Progressive Direct Launches Pilot Test in Iowa Based on Drivers’ Mileage

Iowa-based Progressive Direct Insurance has kicked off a pilot program aimed at providing discounts to policyholders based on the mileage on their odometers. The premise, according to Progressive, is that drivers could control how much they pay for car insurance by controlling the number of miles they drive?

In a written statement, Progressive Direct said it has data that supports that there is a correlation between the number of miles customers drive and the likelihood of their being involved in a crash – if you drive less, your chances of being involved in an accident are lower. 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’ behavior.

The Pilot Program in Iowa is asking Progressive Direct customers who volunteer to participate to periodically submit odometer readings on the insured vehicle(s) they sign up for the program. The customers participating merely log in to a password-protected Web site and enter their current odometer reading.

Customers will report odometer readings when buying a policy and again at each renewal of the policy, or once every six months. Customers also have the option of signing up all or just some of the vehicles on their policy.

All customers will receive a five percent “participation” discount on a vehicle’s total premium simply for signing up the vehicle(s); 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 future policy terms. In all, customers could receive as much as 15 percent off a vehicle’s total premium for a six-month policy. With the average Iowa driver paying about $670 a year for auto insurance, that’s a potential savings of about $100 a year.

“This pilot is a win-win for everyone. All drivers can reduce their insurance costs simply by participating and, if they drive less over time, can save even more. We also have the opportunity to gather 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,” said Ian Forrester, Iowa product manager, Progressive Direct. “We’re always looking for ways to more accurately price auto insurance and this program is just another way to achieve this goal.”

New Progressive Direct customers in Iowa may sign up for the odometer discount within 30 days of buying the new policy; existing customers may sign up at or within 30 days of renewal. After signing up, they’ll immediately receive the 5 percent participation discount which will be applied during the current policy term; this participation discount will continue on every renewal as long as they submit one mileage reading per 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 during the next renewal term. Customers can share mileage data for as many consecutive policy terms as they’d like during the length of the pilot program, according to the written statement on the program.

According to a spokesperson for Progressive, the pilot program is currently for Progressive Direct customers only. However, Drive Insurance will monitor pilot results and customers who purchase their policies through independent agents and brokers will be considered in plans to make it available to more customers in the future.

Progressive added that drivers have the choice of participating in the odometer pilot program. All customers who sign up will receive a five percent discount just by sharing their odometer readings and no one in the program will wind up paying more for their insurance than they currently do. For example, if you think you drive 10,000 miles a year and therefore would be eligible for a 7 percent discount (5 percent participation discount and an additional two percent for driving between 10,000 and 11,000 miles; see chart below), but you actually drive 20,000 miles, you will not be charged more for your insurance.
Instead, you’ll receive just the five percent participation discount but no mileage discount.

Progressive will continue to offer its traditional auto insurance policies to customers who choose not to sign up for the pilot.

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. The Company is currently testing a usage-based auto insurance discount pilot program in Minnesota called TripSenseSM, 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 TripSensorTM that records information about how often, how fast and when their vehicle is driven, along with information about acceleration and braking. In addition, a countrywide driving habits research study is underway 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 ranks third in the nation for auto insurance and number one for motorcycle insurance based on premiums written.

For more information go to progressive.com.