Posted : 07/02/2013
After closing a deal allowing USAA to license its pay-as-you-go car insurance technology, Progressive remains tight-lipped about other possible partnerships as its licensing offer expires.
USAA, which sells insurance to military personnel and their families, may begin using Progressive's patented usage-based technology, the backbone of its Snapshot product, in April 2015, says Erin Hendrick, Progressive's public relations manager.
The agreement would require USAA to pay 0.02 percent of its annual direct written premiums on auto coverage to Progressive. USAA, based in San Antonio, Texas, wrote nearly $8.5 billion in auto premiums in 2012, according to the National Association of Insurance Commissioners.
The deadline for forging similar agreements with Progressive ended June 30 and the company has no immediate plans to extend it, says Hendrick. However, she adds that the company entered into talks with other insurers to lease the intellectual property prior to the deadline and those deals remain in play. Progressive declined to name the insurers or status of the discussions.
Progressive holds six usage-based insurance patents with more than 1 million pay-as-you-go customers, according to a statement announcing the USAA arrangement, and has gone to court to protect its intellectual property.
Over the past four years, Progressive filed patent-infringement suits against Allstate, Liberty Mutual, State Farm Mutual Automobile Insurance and Hartford Financial Services group over usage-based technology. Progressive settled with Allstate, while the other suits are under review by the Patent Trial and Appeal Board.
The pay-a-you-gomodel is clearly a growing trend in auto insurance. (See: "Report: Three in four insurers moving forward with pay-as-you-go.")
It usually works this way: Policyholders let insurers monitor their motoring habits, often by plugging a telematics tracking device into their car, to potentially qualify for discounts. Drive safely and log fewer miles, companies say, and you may save as much as 30 to 40 percent a year. Most 1996 or later car models are equipped with a diagnostic port that takes the plug-in.
There are privacy concerns, however, as some worry how the gathered details could ultimately be used, perhaps by advertisers or in criminal investigations. And social scientists and academics have also cautioned that the information, if not adequately controlled, might even affect the workplace if insurers were willing to give driving profiles to employers. (See: "To save a buck, let your insurer be a 'Peeping Tom.'")
Other industry watchers have speculated that though pay-as-you-go data may not be used by insurers to increase premiums, eventually it could factor in decisions to renew policies. Progressive has said that it has no plans to use such data when reviewing coverage renewals "at this time." (See: "Snapshot to include teen driver monitoring in the future?")
Here's a look at what's currently available. Be aware that pay-as-you-goisn't offered in every state so talk to an agent or visit company websites:
Progressive's Snapshot: The plug-in tracks time of day and vehicle speed, how many miles driven and how often you brake hard. Richard Hutchinson, the company's general manager of usage-based insurance, says savings could reach 30 percent for the most conscientious motorists. He adds that it's best if your car stays parked during peak accident hours (between midnight and 4 a.m.). The device must be installed for at least 30 days to generate a driving profile. Snapshot can now be tried for 30 days without being a Progressive customer.
State Farm's Drive Safe & Save and In-Drive: You need an OnStar subscription for Drive Safe & Save. OnStar is already in more than 30 Genaral Motors models, but you can pay to have it added to your car. State Farm receives odometer readings from OnStar every 30 days after you enroll and, after six months, adjusts your premium to reflect the mileage. The company says discounts usually range from 10 to 50 percent depending on mileage, when you drive and how safely you drive. The insurer also offers In-Drive, which requires a plug-in to track time of day and vehicle speed, how many miles driven and how often you brake hard. Spokesperson Missy Lundberg says you immediately receive about a 10 percent discount on premiums through In-Drive. She adds that another 20 percent might be saved if you stay below 12,000 miles a year, the national average.
Allstate's Drive Wise: A plug-in device records the usual motoring statistics, which are used to determine if customers qualify for a 10 percent discount for the first policy term. If drivers maintain safe motoring habits and low mileage during subsequent terms, savings can reach 30 percent, according to the company.
The Hartford's TrueLane: A plug-in device records relevant motoring information and transmits it to the insurer by its partner, Octo USA Inc., over that firm's cellular network. You get a 5 percent discount by enrolling. After driving for 75 days, your premium could drop by as much as 25 percent, depending on how safely you drive.
Travelers' IntelliDrive: You can receive an immediate discount of up to 5 percent by installing this telematics device. IntelliDrive can reduce premiums by as much as 20 percent for the best drivers, according to Travelers.
Esurance's DriveSense: Another plug-in offering; gathered details are transmitted through Sprint's wireless network to Esurance, which determines if drivers qualify for discounts up to 30 percent.
Safeco's Rewind: The company, which is owned by Liberty Mutual, offers a pay-as-you-gofor motorists who are paying higher insurance rates because of traffic tickets or accidents. A device monitors their driving and keeps a record of the usual details. After four months, the record is evaluated by Safeco, which may reduce or eliminate the premium increases that came because of the prior accidents or violations.
GMAC Insurance: The insurer's plug-in monitors much the same as others -- speed, braking, and mileage and when a vehicle is driven. GMAC tracks the information through OnStar and says a primary reason for discounts is mileage. The rate cuts range from 13 percent for those who drive 15,000 miles a year to 50 percent for those who drive less than 2,500.
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