An article in Fast Company magazine by Malia Wollan entitled "Progressive Uses New Driver-Focused Technology to Determine Insurance Rates" initiated my contemplation into the vast depths insurance companies will begin to delve in an effort to enrich their already unfathomable net profit.
The article describes a palm sized device named "Snapshot" that is set up on a wireless network and provides Progressive with real-time driving reports, to include the number and time of miles driven, incidents of hard braking or quick acceleration, and speed.
This may sound great from an insurance standpoint, but are you the consumer really gaining more by allowing your privacy to be invaded and having equal opportunity to both lower or raise your premiums? The selling point from Progressive’s standpoint would be the lowering of premiums. However the the sword cuts on two sides, as Progressive’s own Chief Executive Officer Glenn Renwick found out about his wife’s driving:
In March, Renwick plugged a device called Snapshot into the on-board diagnostic computer in the couple’s shared car… When he logged on to monitor the couple’s stats, he saw "more hard brakes than I expected."
As the article aptly points out, "Luckily for Renwick, bad driving does not result in higher rates." Other hard nose bottom line insurance companies are hot on the technology trail with Allstate Insurance Company rolling out Drive Wise, a device similar to Snapshot, and GMAC Insurance partnering up with OnStar to offer discounts to infrequent drivers willing to track their mileage through the in car service.
The true issue here is that insurance companies want someone to pay their premium and never have any claims. That is how they make money.
As Gregory Locraft with Morgan Stanley stated:
Insurance companies are always trying to find the little old lady who leaves her car in the garage.
How Do Insurance Companies Make Money?