INSURANCE PROGRAM REWARDS DRIVERS WHO DRIVE LESS AND SLOWER

An auto insurance program based around usage could spell cost-savings across the board and change the face of future policies. The program, which began in August and was in its testing phase at press time, rewards drivers who log fewer miles and drive slower than other motorists.

Progressive announced it would offer the discount plan to the first 5,000 vehicles registered at tripsense.progressive.com. Also known as TripSense, the program includes a free matchbox-sized module, or TripSensor™, that plugs into the on-board diagnostic (OBDII) port, located near the steering column in vehicles made in 1996 or later. OBDII ports are also used to read other types of vehicle information, like emissions data.

“Drivers who reduce their risk of being involved in an accident by driving less, driving during lower risk hours or driving slower will be rewarded in this discount program,” says Jim Haas, Minnesota auto insurance product manager for Progressive.
The testing phase is mainly focused on residential customers as Progressive takes a “wait and see” approach to offering it to all drivers nationwide, commercial fleets included, says Progressive Spokesperson William Perry.

“We are optimistic it will be successful,” he says. “If everything falls into place, we’d like to make it more widespread in other states.”

Each vehicle that registers receives an automatic 5-percent discount for the six-month premium period. Those who choose to upload driving data to Progressive via computer hookup will receive a 5-percent discount in subsequent policy periods.
The more significant savings, up to 20 percent, will occur when the insurance company interprets the driver’s data. For example, a usage discount of up to 15 percent will be offered based on how much and when the vehicle was driven, and another 5 percent will be added to or subtracted from the usage discount depending on how much time the vehicle was above or below 75 mph.

“Anything you can do to arrive at a more accurate and fairly priced product is the driving force behind what we’re trying to do,” adds Perry.

Also collected, but not a part of the discount, will be information regarding rapid acceleration and braking. Progressive plans to use this data for future accident prevention.

The data also will allow drivers the chance to view a day-by-day travel log, as well as anonymously compare how their driving habits stack up against those of other drivers.

“If you wanted to compare (your driving) to all males in your age group, you can compare it to other demographic groups, with all the other participants,” says Perry.
The reading devices are a customized version of modules made by Hayward, Calif.-based Davis Instruments Corp. The company also manufactures chips for fleet management, as well as specialized fleet management software, which keeps track of driver performance, vehicle usage and accidents.

Progressive embarked on a similar program in Texas in which a retrofitted Global Position System (GPS) and cellular technology were installed into vehicles to calculate discounts much like the company’s current pilot program. Conducted from 1998 to 2001, the GPS program was discontinued because of high costs and “complex installation logistics,” according to the company.

Perry says the current program will be much more cost-effective and has a better chance of survival. “(The GPS program) was cutting edge-technology back then. It was a big-ticket item; certainly more than people wanted to pay,” he adds. “People loved the idea, but the cost of installation and logistics were too great.”

By: Chris Miller

AUTO INSURANCE RATES STABLE FOR MANY

Jolted by high gas prices this year, car owners are at least getting some insurance relief. Auto policies are basically flat or falling for many Americans.

This year, the cost of auto insurance on average will rise only 0.5% -- the smallest increase in six years, according to an estimate of the Insurance Information Institute out Monday. It predicts a 0.5% decline for auto rates next year, the first drop since 1999.

The projections are based on recent auto claims and other information, as well as the national report of auto insurance rates released last week by the National Association of Insurance Commissioners. In 2004, the latest data available, the average annual cost of auto insurance was $838 per vehicle.

Individual premiums vary widely. Bryant Jaggers of Aurora, Colo., saw a "pretty significant" drop in his rates this year. State Farm Insurance cut his premium for four cars by about $500.

A chief reason for tumbling rates is a decline in auto accidents, in part due to safer cars and roads. "We've had many technological innovations ... helping vehicles avoid an accident and helping reduce or eliminate injuries of the occupants," says Robert Hartwig, chief economist of the institute.

The decline in accident rates is also attributed to some states barring or restricting late-night driving by teenagers. Although such programs have been in place for a while, they're finally starting to have an impact on insurance rates, Hartwig says. Other factors affecting rates:

*New Jersey, for years one of the most expensive states for auto insurance, is allowing more firms to do business in the state. That's brought more price competition. "We had just a tight stranglehold of regulation," says Steven Goldman, commissioner of the New Jersey Department of Banking and Insurance.

*In September, California implemented a law that prohibits insurers from determining auto rates based on people's ZIP codes rather than on how safely they drive. Insurers have since filed for rate cuts totaling $1 billion, according to the California Department of Insurance.

*In New York, rates are dropping because of a state crackdown on auto fraud and abuse. In July, for example, the state indicted 17 people and three corporations on charges of operating an auto insurance fraud ring.

Some say the drop in auto rates is not steep enough. They note that the property and casualty industry had a profit of $15.1 billion in the first half of the year, according to the Risk and Insurance Management Society. "Rates should be down quite a bit more," says Robert Hunter, director of insurance at the Consumer Federation of America.

(c) USA TODAY