Sep 8, 2009 2:52 PM, By Kevin Fitchard In part 2 of a 4-part series on the emerging M2M, Connected Planet explores how wireless telematics is changing one specific industry: automotive insurance. more on the topic More Related Articles Part 1 of the series, on the carrier’s new role in M2M, can be found here. In the highly competitive industry of automobile insurance, the differences between premiums are one of the single biggest ways insurers differentiate themselves. In a new effort to maximize its customers cost benefits, Progressive (NYSE:PGR) has turned to an unlikely source: wireless machine-to-machine communications. Progressive has been scaling up a commercial pilot program called MyRate that uses a M2M device plugged, custom-designed by Xirgo, into a vehicle’s on-board diagnostic port to transmit information about a customer’s driving habits back to the insurer. The application tracks any number of factors from the frequency and intensity of breaking and acceleration to the time of day driving occurs as well as the overall mileage driven in a month. Depending on how much of the driving is deemed safe or low-risk by Progressive’s computers, the driver can qualify for steep discounts on his or her premiums. “Customers value more competitive prices,” said Richard Hutchison, general manager of MyRate, which is now available to customers in 15 states. “The question is do they deserve more competitive rates. MyRate allows us to make that judgment by measuring the quantity and quality of their driving.” Hutchison said Progressive doesn’t view MyRate as a replacement for traditional insurance policies, which calculate premiums via age-old actuarial tables and driver history, but the program is an optimal alternative for a driver who feels he's outside of the traditional risk profile for his demographic group. Teenage drivers, for instance, tend to pay much higher premiums than older drivers due to their age group’s inexperience and tendency to engage in much riskier behavior on the road. But the rare teenage driver that drives cautiously or infrequently could use MyRate to prove himself the exception. Drivers with checkered driving pasts but who have reformed their ways—or so they believe—would also be ideal candidates for the program. Other potential beneficiaries aren’t so obvious – say, a driver who lives in a high-risk urban area but drives rarely or keeps to suburban roads, or a driver with a high-performance sports car that always keeps under the speed limit. Essentially, if you can use MyRate to prove that your driving behavior and circumstances are less risky than that of peers, you pay lower premiums, Hutchison said. Read Full article Posted by:

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