Leading Auto Insurer Launches Research Program; Says There Could Be a Better Way to Price Policies

For as long as anyone can remember, car insurance policies havebeen priced in the same way, using information about you, your drivinghistory and your vehicle's make and model. And, why not? After all,this information helps auto insurance companies better understand yourrisk of being involved in an accident, it's able to be gathered andit's generally able to be verified.

But, what if there is information about how you drive that is farmore predictive of your risk of being involved in a crash? Forexample, would knowing about the trips you take each day, or just thetrips you take on Monday, help insurance companies price your policymore accurately? What about the amount of time you spend driving athighway speeds vs. slower? Does it matter that you drive shortdistances quickly or that you drive long distances more slowly? Orthat you get up to the speed limit very quickly vs. gradually? Does itmatter that you brake hard?

The reality is that, today, no one knows because no one has evergathered this information before. That's why Progressive Direct istaking what it believes to be the next big step in the evolution ofauto insurance pricing by inviting its customers throughout thecountry to participate in a voluntary research program that willgather driving habit information. Customers who choose to participatewill install in their car a small device called a TripSensor(TM) thatwill record information about how often, how fast and when theirvehicle is driven, along with information about acceleration andbraking.

Using the information collected by the TripSensor, ProgressiveDirect expects to find data that will help it to continue to advancethe science of auto insurance pricing.

For helping with its product research and development efforts,Progressive will reimburse customers $50 for six months of data fromeach car in the program. Customers may install a device in as manycars as are insured with Progressive Direct and may sign up formultiple six-month terms. Progressive Direct's goal is to collect asubstantial amount of information from a representative sample of U.S.drivers in the next couple of years. All driving information is sharedvoluntarily with Progressive and will not affect the cost of thecustomer's current auto insurance policy.

"Today, auto insurance pricing is all about using data about youand people like you to determine a price that will cover the cost ofthe risk you present," said Dave Huber, product development manager,Progressive Direct. "We've been constrained in the types of data wecan use because it's the only information we could gather. We'rebreaking through that barrier and using technology to gather differentdata to see what it tells us."

This research program is the latest in Progressive Direct'sproduct research and development efforts and uses technology currentlydeployed in a usage-based auto insurance discount pilot programunderway in Minnesota. Called TripSense(SM), drivers in the programare eligible for a discount on their renewal policy if they choose tosend their driving data to Progressive.

"We are continuously looking for ways to make car insurance morecompetitively priced and easier to use," said Huber. "We believe thatif we could know more about how you drive, we could charge you a ratethat more accurately reflects your driving characteristics and,therefore, your insurance needs."

For more information about the research project or to sign up toparticipate go to http://gettripsense.progressive.com.

The Progressive Group of Insurance Companies, in business since1937, ranks third in the nation for auto insurance based on premiumswritten and provides drivers with competitive rates and 24/7 in-personand online service. The products and services of the ProgressiveDirect Group of Insurance Companies are marketed directly to consumersby phone at 1-800-PROGRESSIVE and online at progressive.com throughthe Progressive Direct(SM) brand. Progressive Direct offers consumersconveniences that help make car insurance easier, including comparisonrates of other top companies and the ability to shop for, buy andmanage their policies by phone or online, 24/7. The Common Shares ofThe Progressive Corporation, the holding company, are publicly tradedat (NYSE:PGR).

Dave Huber, product development manager, Progressive Direct, isavailable for interview.