Progressive, which sells auto insurance directly to consumers over the phone and on the Internet, is offering Michigan drivers a program that will allow them to pay lower premiums by driving less and during non-peak hours.
TripSense, a program started in Minnesota in 2004 that now has 6,000 participants, can save drivers up to 25 percent off their premium depending upon how much and when they drive, according to the Progressive Direct Group of Insurance Companies.
But there’s a catch: The device drivers must install on their cars to record mileage also collects information about vehicle speed, acceleration and braking. Progressive says that information is not used to calculate the insurance premiums, but to better understand what causes accidents.
Still consumer privacy advocates question the motives of a car insurance company providing a monitoring device — on a voluntary basis — that collects more than just the car’s mileage.
"I don’t like the creeping invasion of these devices that collect a whole lot of data the insurance company tries to comfort us into believing it won’t use," said Doug Heller, executive director of the Foundation for Taxpayer & Consumer Rights in California. "The insurance company is trying to get their hooks in on what should remain private information."
Consumer advocates said they had little problem with collecting only mileage. Their suspicion is the other data could be use to justify rate increases or be sold to marketers.
The small data-logging device plugs into the vehicle’s onboard diagnostic port, usually located underneath the steering column.
Just before a vehicle owner’s insurance policy expires, he must download the data into a personal computer through a USB port. The owner can see the report, which details how the vehicle was driven and the premium savings — if any — they can receive. The owner then decides whether to send the data to Progressive.
The average discount among TripSense customers in Minnesota is 11 percent to 12 percent annually, Progressive said.
Patrick O’Malley, Progressive product manager for Michigan, said that other than mileage and time of day the vehicle is in use, the other data will not be used to calculate insurance premiums. And he said the data won’t be sold to a third party for marketing purposes.
"Potentially, consumers can be concerned about all the data we’re collecting, so that’s why the program is optional," O’Malley said. "But some people want to be rewarded for driving less. The only way you can do this is by providing verified mileage."
O’Malley said the additional data will be used to refine the science of premium pricing. He said the hope is that the data will help Progressive understand factors that can predict future losses.
Michigan and Oregon joined the company’s test marketing program last month. No expansion is planned until the results from those states are analyzed.
Data from the National Association of Insurance Commissioners shows the average Michigan driver pays $980 a year for insurance. A 25 percent discount could mean an annual savings of $245.
"Once they start collecting more data than how many miles you drive each year, it really deserves much more public policy debate," Heller said.
"If these devices can collect the data, there is no doubt in my mind the insurance company will use or sell the data. I find it offensive."
About the program:
Name: TripSense
Available: Now
Discount: 5 percent to 25 percent
How it works: A device in your car monitors your mileage and time you drive.
To qualify: Have low mileage and drive during non-peak hours.
Sign up: (800) 776-4737 or at http://www.tripsense.progressive.com
Source: Progressive Insurance
