When you are a market leader, why not press your bet? Thatappears to be what Progressive Insurance is doing through its newprogram that allows drivers not currently insured by Progressive totry out the carrier's usage-based personal auto insuranceprogram—known as Snapshot—for a month to determine if the potentialcustomer is eligible for a good-driving discount.

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Progressive doesn't need me to praise their marketing skills;they'vedone quite well for themselves over the last decadepromoting the company with a style that makes their name match thekind of company they strive to be.

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This is also another warning shot for the mid-tier personal autocarriers that are not equipped to do battle with giants such asProgressive and State Farm, particularly when it comes to the useof telematics technology to determine if a driver is a good risk ornot.

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We are seeing more examples of insurers using telematics on aregular basis, particularly on the commercial lines side. Indeed,fleet insurance may be the perfect use for telematics because itallows carriers to offer customers a variety of benefits—not justthe quality of the person behind the wheel.

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But make no mistake, the money is in personal auto and the madrush to gain more market share in the personal auto field continuesunabated. In an interview I recently conducted with Novarica's MattJosefowicz, he brought up an important point pertaining to thepricing battles that are going on. The tier-one insurers in thepersonal auto market are battling hard for their competitors'customers, but eventually there has to be a point reached wherecarriers can no longer lower their prices. What then?

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The good risks are going to be gobbled up by a handful ofinsurers and the rest of the personal auto market will be fightingover the scraps. It also appears likely that those scraps willcontain a lot of bad risks.

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Trying to determine which risks are worse than others will bethe next battleground for the mid-tier insurers. Can oldunderwriting methods make it worthwhile for carriers to stay in themarket? The difference between risks and gambles will cause acontinued battle, one the mid-tier and smaller insurers may notwant to take part in.

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