Usage-based insurance (UBI), which ties premium rates to driving behaviors, “will be the norm over time,” Progressive CEO Tricia Griffith said in a letter to shareholders.
“We debuted our mobile device UBI application in 2016 and will continue with a countrywide rollout in 2017,” Griffith wrote in her annual letter to shareholders. “We continue to make significant investments in R&D across the enterprise. The application of telematics for commercial vehicles, to improve segmentation and effectively underwrite and price small fleets, is a space where we are enthusiastic about playing in the future.”
In December, Progressive introduced the Snapshot mobile app in four states, and “early results are meeting our expectations,” Griffith said in her first-quarter 2017 letter. As of the end of March, Progressive had collected data on 6.2 million driving miles and more than 500,000 trips via the mobile app, according to Griffith.
Progressive’s website describes Snapshot as “a program that personalizes your rate based on your actual driving.”
“It’s technically called usage-based insurance,” the Progressive website explains. “That means you pay based on how and how much you drive instead of just traditional factors. It’s simple. Drive safe and save. Drive extra safe and save even more. There are still other pricing factors, and your rate may increase with high-risk driving. But you’re in control of what you pay, and most drivers earn a discount. In fact, Snapshot rewards the average driver with a $130 discount.”
Snapshot is available as a mobile app or a device that plugs into a vehicle’s OBD-II port.
Progressive’s technology strategy “continues to be an integral part of how we run the business and find ways to gain a competitive advantage,” Griffith wrote in her 2016 letter to shareholders.
“Snapshot has been and will continue to be a critical component of this advantage,” she wrote. “We believe that with the evolution in technology, usage-based insurance (UBI) will be the norm over time. Having first mover advantage with UBI allows us to use those data capabilities to quickly evolve as necessary.”