You might have seen a commercial by now advertising Progressive’s “Snapshot” service. Even if you haven’t, it’s likely to happen soon.
That’s because Snapshot, and other usage-based services like it, will dominate the market by 2020 according to a new study released by strategic advisory firm Strategy Meets Action (SMA). In Progressive’s case, a modular device plugs into your car’s OBD-II port and monitors a driver’s behavior behind the wheel.
“Telematics is going to have a profound effect on the auto insurance business,” said Welch. “Even if consumer adoption is in the low end of the consensus range, usage-based insurance will grow rapidly, and as it grows, the traditional market will shrink, making it very difficult for companies not playing in the usage-based segment to maintain market share,” said co-author Richard Welch.
The idea offers benefits to both the insurance companies and drivers, at least potentially. Safe drivers get a way to prove their habits for a lower premium. Insurers, on the other hand, have more access to information on how the people they insure are really behaving.
There are already 20 insurance companies between the U.S. and Canada using such technology and eight of the top 10 U.S. insurance providers are included in those numbers according to the study.
Other, similar, systems are also being made available for companies that have vehicle fleets and for parents concerned about their children driving dangerously.