When you are a market leader, why not press your bet? That appears to be what Progressive Insurance is doing through its new program that allows drivers not currently insured by Progressive to try out the carrier's usage-based personal auto insurance program—known as Snapshot—for a month to determine if the potential customer is eligible for a good-driving discount.

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

This is also another warning shot for the mid-tier personal auto carriers that are not equipped to do battle with giants such as Progressive and State Farm, particularly when it comes to the use of telematics technology to determine if a driver is a good risk or not.

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

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

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

Trying to determine which risks are worse than others will be the next battleground for the mid-tier insurers. Can old underwriting methods make it worthwhile for carriers to stay in the market? The difference between risks and gambles will cause a continued battle, one the mid-tier and smaller insurers may not want to take part in.

Special Reports /

In the Battle for Control of Personal Auto, One Carrier Presses Its Bet

Related Stories

Recommended For You