According to the American Automobile Association, the average national price of unleaded regular gasoline on June 9, 2008 was $4.023 per gallon. On June 9, 2007, the price was $3.091 per gallon. Motivated by news reports of the escalating price of gas and the confirming reality at the pumps, consumers are looking for an edge. The Consumer Federation of America and similar public interests groups are promoting the "drive less, pay less" mantra of reduced insurance premiums. Now policyholders are asking agents and insurers, "How much less do I need to drive, and what can I save?" The answer isn't simple. Different underwriting rules abound, even within companies. Allstate, for instance, offers decreased mileage deductions at certain levels of policy choices.
Main Street America Group takes a longer view. Spokesperson Mark Friedlander said,
"We price based on three-to-five year results, a process called smoothing. With regulatory requirements in the 17 states where we write business, we do not adjust our pricing based on current market conditions."
Angie LaPlant, CIC, senior project manager of public and government relations at AAA Auto Club South, said that while some carriers send renewal questionnaires in an effort to update information, they are "not making rate changes automatically due to more people car pooling."
High-Tech Driving
Some companies are introducing new technologies to support lower premiums and entice "good" drivers to their products.
Although not yet available in Florida, drivers in Alabama, Minnesota, Oregon, and Michigan can sign up for Progressive's optional car insurance program that offers lower rates on vehicles driven in less-risky ways. A behavior-based insurance program, MyRate, offers drivers a customized rate based on how much and when their cars are driven. Progressive is implementing a national rollout of the program that will continue, pending regulatory approval, through 2009. It's available to customers who buy their policies directly or through independent agents.
A driver who signs up for MyRate receives a small wireless device that plugs into a port in his or her car. The device allows Progressive to track driving patterns and locales. Cars driven less often, in less risky ways, and at less risky times of day can receive reduced premiums.
Progressive has patented versions of its MyRate device and has sold a few to other companies.
"It is designed primarily for lower-risk drivers who are consistent and safe," said Richard Hutchinson, Progressive's MyRate general manager, in a company release. "They drive at low-risk times of day and they keep alert for others on the road. They don't make fast lane changes or follow too closely behind other drivers so they don't have to over-react or slam on the brakes."
The company reports that all participants can earn a first-term discount of up to 10 percent just for signing up. Then, depending on the program features in their particular states and on their driving habits, their rates may go up or down at renewal. The impact on the rate could be anywhere from a 60 percent discount to a nine percent surcharge. Users also pay a $30 technology fee each policy period for the cost of the device and data transmission.
"Because MyRate could lead to a higher rate for drivers in some states, we want people to know that the program is not right for everyone," Hutchinson said. "The good news is that customers who have signed up for MyRate can review their driving data in a secure part of progressive.com, see how their habits are affecting their rates, and, if they choose, make behavioral changes that can lead to real savings."
Progressive's product manager, J.C. Jones, sees the device as a business-grower and a positive retention tool. Test-state data shows retention is significantly higher among customers who choose to participate.
Helping Employees Cope
While Progressive appears to head the pack on this technology, Florida agencies are making efforts in-house to help their employees cope.
Employees in all markets where Main Street Group operates can register online via the company intranet to set up carpools. Friedlander also said Main Street is assessing flexible work arrangements for all of its employees, but has not made any final decisions yet.
The commute is a growing issue for potential employees, even in today's down job market. Stacy Kagan, principal of the Allstate Kagan Agency in Broward County's Coral Springs said, "I'm finding when I interview to hire people, many are very concerned about working close to home."
On the customer side, Kagan noted that the agency is seeing an increase in calls from people asking which cars have lower insurance premiums. Others are switching to direct payment plans for existing policies, which can offer a slight reduction in rates.
John Cheney, principal at J. Cheney Insurance Inc. (also Allstate), in Tallahassee, said he communicates with staff via email when possible to minimize in-person meetings. "The same with our customers who like to be contacted that way, although a certain set still likes to pay in person," he said.
Free Gas
Some drivers are resorting to innovative strategies to save gas money — getting free fuel from the roadside service offered in their insurance policies. Amy Moore, senior communications consultant for Allstate Insurance, said their data shows the number of Florida drivers running out of gas on the highway is up nearly 35 percent in the first five months of 2008 compared to last year.
It's worse across the country, with out-of-gas calls to Allstate Motor Club up by 52 percent nationally for the first months of 2008 over the same time last year, according to Moore.
The increase is attributed to people trying to get some free gas by letting their tanks run out, and those who are trying to stretch their gas-buying dollars to the next payday and simply misjudge how many more miles they can coax out of the tank.
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