http://www.marketwatch.com/story/hartford-to-enter-pay-as-you-drive-arena-2011-12-08
NEW YORK (MarketWatch) -- Hartford Financial Services Group Inc. HIG -2.42% plans to launch a pilot program next year to price auto insurance using an onboard device that measures how well its policyholders drive.
The program, called TrueLane, will roll out "in the first half of 2012," said Andy Napoli, the president of Hartford's consumer markets division, in a presentation to investors Thursday.
TrueLane puts Hartford in the company of insurers including Allstate Corp. ALL -1.25% , Travelers Cos. TRV +0.18% and State Farm Mutual Automobile Insurance Co., which have been rolling out discount programs based on measurements of their policyholders' driving habits.
Insurer Progressive Corp. PGR -0.66% leads the field with its Snapshot program, available in most U.S. states. It uses a small device that plugs into a car's onboard diagnostic computer to measure when policyholders use their vehicles, how far they drive and how hard they brake. Customers who volunteer to install the device can get a markdown on their auto insurance of as much as 30%. Currently, Progressive won't raise rates on drivers based on the information it collects.
Auto insurers have typically evaluated potential customers by comparing them with others who share similar characteristics. Young single men, for example, have a substantially higher chance of getting in an accident than other demographic groups, and typically pay higher premiums. About a decade ago, Progressive led a trend toward incorporating credit scores as a metric for measuring the likelihood that a customer will submit a claim.
But data from an individual driver, collected with a so-called telematics device in real time, trump any effort to pool people with similar characteristics. With an onboard device, insurers can offer discounts to people who drive in a safer manner than the usual metrics would suggest. They might find a young single man who shows signs of being a defensive driver, someone who uses the car only on weekends, or others whose habits wouldn't be revealed by the standard information insurers gather about their customers.
Napoli, who announced the Hartford pilot program at the company's annual investor day, said the TrueLane program will help "us to stay at the leading edge of pricing sophistication."
"The data is compelling," he said. "This capability has really redefined the way we think about pricing auto."
Insurers that don't use telematics to price auto coverage will eventually attract poor drivers who were turned down for coverage by the insurers that do, Napoli said
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