Beginning this summer, insurance telematics giant Progressive will use data from OnStar, the subscription-based connected-car service from General Motors, to score drivers’ behavior and offer discounted auto insurance. OnStar also will offer driving metrics and safe-driving tips to customers who have opted into the program, comparing them to an aggregate of anonymous subscribers. INN spoke with Dave Pratt, general manager of usage-based insurance at Progressive, about the program and what’s next for insurance telematics.

INN: Is OnStar going to be installing Snapshot devices in these cars?
Dave Pratt: No, that’s the beauty of this opportunity. OnStar customers will have the opportunity to use their device to share data with Progressive. We’ve had interest for a while in using built-in telematics devices as data sources for Snapshot, and this partnership with OnStar is the first real life implementation of that.

INN: Is OnStar capturing the same data Snapshot does in a different way, or is it different data? How are you managing the data?
DP: Figuring that out is why it’s taken a while to get to this point. In all 2016 models and some 2015 models, OnStar built the technical capability into its device to collect the data that we need to do the Snapshot scoring. If they opt into the service, OnStar will give them a driver assessment. The customer will get to see information about his or her driving and how it compares to others’. Then they’ll have the opportunity to share that data with Progressive to see if they get a discount on Progressive insurance. If they opt in, OnStar sends the data to us, and we run it through our algorithms and see what the discount would be.

INN: When drivers decide to opt in for Snapshot, will Progressive gather data on them continuously?
DP: It would just be a one-time data transfer. OnStar will send us three months’ worth of driving data, and that’s enough for us to create a score and tell the driver right away what the
discount would be as a Snapshot customer.

INN: Is it OnStar or Progressive’s algorithm that determines whether a customer is desirable or undesirable and deserving of this discount?
DP: The scoring algorithm is still proprietary to Progressive. We’re not sharing that with General Motors. OnStar will prepare its own safe driving report for the customer. And then, assuming that customer is doing pretty well and is interested, we get that data and run it through our scores to see what the potential insurance discount could be. But we never see customers’ information until they have explicitly said they want to share it with Progressive.

[See also: Telematics improves policyholder acquisition, retention]

INN: So is this a marketing or a technology agreement?
DP: We have to collaborate on the technology to make it work seamlessly for the customers of both companies. Our hope is that by making it easier to sign up for Snapshot, we’ll encourage more people to do it.

INN: Other automakers have similar services to OnStar. Have you looked into partnerships with any of them?
DP: This is the only deal like this that Progressive has. We’ve certainly started conversations with other auto manufacturers. OnStar is the only one that has built the technical capability into vehicles today that collects the data we need. I can’t really speculate on timing for anybody else to be ready to do a similar thing.

INN: What does this deal indicate about the future of usage-based insurance?
DP: It’s evidence of the continued technology evolution in this kind of insurance. We’ve talked before about how our plug-in device evolved over time, but now I think you’ll start to see new data sources that, hopefully, will encourage even more people to participate in UBI. We had the Zubie deal last year [Progressive began accepting data from a third party’s OBD II device –Ed.], and we continue to research using the sensors in mobile phones as a measurement tool. With more options that make it easier to participate, we should see greater adoption.

[See also: Uber, Metromile in usage-based insurance partnership]

INN: In the telematics market, is the discount angle overplayed? Do people really change their driving habits?
DP: The discount is a big benefit, and one of the main reasons people sign up. But as we get better about giving them useful feedback, that will be seen as a pretty big benefit. For example, because our device gives users audio feedback after a hard brake, we see clear evidence that people learn to avoid situations where they’re hitting the brakes hard, and the number of those events drops over the first several weeks they have our device. There’s a sort of training component to it.

INN: What other advancements can we expect from Snapshot?
DP: We’ve made some big investments in big data systems over the past year, and that’s really improved our ability to collect and analyze data. We’re also using these big data tools to test theories about what sorts of behaviors are more or less safe. That’s an aspect of it that I’m very enthusiastic about. It’s helping policyholders improve their driving performance. We can actually help people avoid having accidents.

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