A couple of years ago, it must have seemed like a drive in the country when Progressive launched its Snapshot program, which claimed consumers could save as much as 30 percent on their auto insurance rates if they just gave the insurer an electronic peek at their driving habits.
What a difference a few data breaches make. It seems the growing public concern surrounding electronic surveillance, most recently fueled by former National Security Administration contractor Edward Snowden's startling revelation that spies will be spies, has many drivers looking askance at Progressive's onboard driving monitor, Snapshot.
Snapshot snap judgments?
Last week, Progressive CEO Glenn Renwick admitted to investors that Snapshot's marketing push has hit some rough road with consumers. By the company's estimate, roughly 30 percent of drivers were comfortably onboard with Snapshot, 30 percent wanted more information and 40 percent flat-out refused to embrace the gadget.
"Intellectually, I kind of go, 'Why wouldn't 100 percent of people take this option?'" Renwick said. Nevertheless, he admitted that Snapshot marketing, while "very acceptable, but short of a breakout," has become a "bigger burden" to the company than expected.
Up until a few years ago when usage-based insurance (UBI), aka "pay as you drive" plans, arrived in the consumer market, auto insurance was underwritten based on hard data: your age, the make, model and year of your vehicle, your ZIP code, credit ratings and claims history. The insurance company would compare your profile to that of its other drivers and charge you a premium based on the pool's collective accident risk. Both you and your insurance company save by spreading the risk in this way.
While the prospect of cutting your auto insurance premium by a third appeals to most of us, it appears many are cautious about how much information we share, especially data that could potentially be used against us down the road, so to speak.
Snapshot advertising gets a tweak
Although Progressive tried to calm consumer heebie-jeebies by, for instance, leaving GPS off its Snapshot device, its effort to sell Big Brother as a slightly less-obnoxious little brother fell short of company expectations. Its new pitch to consumers now focuses less on "trust our gadget" and more on "Look at all the rogue drivers ('rate suckers') who are making driving more expensive for the rest of us."
One interested party who no doubt took note of Progressive's heart-to-heart with shareholders was Warren Buffett, whose Berkshire Hathaway owns Progressive's arch rival, Geico. The gecko has yet to introduce a UBI product. While Buffett told his shareholders in May that he was monitoring Progressive's Snapshot "with interest," he admitted that, in his view, there are other ways to attract customers.
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Jay MacDonald is a Bankrate contributing editor and co-author of "Future Millionaires' Guidebook," an e-book by Bankrate editors and reporters.