How Progressive Uses Telematics and Analytics to Price Car Insurance

Progressive's Snapshot device monitors customer driving habits, lets insurer fine-tune policy pricing.

Many companies use IT to understand their customers. Progressive uses IT to learn more about people it wishes were its customers.

More than 1.4 million drivers in the past two years have tried Progressive's Snapshot program, which tracks driving habits to determine whether individuals should get insurance premium discounts and if so, how much.

Snapshot allows Progressive customers to plug a small electronic device into their car's on-board diagnostic port to report on three driving habits: hard braking, total mileage and the time of day the car is driven.

Last year, Progressive launched a related product, Snapshot Test Drive, that allows drivers with insurance from competitors to use the technology for free for 30 days, to see what they would pay if they switched to Progressive.

Snapshot, says CIO Ray Voelker, has "given us access to segments of the auto insurance markets that we normally did not attract." The innovative project also earned Progressive a 2013 CIO 100 Award.

The idea for Snapshot came from the IT group, where some staff members had previously worked in commercial trucking, using telematics to manage fleets. The devices can provide data on individual drivers, which could be a big advantage in an industry that relies on demographic data to set rates.

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