If you could learn from any telematics programs in the world, what would they be? They’d likely include successful programs from around the globe that hit a cross-section of pricing, claims, and loyalty. Let’s look at two programs today – Progressive and Metromile.
Progressive is arguably the father of telematics in the U.S. In recent investor calls, it reported a blockbuster 90.3 combined ratio and 20% annual growth. Telematics is a large part of its success. It can keep the good drivers with fair pricing and charge the risky drivers more. What if a bad driver goes to the competition? It’s OK with that. That’s negative selection at work.
Progressive first paved the way for modern telematics in the U.S. with TripSense in 2004, its UBI pilot initiative. TripSense morphed into MyRate in 2008, a program that offered the first UBI plug-in device.
Today’s Progressive Snapshot is similar in concept to its predecessor programs, but different in execution. For some customers, Progressive uses an OBD-II telematics device that plugs into the onboard diagnostic port. For others, the Snapshot mobile app (powered by TrueMotion) is all they need. Both deliver driving data wirelessly to the insurer, but with the mobile app there’s distraction data as well.
The foundation of the program is safe driving. Progressive uses mileage, time of day, speed, and braking to score driver safety.
Progressive’s Snapshot has mass-market appeal, selling in 42 states and counting. The signup discount for the program is $25. The average discount after 6 months is $130. The program is a defined time period – 6 months – because it started at a time when a telematics program required expensive hardware. (You don’t have those constraints with mobile.) The highest discount you can earn is 30%.
Metromile is one of the newest players on the market and it’s attacking auto insurance from a different angle. Like Progressive, its ultimate goal is to offer discounts for safe driving. But, instead of pricing risk from a host of metrics like braking and speeding, it connects miles driven with crash probability. Instead of charging a regular monthly policy rate like a typical insurer, Metromile calculates a flat monthly rate and adds an additional charge for extra miles driven. This is why Forbes calls Metromile the “Fitbit for your car.”
Metromile uses a dongle to measure miles driven. It’s called Metromile Pulse. And like other dongles, it plugs into the policyholder’s OBD-II port. It also powers a smart driving app. As their website says – “All pay-per-mile insurance customers receive the Metromile Pulse, which plugs into your car’s OBD-II port to measure mileage and also powers our smart driving app.” The app allows drivers to track and customize trips, monitor vehicle health, and find their car if they forget where they parked. In some cities, the app even gives you updates on sweeping alerts.
Early on, Metromile used National General Insurance Group to underwrite its policies. This enabled it to focus on developing telematics-based enhancements and increasing its market presence. But today, Metromile underwrites its own risks and sells in seven states, including CA, NJ, and PA.
Once it began operating as its own corporate entity, Metromile built a product that many established auto insurers still only dream about: a smart claims mobile app. It uses sensor data and an automated assistant, AVA, to reconstruct a crash scene to determine if claim details are accurate. If verified, the claim is automatically approved and payments are issued within seconds.
Progressive and Metromile differ in size and market scope, and timing and approach, but they’ve built two successful telematics programs. They’re supporting safe driving with data-driven programs that incentivize good driving habits. They provide clear and fair pricing based on real consumer behaviors. And, they’re able to deliver what consumers want.
Learn more about these programs and many others at our webinar 10 telematics programs you need to know about.
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December 1, 2020