Personal auto insurance is already the most commoditized line ofproperty/casualty insurance and is likely to become the most exactof the lines in terms of underwriting as insurers spread themovement known as usage-based insurance.

The number of insurers continues to grow, according to RobinHarbage, director, Towers Watson, and co-author of a report on thesubject, "The Brink of a Revolution.

"We are seeing the U.S. market become almost a hotbed [forusage-based insurance]," he said.

Progressive has been an early adopter and continues in thatdirection, having introduced its usage-based product in 37 statesand the District of Columbia, explains Harbage.

But Progressive isn't alone. Harbage reports the list ofinsurers offering some type of UBI at this point is "a who's who ofinsurance."

Among the names bandied about are State Farm, Allstate,Nationwide, The Hartford, and Travelers, as well as many smallerinsurers on the list.

Towers Watson estimates auto insurers representing 60 percent ofthe passenger auto market, have launched a product it in at leastone state.

"It's not just an experiment anymore; it's a mainstream productfor some of these companies and they are pushing forward on a rapidbasis," says Harbage.

At this point in time, all the major insurers are operating withit as a voluntary program, so consumers can take it or follow thetraditional process for their personal auto product, points outHarbage.

Harbage explains the devices used to track driving habits vary.Some new cars offer original equipment devices, such as OnStar forGM vehicles and Sync from Ford.

"Those devices track the mileage and behavior of the drivers asthey operate the vehicle," he says. "That's used to creatediscounts for the insureds on their better-than-average driving orless-than-average mileage."

The common standard, explains Harbage, is the device plugs intothe onboard data port, which was mandated for all vehiclesbeginning in 1996 by the EPA. The port—which also performs emissionchecks—is linked directly to the onboard computer so anythingdrivers can see on their dashboard—RPMs, mileage, speed as well aschanges in speed—can be recorded.

In addition, most of the devices are comingout with GPS units on them, according to Harbage.

"They get quite a bit of information about the way the vehicleis operated," he says.

The information received from the cars is both valuable andpredictive.

"Most of what insurers rated on for years were things like adriver's age, gender, marital status or something more intrusivelike credit scores," says Harbage.

Insureds—not surprisingly—often wondered how such informationrelated to driving habits, according to Harbage.

"The newer information is not just related to your driving; itis your driving," he says.

"It's a quantum leap forward in predicting behavior," addsHarbage. "It's taking information, such as where you are drivingthe vehicle, how fast you are driving, rapid accelerations,decelerations, aggressive maneuvers, and data such as that.Insurers believe there is a certain population of drivers that wantto prove they are safe drivers and they are earning substantialdiscounts. Most insurers are offering up to 30 percent discountsbased solely on the information provided from the devices."

Towers Watson is a global professional services company and oneof its strengths is risk management, explains Harbage. The companyis helping insurers determine the best way to collect and use datasuch as what onboard computers are offering.

"Most of the smaller insurers are saying [the amount of data] isa bit daunting," says Harbage. "They don't quite know what to dowith it all. It's unlike any data they've seen before. Luckily, weemploy people who have worked with this kind of data before."

Insurers are unsure what the discounts should be.

"Much like a credit scores, there's a score based on theoperation of the vehicle: where it's driven, when it's driven, howit's driven, how long it's driven," says Harbage.

As programs expand among, Harbage believes good drivers willstep forward and volunteer to be a part of the program.

"What will happen is the other insureds will remain with theinsurers not offering these programs and they will begin to see therate creep up as drivers that don't volunteer for these programsbecome the bulk of the residual pool," he says.