Good heavens!
Behind the seemingly innocent name change of the MyRate by the Snapshot project lies an idea that will revolutionize the concept of the Usage Based Insurance.
To do without telematics device !!!
Experience finds that, after a learning time, user habits and risk have very little variation. So Progressive wondered if it is profitable to bear permanently the telematic device and the costs of the information management. And the answer has been no.
The Progressive’s new approach is to install the telematic terminal for a period of six months and then remove it, reserving the right to ask the customer to reinstall it to verify that his habits and risk have not changed. Their experts in DataMining will lay the criteria for these inspections down, but it seems reasonable to think that it won´t be necessary more than six months every three years. Reducing the system costs by 83%!
Want to know more curiosities about Progressive?
The first is that they have problems that its project is approved in Pennsylvania because its refusal to document the formulas that they use to calculate the risk, something that they identify as a trade secret, the second is that it is not clear that they will join to State Farm and to Auto Club of Southern California in order to market PAYD insurance in California as they don’t believe that with the only possible mileage information the risk can be properly estimated.
The Progressive experience cannot be directly extrapolated to other insurers because the response of competitors is limited by their patents, their discounts are relatively low, U.S. road infrastructure are very different from those of other countries and its market has an enviable size and homogeneity.
But it is advisable to monitor its evolution because:
They were the first to launch a pilot UBI.
They were the first to use GPS
They were the first to do without GPS
They were the first to connect the device to the OBD bus eliminating the problems and costs of installation
They are the insurance company with more UBI policies.
They have been the first to do without telematic equipment.
Adding its collaboration with Aviva in the definition of Pay As You Drive project, would obtain a share of the merit of being:
The first to incorporate anti-theft
The first to install automatic emergency call
The first to incorporate a assistance call
The first to identify risk factors for young drivers.
They were the second to patent an UBI concept and to claim against an insurance company for infringing its patents.
So far, in Europe the technology companies that were in better position to access to UBI market were those that could “complement” the product with other services that help with the investment. Now, with this idea open up many opportunities for companies that were focused on the detection and correction of driving risk which were looking for a market niche at companies that manage large fleets of vehicles.
As always, I have upgraded my “Pay As You Drive Directory” with the last UBI news and my News Bulletin.
If somebody wants that their address is erased of my distribution list, please return me this message with the word “DELETE”.
Yours sincerely.
Salvador Minguijón Pérez.
Interim Management.
+ 34 649 49 17 70
+ 34 976 59 58 71
Email: s.minguijon@salvador-minguijon.es
Web: http://www.salvador-minguijon.es
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