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Auto insurance Snowden effect

By Jay MacDonald ·
Tuesday, August 13, 2013
Posted: 6 am ET

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.

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August 14, 2013 at 5:02 pm

Progressive lost my business two years ago when after being a customer for 4 years my rates suddenly went up by 23% and they were unable to provide me with *any* reason. I am a very well experienced driver, never had a ticket or caused an accident and they withdrew every single payment from my checking account on time with no problems. So essentially my "reward" for being the perfect customer was to jack my rates and see if I would leave. They lost that bet...

When you see all their cute TV ads, ask yourself "how do they pay for that airtime?". You got it, by playing shell games with your rates and hooking you in with a low price only to jack them up when you're not looking.

August 14, 2013 at 2:57 pm

My 24 yr old son is using the Snapshot. Progressive took $50 off his 6 month premium after the first 30 days. However I have read that they look poorly at people who drive between 2-4 A.M., must think someone is driving drunk. I drive to work at 2:30, six days a week,so I'm unworthy of a discount.

August 14, 2013 at 2:38 pm

Since the insurance system is a scam, which uses police depts, cameras on poles and now some device in your car? The police write tickets as a representative of the insurance companies to issue points and fines, cameras may send false violations etc. Some gizmo in my car to tell them I drove fast or something? Nope. If your driving record is good and no claims/accidents that is the proof. New cars already have "black boxes" in them to record speed and braking etc that is used in accident claims. Good drivers may also have a mixed driving experience whether nights, cities, high speed highways etc. It becomes a subjective judgement by some device if you are driving well? How many times we may have to speed up to avoid something or swerve to avoid debris or do maneuvers avoiding animals, holes etc. Driving takes on many characteristics that may be driver insight rather than some device.

August 14, 2013 at 2:02 pm

There is definitely something wrong with the Progressive Insurance culture. We are a former Progressive network shop and finally severed the relationship. The adjusters were always sneaking around. They continually asked me what I thought of Progressive, always probing, it was weird. I told the employees not to speak to any of them. I even caught one at this desk reading my e-mail. They seemed very "cult like" like scientologists.

Dawn M
August 14, 2013 at 1:26 pm

I had the snapshot installed when i got a newer car in may and i can honestly say it saved me a lot!!!! I drive 35 to 45mins to work everyday and was a little unsure of it my biggest issue i was worried about was the hard braking that could have counted against me but i was lucky and didnt have a lot of idiots slam on brakes in front of me actually it helped me with my braking and i actually got almost 70.00 taken off my bill for using it! I had issues with having to reset it probably because i live in a somewhat rural area but keep in mind i work in a pretty nice size city so don't think my discount was from living in the country i have also traveled back and forth to New Orleans so i can say I am SATISFIED with the results i had.. When i told others i had gotten it they freaked your insurance is going to go up well to all those with bad experiences it may not be the device u may not drive well.. Hope I didnt offend anyone but i really wanted others to see that it does work if you are cautious! Thanks Progressive

August 14, 2013 at 12:49 pm

Wait 'till they start sending you BIGGER insurance bills because you drive like ME!

August 14, 2013 at 11:59 am

Snapshot is a joke. Had it on both my cars. Driving in suburban areas, if you drive REALLY slow, stay 50 feet behind the car in front of you, then the "Beep, Beep, Beep" didn't go off...but that's just not realistic. Switched companies, saved 500 per 6 months and prompted ripped that device out of my cars, mailed it back and washed my hands of it all.

C macdougall
August 14, 2013 at 11:43 am

my driving record speaks for itself after 40 yrs.
why would I want someone monitoring me are you kidding!
I don't believe the hype it's like the government promising tax reform.

Matt Menke
August 14, 2013 at 11:05 am

Yes , it is hard to stop without the beep. Most of my vehicles do not have ABS. I have learned over my 40 years of driving not to follow too close. Sure over the years I have had my share of accidents. Some my fault, some not. Insurance companies don't really care who is at fault. But I would like to think I am a safe driver. I still have my first new car I bought at 17YOA. I had the Snapshot on my 07 F150 and I don't qualify for any discount. Is there something wrong? If you were to ask me" It doesn't work or help" Thanks anyway. Drive safe and watch for the idiots. Matt

August 14, 2013 at 11:03 am

I find it difficult to believe that they could save me 30% here in Michigan. That would amount to $830/6 months for the four cars my family owns. Also, it seems like this info could be used against you unfairly and too much like big brother.