Tra­di­tion­ally the insur­ance indus­try has not had much rela­tion­ship with con­sumer ori­ented tech­nol­ogy. How­ever, recently there has been a num­ber of prod­ucts released by insur­ance com­pa­nies that indi­cate times have changed. 

In the last few weeks we have wit­nessed the release of 2 sep­a­rate iPhone appli­ca­tions by Nation­wide and State Farm insur­ance — both designed to expe­dite the claims process after an auto acci­dent. We have also learned of an advanced telem­at­ics prod­uct called OnBoard Advi­sor that was released for com­mer­cial and pri­vate fleets as a part of a part­ner­ship between GE and Lib­erty Mutual. There has even been spec­u­la­tion of All­state Insurance’s inter­est in acquir­ing OnStar, a move that would surely be appre­ci­ated by GM.

How­ever, many fail to real­ize that the adop­tion of advanced tech­nolo­gies to assist the insur­ance indus­try with their “Pre­dic­tive Risk Analy­sis” (estab­lish­ing dri­ving behav­ior to limit the company’s risk level) was first imple­mented by Pro­gres­sive. Since 1999 Pro­gres­sive Insur­ance has released 3 “Pay As You Drive” prod­ucts, the lat­est being MyRate. In 10 years, these prod­ucts have seen lim­ited release in only 15 states.

Accord­ing to Richard Hutchin­son, GM of Usage Based Prod­ucts at Pro­gres­sive, MyRate is a vol­un­tary pro­gram that is only offered to qual­i­fied cus­tomers. Cur­rently only 1 in 4 clients qual­ify. Par­tic­i­pants are sent a telem­at­ics device that they are respon­si­ble to con­nect to their vehicle’s OBD-​​II port. This enables the com­pany to mon­i­tor the time and speed of travel through­out the day.

The con­cept behind this offer­ing is that cars that are dri­ven less often, in less haz­ardous ways and at less risky times-​​of-​​day may receive dis­counts (which aver­age between 10 – 15%). Inversely, cars gen­er­at­ing less favor­able met­rics may see their rates increase. This is a true reflec­tion of a usage-​​based pric­ing model that is being adopted in other indus­tries (i.e. utility’s smart grids). While devel­op­ing these prod­ucts, Pro­gres­sive has acquired many patents relat­ing to usage-​​based insur­ance and has licensed these patents to other companies.