From the July 25, 2000 issue

Cruise and Effect

Insurance companies don’t really know much about their auto policyholders. They compute premiums based on genders, drivers’ ages, cities of residence, and the value of their cars, but they are clueless about the actual risks individual drivers take.
 
Insurance giant Progressive, however, thinks it knows better. The company recently finished testing a method through which it will not only track car mileage, but also where cars are being driven and at what time of day. Progressive’s goal is not to become an Orwellian Big Brother, but to make its premiums more accurate and to give policyholders a financial incentive to reduce risky driving, says Maria Henderson, general manager of the upcoming Autograph product. Because Autograph uses cellular technology with the Global Positioning System, it could also ease the recovery of stolen vehicles.
 
Drivers who lease an Autograph (probably for about $15 per month) will be leasing a computer that constantly records the car’s position. Each month Progressive will tally the mileage and match the car’s travels with data about the relative risk of the roads traveled. Frequent trips through risky intersections at the most dangerous times will raise rates.
 
In testing, Henderson says, close to 1,200 Texans lowered their rates by an average of 25 percent by improving their driving habits and through better theft recovery. "The consumer is able to control the rate," she says. If only Autograph could prevent fender benders–now that would be a product.
 
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