told OAIN in September. “One example might be charging more to a customer for their occupation that forces them to drive at night.”

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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