Travelers Group said Thursday it will roll out the discount at the end of February for owners of gas/electric hybrids. Although there aren't enough data to prove that hybrid owners are safer drivers, Travelers says the drivers tend to fall into a "preferred group." Travelers says hybrid owners it insures are typically married, ages 41-60, with both genders represented equally. The insurance company is also betting that the number of hybrid owners -- and potential customers -- is only going to grow.
"It's definitely about rewarding drivers," says Greg Toczydlowski, senior vice president of product management for Travelers. "And as we look at the growth of that marketplace, we want to be well positioned in that market."
Hybrids have grown from two models and less than 10,000 sold in 2000 to 11 models and 212,000 sold in 2005. J.D. Power and Associates estimates hybrid sales will increase 268% to 780,000 among perhaps 52 models in 2012.
Toczydlowski first tuned in to the potential for growth in the hybrid market after Hurricane Katrina. As he stood at the pump filling his family's SUV with gas, he watched a hybrid owner zip in and out, filling the car's tank before his own was halfway done. "We did some research after that, and all the trends are very encouraging," he says.
It's debatable whether driving a hybrid actually saves consumers money. Currently, hybrid owners benefit from a tax credit ranging from $250 to $3,150, depending on the car. But they also pay a premium for the hybrid powertrain, often $3,000 over the base price. And because they are so popular, getting a discount is next to impossible. Some Toyota Prius buyers have paid more than sticker price for their wheels.
The insurance discount should amount to about $100 a year, Travelers says. The discount still needs to be approved by individual states because insurance is regulated on the state level. And two of Travelers' insurance components -- covering personal injury and a collision with an uninsured motorist -- will not have the discount. Toczydlowski says those two plans make up 15% of Travelers' auto insurance business.
Travelers is not the first to offer a discount for hybrid owners. Farmers Insurance began offering a 5% discount in October for California residents.
State Farm spokesman Kip Diggs says his company doesn't plan to follow Travelers. Hybrid owners, on average, tend to get into as many accidents as other drivers, Diggs says. State Farm also takes into account how much it costs to fix a damaged hybrid.
"Some of those vehicles, depending on where they are hit, the cost for repair is going to be substantially greater," Diggs says.
(c) USA TODAY