Progressive was the first U.S. insurer to install a device called the Snapshot into car dashboards to monitor their customers’ driving habits over a 30-day period. Based on their mileage and hard brakes, customers could be eligible for a discount on their monthly payments.
Now Progressive has challenged more than a dozen tech entrepreneurs and mobile developers to take the next step: track when a driver slams on the brakes or speeds with a simple smartphone app it can launch next year — an app that will be as accurate as the Snapshot.
That would be far easier to install than a physical device that drivers get in the mail, and could offer richer data like GPS, which the Snapshot doesn’t track. It’s also a major engineering challenge.
♦ Progressive’s developer partners are currently figuring out how to track movements that reflect speed or heavy braking, the company says, without being tainted by the movement of picking up a phone or accidentally turning on the app while a user is on the train.
♦ Rival Allstate has already got a monitoring app on the market. Last month it launched Drivewise, an app that monitors and gives feedback on driving behavior, which is currently being tested on drivers in Montana, Nebraska and New Hampshire.
♦ Progressive has been working on individual driver monitoring since 1998, when it first launched its pilot for the Snapshot.
♦ “It seems more fair and accurate if we can set prices in how people actually drive instead of just how old you are,” says David Pratt, a general manager at Progressive.
♦ Since its pilot Progressive has made $2 billion in premium revenue from customers who installed the device, and who ended up getting a discount if they drove safely. The company makes no margin on these customers. “We give them a big enough discount that it matches what we gain in lower loss costs,” says Pratt.
♦ Customers also tend to stay with the company longer and drive better too. “The benefit is growth.” Progressive would not disclose numbers illustrating how customers were staying longer with the company after using Snapshot.
“This is a good thing for society,” says Anthony Goldbloom, founder of data predictions platform Kaggle, who has worked with insurance companies on learning how to predict and influence behavior. “As more and more good drivers elect to be monitored, insurance for dangerous drivers becomes more expensive. I believe the same dynamic applies to health insurance.”
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