Progressive to Risk Raising Rates on Risky Snapshot Drivers

By | March 25, 2015

Progressive Corp., the fourth-largest U.S. auto insurer, said it will begin increasing rates for some risky customers who participate in a program that allows the company to electronically monitor driving habits.

The decision to lift premiums is a shift for Mayfield Village, Ohio-based Progressive, which previously highlighted how customers can agree to a rate and then win discounts for safe behavior. Its Snapshot program rewards customers who drive fewer miles, avoid hard braking and minimize travel from midnight to 4 a.m., according to the company’s website.

“In our new program that we just began to roll out, we are affording more customers discounts for their good driving behavior while for the first time, increasing rates for a small number of drivers whose driving behavior justifies such rates,” the company said in its annual report this month.

Chief Executive Officer Glenn Renwick has said Snapshot could help the company encourage safer behavior and retain the most valuable customers. He has lamented the reluctance of some potential customers to sign up for the offering. That unease could increase under the new strategy, according to Jonathan Adams and Jamie Dranoff of Bloomberg Intelligence.

“This is a key policy shift,” they wrote in a report Tuesday. “The decision to raise prices for some bad drivers may discourage customer acceptance of Snapshot, whose sales grew 28 percent in 2014.”

The program will apply to new customers and is being tested in Missouri, Amanda Lupica, a spokeswoman for Progressive, said in a phone interview. It is likely to roll out in additional states in May or June, she said.

‘Immediate Benefit’

The insurer is switching to offer immediate discounts to new Snapshot customers, instead of having them wait 30 days, David Pratt, general manager for the program, said in an interview. After a year, he expects most people will retain the discount or get a better rate. About 20 percent might pay more, he said.

“The hope is that the immediate benefit will encourage people to sign up,” he said.

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Topics Personal Auto

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Latest Comments

  • September 18, 2015 at 2:20 pm
    Agent says:
    May I ask why you are a former Progressive Employee? It sounds like you are pretty proud of their program.
  • September 18, 2015 at 1:25 pm
    Momo says:
    Since we have one driver really in our household and two full coverage vehicles , three licensed drivers but one is disabled and one is an away student.......we figure the sna... read more
  • June 1, 2015 at 11:11 pm
    Former Employee says:
    1 - Surcharges are not a new idea for Progressive. Before they rebranded MyRate into Snapshot there were 4 pilot programs going head to head in a multivariate test. Two of the... read more

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