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Progressive: Rate Suckers Change up the UBI Message

by Roger Lanctot | Apr 22, 2013

Pioneering UBI provider Progressive has changed up its messaging around the Snapshot usage-based insurance offering with a new ad campaign in the U.S. built upon the concept of Rate Suckers. The campaign shifts the UBI angle from being a simple means to achieving a discount, to an aspirational model capable of creating an elite group of drivers rewarded with lower insurance rates.

According to a recent Progressive blog, Rate Suckers are the poor drivers forcing up insurance rates for good drivers. And Progressive’s SnapShot is intended to free drivers from the burden of supporting Rate Suckers.

(Link to Rate Suckers ad: http://tinyurl.com/bocbmbk)

Progressive’s blog states: “Rate Suckers are real, and only Snapshot can stop them.

“You might not know it (63% of those we surveyed didn’t), but you’re paying more for car insurance because of others’ bad driving habits.

They’re called Rate Suckers, and they’re everywhere:
Behind the wheel for breakfast, lunch and dinner. 
Out to play at the strangest hours.
Slamming. On. Their. Brakes. Constantly.
Only Snapshot saves you! It sets you apart, so you can take back the savings you deserve.”

The message from Progressive could not be much clearer and clarity is useful in conveying the Snapshot UBI value proposition. But it is also possible that Progressive is over-simplifying.

The three driving behavior factors most frequently used as part of UBI programs generally are hard braking, harsh acceleration, the amount of driving and time of day. Progressive not only emphasizes hard braking in its blog but also in the functioning of the Snapshot module, which audibly and annoyingly beeps during hard braking.

Progressive’s model emphasizes the avoidance of hard braking and also focuses on taking a “snapshot” of a driver’s behavior – about a month’s worth of driving data – to establish A) whether the driver will benefit and, therefore, qualify for the program and B) the relevant discount.

Progressive is to be admired for its attempt at transparency and simplicity. The Rate Sucker advertising program is clearly intended to discourage drivers who drive a lot, drivers who drive between midnight and 4 a.m., and drivers that accelerate rapidly or brake hard.

Drivers may not agree with Progressive’s definition of the factors that determine safe driving or that lead to lower claims exposure, but at least the company is spelling out the objectives of the program. Drivers that fit the profile can self-select into the Snapshot program and those that do not ought not to even apply – unless they intend to change their driving behavior.

Interestingly, the Snapshot program’s safe driving criteria are antithetical to both the marketing and safety system strategies of car makers. Car makers routinely advertise the handling characteristics of their cars emphasizing both rapid acceleration and deceleration – both of which are shown in ads as the means to avoid hazardous circumstances rather than creating them.

Car makers also use advertising to demonstrate how safety systems can step in and assist drivers who may be distracted. Whether activating emergency braking in proximity to slowing or stopped vehicles or providing lane departure or blind spot warnings for inattentive drivers, the safety systems provide a more forgiving sensor cocoon in the car, with no penalty for the driver.

So all the things that car makers promote – acceleration, harsh braking or even frequent or late night driving - are likely to negatively impact a driver’s insurance rate, particularly if that driver uses Progressive’s Snapshot.  This raises the question as to whether Progressive’s criteria are too simplistic (ie. hard braking and harsh acceleration are not universally negative driving characteristics) or are OEMs promoting bad driving behavior either via their advertising or via the implementation of forgiving safety systems.

A driver who brakes harshly to avoid a collision with another driver that has made a driving error will want to be rewarded, not penalized. Similarly, a driver that accelerates to bypass a dangerous driving circumstance will also expect positive, not negative, feedback.

Progressive benefits from a simplistic message and a simplistic approach to UBI, but there is nothing simple about driving a car.  Progressive’s approach over-simplifies the proposition and ignores the fundamental nature of UBI in particular and telematics in general vis-à-vis auto insurance.

Progressive is adding thousands of Snapshot users every month, suggesting a respectable degree of success with the simplistic approach.  But the opportunity remains for competitors to deliver a more nuanced offering recognizing real-world driving behavior and leveraging, more broadly, the vehicle connection.

State Farm’s In-Drive offering, for example, delivers a broader functional portfolio including vehicle diagnostics, hazardous driving alerts, and a wider array of real-time vehicle and driving information. In fact, among the many UBI programs on the market Progressive stands out for the lack of added-value customer engagement.

Telematics has the ability to alter key aspects of the insured/insurer relationship around such issues as first notice of loss, timely claims processing and value-added services. If insurance telematics solely focuses on lower rates it is unlikely to have a lasting disruptive impact on the industry.

 

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