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Devices map driving habits, can cut insurance premiums

By BECKY YERAK Chicago Tribune

Publication: The Day

Published September 29. 2012 4:00AM

CHICAGO - Audiovox Electronics Corp.'s new consumer product, Car Connection, claims it can tell parents, through online reports, when their teen has driven beyond a certain boundary. It also produces vehicle diagnostic reports and provides tips on how to save fuel.

Of the product's half-dozen or so features, the one that excites Audiovox President Thomas Malone is the driver score. "This is a big one," he said, explaining that the device, which plugs into a port under most dashboards, generates a score based on how quickly the driver accelerates or stops as well as how hard they turn the steering wheel or hit the brakes.

Gizmos like Car Connection are generating lots of enthusiasm, especially with insurers because they want to reduce claims costs, but also among people who want to track the driving habits of their children or aging parents.

Allstate Corp. and State Farm offer voluntary telematics programs in various states, and Progressive Corp.'s Snapshot device is spreading as well.

At the automobile insurance industry's "Telematics Update" conference in September, Robin Harbage, a former Progressive manager and now a director for consulting firm Towers Watson, told the crowd that eight of the nation's 10 biggest auto insurers have usage-based insurance programs in some states.

Beginning in October, Car Connection will be offered through retailers Sears and Pep Boys. Audiovox hopes to become a tool in the insurance industry's move into usage-based coverage, which uses gadgets to record mileage, time of day, speed and other driving behaviors that insurance companies say provide improved predictors of claims costs.

Car Connection is to be regularly priced at $169 with an annual subscription fee of $79, or $9.99 a month. Malone said he hopes to have it sold in 10,000 retail outlets in 2013.

Sears' decision to carry Car Connection, which it believes has "tremendous potential," was contingent on it being easy to use and understand, Joe Finney, president of Sears' automotive group, said.

Other benefits cited at the conference include the ability to track stolen vehicles, determine fault in accidents and alert emergency crews.

A few state regulators have expressed concerns about privacy because the technology can reveal a driver's location or where they have driven. Progressive stresses that its Snapshot device doesn't include tracking, and said it doesn't share data with third parties unless ordered to do so by courts.

Snapshot can give drivers discounts of up to 30 percent for safe driving. About 7 of 10 drivers using Snapshot get discounts, a Progressive spokesman said.

In the year ended July 2012, Progressive said it sold more than $1 billion in policies through people signing up for Snapshot.

Snapshot records time of day, vehicle identification number, odometer mileage and braking habits. The device also detects if it has been connected or disconnected from the car's diagnostic port. Progressive uses the driving data to calculate an auto insurance rate, making pricing more sophisticated; the company said it also shares the data with drivers via their online policy accounts. Drivers may discontinue the program at any time.

Telematics users tend to improve their driving habits while reducing crash rates. The motivation to change driving behavior is tied to reduced insurance premiums.

Nathan Bryer, senior manager for innovation for Allstate, which in 2010 introduced Drive Wise, told the conference that once the device is plugged into a car "light bulbs go off" with a driver, resulting in fewer, and less severe, accidents. Drive Wise, which measures when policyholders drive, their mileage, hard braking and speed, offers up to 30 percent savings on premiums to safe drivers.

Internal Allstate data for a recent test with a group of employees showed dramatic changes in driving behavior. For example, 25 percent of drivers in the initial group of testers scored in the ideal "safe zone," but over the course of the test, that figure rose to 75 percent.

Allstate's Drive Wise device is in Ohio, Illinois and Arizona, and expected to be in 10 states by year end. So far, 52,000 Allstate customers are registered in the program.

"We expect that number to grow rapidly as we expand late this year and in 2013 and beyond," Allstate spokesman Justin Herndon said. About 10 percent to 15 percent of new Allstate customers enroll in Drive Wise, he said.

State Farm's overall telematics program, Drive Safe & Save, consists of three platforms. Both OnStar and Ford Motor's Sync system measure mileage, State Farm spokesman Dick Luedke said.

In-Drive is a Hughes Telematics Inc. device that State Farm provides to interested drivers.

"We use it not only to measure mileage but also driving behavior," including whether the driver is surpassing 80 miles an hour, decelerating or accelerating habits, cornering and what types of G-forces are being produced, Luedke said.

The voluntary program provides discounts but doesn't penalize drivers.

At least one of State Farm's three Drive Safe programs is offered in 14 states in some fashion.

"We're pleased with the response," Luedke said, declining to be more specific, and State Farm plans to expand it into more states.

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