Usage-based Insurance Programs are Attracting Some of the Absolute Safest Drivers
A report from The Wall Street Journal suggests that telematics may be playing a key role in preventing fatal car crashes. The report, which was written by the Journal’s Leslie Scism and published September 9, 2015 discusses the way U.S.-based insurer Progressive Corp. – an early adopter of usage-based insurance programs – has seen the number of fatal crashes among its drivers remain level, even though miles driven has increased substantially.
Progressive’s usage-based insurance (UBI) system is called “Snapshot” – it’s based on a wireless device that, when installed in a vehicle’s diagnostic port, sends information about a driver’s behavior back to the insurer. This system allows Progressive to develop a more accurate picture of a driver’s on-road habits and build them a fairer, more representative policy.
Snapshot, a voluntary program, has proven rather popular, and no wonder – some drivers can reportedly save up to 30 per cent by making the switch away from more traditional insurance plans.
So, how is the program helping keep the number of fatal accidents down?
It may be because Snapshot encourages drivers to be safe – something more traditional policies don’t do in such a direct manner. The whole point of the system – which many other insurers around the world are also adopting – is to reward good drivers for their safe on-road behavior.
The impact of UBI is particularly noticeable when you compare Progressive’s situation with that of Geico Corp., which hasn’t introduced a usage-based insurance program. Unlike Progressive, which has seen miles driven increase but fatal crashes stay level, Geico is reporting a jump in the frequency and severity of customer claims.
We recommend that anyone interested in exploring the benefits of usage-based insurance or building a business case for UBI contact an experienced, knowledgeable telematics service provider (TSP). They can help you carefully evaluate and understanding the business case scenarios most appropriate for an insurer. The right TSP can also help identify the business case best suited to each individual business’s strategy— the necessary foundation for implementing a successful program.