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A popular program that offers premium discounts to motorists who agree to have their driving patterns digitally recorded worries some privacy advocates who say it is needlessly intrusive and could pave the way for future infringements.
About 250,000 Progressive customers have participated in the company’s Snapshot program in the hopes their driving behavior will earn them savings.
To partake, motorists attach a device to their vehicles’ onboard diagnostic computer that then records and transmits data to the company for six months. It measures miles driven, driving times, braking patterns and speed.
“Snapshot is a voluntary, discount-only program,” said Brittany Senary, a spokeswoman for Progressive, Ohio’s second largest auto insurer.
But Paul Stephens, director of policy and advocacy with the California-based Privacy Rights Clearinghouse, said the device also measures the time of day the vehicle is in use, which is unfair to people who work odd hours. The next step could lead insurance companies to monitor other elements of their customers’ driving behaviors, he said.
“We are on a slippery slope,” Stephens said. “They start out by collecting a little bit more information than they need ... then where does it stop?”
He added the information could hypothetically be subpoenaed by law enforcement agencies in police investigations.
The device Tina Brandon attached to the steering column of her car and van looks like a futuristic garage-door opener, but instead of operating doors, it records data and saves her money.
The device, called a Snapshot, records and transmits the number of miles she drives, her speed, the time of her trips and her braking behavior. The data then goes to her insurance company, Progressive.
Brandon, 40, of Huber Heights, said her safe driving behaviors have already cut the cost of insuring her van by about $100 annually. She hopes the Snapshot program will slash the cost of insuring her car.
“Every little bit counts in today’s society,” she said.
Brandon is one of about 250,000 Progressive customers who have signed up for the company’s Snapshot program in the hopes that digital documentation of their driving habits will result in a savings of up to 30 percent off their insurance bills.
Insurance companies typically set rates based on a customer’s age, gender, place of residence, traffic record, accident history and credit score. But as technology improves and becomes less expensive, some insurance companies are using high-tech methods to set and lower their customers’ insurance rates.
Privacy advocates, however, warn that improved technology can reduce customers’ expectation of privacy.
Progressive, which is the second largest insurer in Ohio, began offering the voluntary, usage-based insurance program in the state in June 2010, and rolled out an associated advertising campaign this year. Flo, the perky character in the Progressive commercials, discussed the Snapshot in a recent ad.
Customers who have vehicles made in 1996 or newer are eligible to participate in the program, because those cars and trucks have diagnostic ports that connect to their on-board computers that track relevant information, said Richard Hutchinson, usage-based insurance general manager with Progressive.
After signing up, customers receive a Snapshot device in the mail that they plug into the computer port. Using the cellphone network, the Snapshot transmits data about the vehicle’s movements and the motorist’s driving habits.
After 30 days, Progressive reviews the data to determine if the customer is a eligible for a discount, which is applied immediately. At the end of six months, the customer returns the Snapshot and the company then determines if their driving patterns earn them a discount that will remain on their policy.
“On average, Snapshot drivers save an average of 10 (percent) to 15 percent,” said Brittany Senary, spokeswoman with the company. The average annual savings is $150.
Although the device records the vehicle’s speed, Hutchinson said speed is not a variable when calculating the potential discount. He said also Snapshots do not have GPS, and the data transmitted will not be used to increase a customer’s rate.
“It is a discount-only program,” he said. “Best case, you get up to 30 percent off your insurance rate. Worst case is 0 percent.”
From a business standpoint, the Snapshot program makes financial sense because it will attract customers who want more power over their insurance rates, Hutchinson said.
It certainly appealed to Brandon, who said she signed up for because she obeys the rules of the road and drives cautiously and defensively.
The Snapshot program is not the only discount program of its kind.
Allstate offers Drive Wise, which also rewards safe and low-mileage drivers who agree to attaching wireless telematics devices to their vehicle’s computers for measurement purposes.
A company spokesman said the program is currently only available in Illinois, but the plan is to expand into other states later this year.
State Farm, the state’s largest auto insurer, has the Drive Safe and Save program, which tracks driving habits using customers’ OnStar, a subscription-based safety and communication system.
Jeff Rieder, president of the Ward Group, which is a management, consulting and research firm located in Cincinnati, said the usage-based insurance model appeals to insurance companies because although it reduces their revenue, they believe it will attract safer drivers, which will save them money in fewer claims.
“For an average insurance company, they will have about 24 (percent) to 25 percent of their policies make a claim in a given year,” he said.
“If they get customers as a whole who are a better risk, and they can reduce that 25 percent down to 22 or 21 percent, that ends up being a huge savings for them.”
Rieder, however, predicts that if discount programs grow in popularity, some insurance companies could end up charging people who do not participate in the discount programs higher rates on the assumption they are worse drivers.
“For some companies, if they don’t make the correlating adjustments for bad drivers to charge them the appropriate rates, it could disproportionately lower the revenue for the insurance company,” he said. “There has to be correlation for insurance companies to charge the worst drivers more.”
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