Progressive's MyRate Plan Pegs Customers' Driving Style To R

Jun. 17--Drivers who keep their lead foot off the gas and quit jamming on the brakes could steer their way to savings on auto insurance through a program that a major insurer has just expanded to Connecticut.

Progressive's MyRate plan, already offered in 14 other states, is a voluntary program for consumers who don't mind a little blue box in their vehicle that tracks their driving style and tattles to the insurer.

Connecticut drivers who do well in the program will get discounts as high as 30 percent. But you could end up paying a surcharge of up to 9 percent if your driving shows more jack-rabbit starts and panicked stops than average.

Ohio-based Progressive reflects the insurance industry's growing interest in using technology and discounts to attract and retain the lowest-risk drivers.

Travelers and The Hartford are among the companies that have been testing telematics -- technology using computers and wireless telecommunication to transfer data -- to track the driving habits of volunteers.

The aim typically is to encourage people to drive less often and more safely so they have fewer claims -- and also boost insurers' profit margins. If the programs succeed, the companies will raise their proportions of low-risk drivers, and the savings on claims would more than offset the discounts they're granting.

"For safer, lower-risk drivers, this can be a great tool to validate their driving story and say, 'I deserve that discount,' but it's not for everybody, so you have to think through what kind of driver you are," said Richard Hutchinson, Progressive's general manager for usage-based insurance.

MyRate tracks annual mileage and what times of day those miles are driven, as well as hard braking and accelerating.

Consumers have to decide whether an insurer's watchful eye is too much of an invasion of privacy.

Progressive's MyRate doesn't use a global positioning system, and it doesn't spy on where you drive. The company had started experimenting in 1998 in Texas with a satellite tracking program in which participants' premiums were based on where, when and how much they drove.

That program, which had raised some concern about "Big Brother" surveillance, was discontinued partly because not enough people were interested. Hutchinson doesn't expect as much "push back" with the new system.

The Travelers Cos., meanwhile, has been piloting its IntelliDrive program since the beginning of this year in Virginia, Illinois, Ohio and Oregon, but not yet in Connecticut. It uses a device installed in vehicles by technicians to track mileage and driving habits, and consumers get a discount just to participate and another discount if they have low mileage.

From the summer of 2007 to January 2008, The Hartford Financial Services Group ran a telematics pilot program in Connecticut using about 500 volunteers and GPS technology. The company is still researching the pay-as-you-drive concept and is "very excited about the feedback and data," said Michael Concannon, a senior vice president at The Hartford.

"We are exploring several areas with great potential opportunities for customer value and savings," he said.

GMAC Insurance is offering discounts in many states -- not yet in Connecticut -- ranging from 13 percent to 54 percent for customers who drive less than 15,000 miles a year and subscribe to OnStar. If customers agree, OnStar gives a car's monthly mileage data to the insurer, and no separate device is needed.

'A Safety Monitor' Although Progressive's MyRate drivers can get up to a 30 percent discount in Connecticut and 25 percent in other states, the average has been 10 percent to 15 percent, Hutchinson said.

Progressive charges participants $30 every six months to cover the technology costs, so they would have to earn discounts of more than $60 a year to make it worthwhile. Even a 10 percent discount, for example, would yield $120 in savings on insurance that costs $1,200 a year.

The company is offering new Connecticut customers a first-term discount of up to 10 percent just to sign up for MyRate online or by phone; it's not available here through independent agents.

Here's how MyRate works: Progressive ships its small blue box to customers, who plug it into the car's diagnostic port. Vehicles built in 1996 or later are required to have the ports and are the ones eligible for the program.

Progressive's device has a cellular chip that accesses your car's on-board computer, monitors when the car is running or off, and captures speed per second. When you turn off the vehicle, the device transmits data to the company over the nation's cellular phone towers.

With data from the blue box, Progressive can tell the miles driven and at what times. It determines how many times you've stopped short or accelerated too fast based on a change in speed of more than 7 mph in one second. Having to stop short can be a sign you're following another vehicle too closely. Whether you're doing 80 mph in a 65 mph zone isn't captured.

"It's sort of a safety monitor, and we look at hard braking and hard acceleration and time of day as being indicators of that," Hutchinson said. "So if you brake real hard a lot or if you accelerate real hard a lot, we interpret that as saying you're a more aggressive driver than someone who doesn't do that."

People who hit their brakes hard fewer than several hundred times a year do well in the program, he said. Also, you can help maximize your discount by limiting your driving during the high-risk hours of midnight to 4 a.m. They may be high-risk because of limited visibility, fatigue, and the prevalence of drunken or drugged drivers.

Customers can bow out of MyRate if it looks like their driving will result in higher premiums. After their first 30 days in the program, they'll be given an idea of what their renewal premiums would be, and they can track how they're doing online.

Hutchinson says about 25 percent of eligible customers participate in MyRate and "the majority of people who drive under 10,000 miles [a year] have a high likelihood of getting a discount with this program."

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