Smartphone app helps set insurance discounts
Allstate rolls out Drivewise program in 3 states
As car shoppers look to technology to save money on insurance, "there's an app for that" is becoming a viable option.
Allstate Insurance Co. this year unveiled the Drivewise mobile app that gauges driving behavior through smartphones to set insurance discounts for motorists in three states. Allstate says Drivewise makes it the first provider to offer mobile usage-based insurance.
Mobile apps for usage-based insurance add another element to a market that has relied on small devices plugged into onboard diagnostic ports, or data from OnStar and Ford Sync vehicle telematics systems.
Researchers say usage-based insurance is growing and could account for half of the private passenger insurance market by 2020.
Drivewise users receive a 10 percent discount for six months upon enrolling. After that, the savings are based on a customer's driving habits.
The app -- available to iOS and Android phone users in Montana, Nebraska and New Hampshire -- uses smartphone equipment such as GPS to track speed, hard braking, location and time of day. The app could roll out in more states this year.
"We want to make sure our program is available to [customers] how they want, where they want, and we want it to be as easy as possible," said Sarah Inciong, product development director for Allstate's connected car division. "Making our program accessible through mobile technology certainly seemed like the right way to go."
It's common sense for the insurance industry to embrace smartphone apps, says Sam Friedman, insurance research leader for the Deloitte Center for Financial Services.
Usage-based insurance programs that rely on data from smartphones will be "the rule rather than the exception" within a few years, Friedman said.
"I think any individual company that adopts it will be poised for growth," he said. "It doesn't mean you have to eliminate the choice. If they don't want it on their phone, that's fine."
Progressive Insurance Co. also wants a piece of the mobile pie.
Progressive held a contest this year in which more than a dozen app development companies tried to devise systems that can match the accuracy of Progressive's Snapshot measurement tool. A Progressive spokesman says the company is evaluating the results and isn't naming the companies involved.
"The challenge is to get accurate data, so what we're looking for is kind of replicating the same speed readings we get from the device with the phone," said Dave Pratt, Progressive's general manager of usage-based insurance. "It's a fairly tricky technical challenge."
Progressive wants to add location data to the mix that would establish whether a motorist is on a highway or on a more cramped city street. There's also potential to account for other factors such as weather, Pratt said.
For years, some OnStar and Ford Sync subscribers have allowed insurance companies to see their mileage data in hopes of trimming their insurance bills.
More than 300,000 OnStar subscribers are enrolled in such insurance discount programs with National General Insurance, 21st Century Insurance, Liberty Mutual Insurance, State Farm Insurance and Plymouth Rock Assurance. National General (then GMAC) was the first insurance company to partner with OnStar, in 2009.
Consumers typically see discounts between 11 and 15 percent depending on how much they drive, although some have received 45 percent reductions on their rates, according to an OnStar spokeswoman.
State Farm's Drive Safe & Save program was introduced through OnStar in 2009 and Ford Sync in 2012. The company released its In-Drive monitoring tool, which is inserted into a port in the vehicle, in 2011 to monitor braking, acceleration, time of day and speed, according to a State Farm spokeswoman.
Dealerships can play a role in informing customers about possible insurance perks.
"It's something noted at delivery. Especially when [salespeople are] gathering insurance information. [They'll say], 'Hey make sure your insurance company knows your vehicle is equipped with OnStar and you get it for X amount of time,'" said Sabrina Hitchcock, a sales manager for Suburban Cadillac-Buick in suburban Detroit.
She added, "It's a great added benefit for our customers, but it's not something we use right off the bat as a selling tool."
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