The auto insurance industry has come a long way since the late 1960s when insurers ramped up competitive advantage by offering safe-driver, multi-vehicle and multi-policy discounts. As consumers became smarter and more demanding, that competitive pressure has had its effects, driving insurers to create variety in tiered and personalized automobile policies that enable consumers to purchase the exact coverage they want, when they want it and how they want it.

To keep up, insurers are now coming up with even more competitive pricing innovations, such as accident forgiveness and no-cost reductions in collision deductibles that increase with the length of an accident-free driving record. And thanks in large part to Progressive, “usage-based insurance” (UBI) or “pay as you drive” (PAYD) insurance has become a common denominator among the large auto insurers fighting for market share. But does all this discounting come at the price of preserving premium revenue?

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