How does it work?
What Progressive have created with their new insurance plan is a way for the driver and their vehicle to communicate with the insurers directly so a more detailed picture is built up about the individual, potentially saving customers hundreds of dollars a year. The 'behaviour-based' insurance program makes use of a small wireless device that plugs into a port in the car and communicates with the insurance company.
The device will inform the insurance company as to what time of the day the car is being driven, how often and the manner in which the driver is handling the vehicle. From this Progressive will be better informed as to the supposedly 'safer' 38 year old female driver's road handling skills, does she actually change lanes like a speed-racer, does she drive as close to the vehicle in front as possible and is regularly forced to slam on her brakes?
What about the supposedly 'high risk' 22 year old male driver, is he in fact a poster child for driving, consistently alert, keeping a safe distance away from the car in front and opts to drive at less dangerous times of the day? If he is, then whilst on the MyRate program he should see a drastic reduction in his premiums, saving him some much needed cash.
The future of car insurance
For now the program is only available to drivers in Louisiana and they will be able to take advantage of a further discount if they choose to sign up online. Of those drivers it is good to note that not everyone will opt for the program, individuals who may not clock up a large amount of miles per year but drive during the riskier times of the day may see their premium go up are one group that may 'gracefully' decline the invite to the program.
Households that have more than one car, with their second car receiving a lot less usage may choose to sign the household's second vehicle up to the program while leaving their primary vehicle insured under a more traditional program. The program "MyRate is designed for consistent and safe drivers" commented Richard Hutchinson, Progressive's MyRate general manager, he went on to elaborate; "people who drive at low risk times of day and who keep alert for others on the road". This is the group that "keep alert for others on the road...don't make fast lane changes" and "don't have to over-react or slam on the brakes".
If this is the future of car insurance and the program proves to be a success, it may mean the dumping of traditional risk-calculation and the heralding of a new way to assess an individual, their risks in a much more detailed and accurate fashion.
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