Basing Auto Insurance Rates on Exact Odometer Readings: Another Pricing Innovation from Progressive Direct
MAYFIELD VILLAGE, Ohio--Aug. 22, 2006--Progressive :-- The Progressive Direct Group of Insurance Companies Continues to Advance the Science of Auto Insurance Pricing; Expands Driving Discount Pilot to Arizona and Florida Giving Drivers the Ability to Save up to 15 Percent Off Their Premiums
Many auto insurance companies ask customers to estimate their annual mileage when applying for a new policy; these up-front estimates generally have a minimal influence on the overall premium. And, these companies don't ask for updated mileage readings over time. But what if your insurance company asked you to report exact mileage readings over time and, by doing so, you could control how much you pay for car insurance by controlling the number of miles you drive?
In February 2006, The Progressive Direct Group of Insurance Companies announced a pilot program in Iowa and Virginia that gave drivers the ability to do just this; today, the program expands to Arizona and Florida. The program is available to private passenger auto customers.
Progressive Direct has data that support that there is a correlation between the number of miles customers drive and the likelihood of being involved in a crash - if you drive less, your chances of being involved in an accident are lower. By collecting exact odometer readings, this information, when combined with other information used to price car insurance policies, could help advance the science of insurance pricing making rates even more accurate and tailored to individual drivers.
"We're always looking for ways to more accurately price auto insurance and this program is just another way to do this," said Shannon Kelly, Arizona product manager, Progressive Direct. "Virginia and Iowa drivers were able to save an average of 7 percent on their total premium so we're excited to expand the program and offer Arizona and Florida drivers a way to save, too."
Ron Davies, Florida product manager, Progressive Direct said: "This pilot is a win-win - drivers can reduce their insurance costs simply by participating and, if they drive less over time, can save even more. And, we get to collect mileage data, which will help us better understand the correlation between how much a person drives and how likely they are to get into an accident."
How the Pilot Program Works
Progressive Direct customers who volunteer to participate will be asked to periodically submit odometer readings on the insured vehicle(s) they sign up for the program. It's easy - customers simply log in to a password-protected Web site and enter the current odometer reading for each enrolled vehicle. Customers will report odometer readings when buying a policy and again at each renewal of the policy, or once every six months. Customers have the option of signing up all or just some of the vehicles on their policy.
What Discounts are Available
All customers will receive a five percent "participation" discount on each vehicle's total premium simply for signing up; this discount will be applied to every renewal policy as long as they continue to report their odometer readings. They may also receive an additional mileage discount of up to 10 percent, depending upon the number of miles driven, which will be applied to the next policy term's premium. In all, customers could receive as much as 15 percent off each vehicle's total premium for a six-month policy. With the average Arizona and Florida driver paying about $1,000 annually for auto insurance, that's a potential savings of about $150 a year.
How to Sign Up
As with all of Progressive Direct's product research and development efforts, drivers have the choice of participating in the odometer pilot program. New Progressive Direct private passenger auto customers in Arizona and Florida may sign up for the program within 30 days of buying a new policy; existing customers may sign up at or within 30 days of renewal. After signing up, they'll immediately receive the five percent participation discount which will be applied to the current policy term; this participation discount will continue on every renewal as long as they submit mileage readings for each enrolled vehicle for each policy term. Then, depending upon the miles they drive during that current term, they will be eligible for the additional mileage discount which will be applied to the next renewal term's premium. Customers can share mileage data for as many consecutive policy terms as they'd like during the length of the pilot. Additionally, customers won't pay more for insurance than they currently do as a result of reporting odometer readings.
This pilot is the latest effort by Progressive Direct to gather data with the goal of better understanding the correlation between driving behaviors and the risk of being involved in accidents. Progressive Direct is currently testing a usage-based auto insurance discount pilot program in Minnesota called TripSense(R), in which drivers voluntarily share driving data in exchange for receiving discounts on their renewal policy. The data is collected by a small device called a TripSensor(R) that records information about how often, how fast and when a vehicle is driven, along with information about acceleration and braking. In addition, a countrywide driving habits research study is under way that uses the same technology to gather the same kind of driving data; customers are reimbursed $50 for voluntarily sharing six months of data from each car in the program.
The Progressive Group of Insurance Companies, in business since 1937, ranks third in the nation for auto insurance and number one for motorcycle insurance based on premiums written and provides drivers with competitive rates and 24/7 in-person and online service. The products and services of the Progressive Direct Group of Insurance Companies are marketed directly to consumers under the Progressive Direct(R) brand by phone at 1-800-PROGRESSIVE and online at www.progressivedirect.com and www.progressiveseguros.com, a site for Spanish-speaking consumers. Progressive Direct offers consumers conveniences that help make car insurance easier, including comparison rates of other top companies and the ability to shop for, buy and manage their policies by phone or online, 24/7. The Common Shares of The Progressive Corporation, the Mayfield Village, Ohio-based holding company, are publicly traded at . More information can be found at www.progressive.com.
Shannon Kelly and Ron Davies, Progressive Direct, are available for interview.
Available Discounts:
Progressive Direct Odometer Discount Pilot
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Participation discount 5 %
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If you drive You will save an additional
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Less than 3,000 miles per year 10 %
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Less than 4,000 but more than 2,999 9 %
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Less than 5,000 but more than 3,999 8 %
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Less than 6,000 but more than 4,999 7 %
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Less than 7,000 but more than 5,999 6 %
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Less than 8,000 but more than 6,999 5 %
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Less than 9,000 but more than 7,999 4 %
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Less than 10,000 but more than 8,999 3 %
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Less than 11,000 but more than 9,999 2 %
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Less than 12,000 but more than 10,999 1 %
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