The ability for independent agents to offer pay-as-you-drive rates for auto insurance is about to become a reality. Next month, agents in 24 states will be able to sell Progressive’s Snapshot product—and offer drivers a chance to be eligible for a 30% rate discount.
“We’re really excited about launching the program,” says Karen Barone, agency distribution business leader for Progressive. “There is already some buzz about it from our investor call. We’ve been working on usage-based insurance since the early 90s, but now we’re ready for a national rollout.”
The Snapshot program device inserted into the customer’s vehicle essentially measures three driver characteristics: how the customer is driving (using an accelerometer that recognizes hard breaking, etc.); what time of day the customer is driving; and mileage. After 30 days, the device takes a snapshot of the customers’ driving habits, and Progressive determines the corresponding discount, which can be up to 30%. Drivers can also access their driving data online and see the characteristics used to calculate their discount—and make corresponding adjustments to their driving. That personalized discount is then in force for one six-month term. After six months, the customer returns the device to Progressive and the rate is reset based on the longer history. The customer can then count on that discount for “the foreseeable future,” says Barone. Progressive has not yet determined how many renewal cycles the rate will be valid.
The program will be available to independent agents in 24 states in April, and by mid-year will be rolled out in 30 states. By the first quarter of 2012, it will be available in 42 states. Progressive is still working through the regulatory process on the remaining states. All appointed Progressive agents in the participating states can sell the Snapshot product, provided they attend a one-hour online certification course. Agent commission levels for the product will be the same as other Progressive auto coverage.
Barone says Progressive has been working extensively to make the program easy for customers to use and easy for agents to sell. “First, we want to make sure customers understand that the program is totally voluntary,” says Barone. “And agents need to assure customers that their privacy is going to be protected.”
Barone stresses that the product isn’t right for everyone, and Progressive will help agents determine which customers are good prospects. “It’s for customers who don’t drive a lot, customers who have more vehicles than drivers,” Barone says. “Or, it can be for that ‘fun’ car that you just drive on weekends. We help agents get to those things through fit questions that assist the agent in having a conversation when doing a quote.”
Progressive will launch a new national advertising and public relations campaign in the next 60 days to promote Snapshot. The ads will not be channel specific, but “speak to consumers generally to help generate excitement and demand for the product,” Barone says. Progressive will help agents leverage the national campaign with print materials, banners, websites badges and social media videos featuring "Flo", the company's TV character.
“This program is ultimately a tool that independent agents can use to offer their safest drivers up to a 30% discount,” she says. “It’s a tool that captive agents don’t have—and it can differentiate our agents. It’s a way for independent agents to capture some of the share that is in the captive market.”
Katie Butler (katie.butler@iiaba.net) is IA editor in chief.