Drivers let Big Brother in to get a break

In two new tests, car owners will be able to let insurance companies monitor their driving via new technology in exchange for lower rates.
The technology will track some combination of when, where, how far and how fast they drive, giving insurers a way to reward low-risk driving. Now just experiments, the technology might be a glimpse of the future of car insurance.

The trials will begin this year:

? Progressive will announce its TripSense trial in Minnesota on Aug. 24. Customers who sign up will get a device the size of a Tic Tac box to plug into their cars. The device will track speed and how many miles are driven at what times of day. Every few months, customers would unplug the device from the car, plug it into a computer, download the data and send it to Progressive. Depending on results, discounts will range from 5% to 25%.

? In Great Britain, major insurer Norwich Union will start its Pay As You Drive test in a few weeks. Volunteers will get a device the size of a Palm computer installed in their cars. The gadget will use global positioning satellite technology to track where the car goes, constantly sending information to Norwich Union wirelessly. Cars that spend more time in safer areas will qualify for bigger discounts.

In 2001, Progressive abandoned a test of a system similar to Norwich Union's because of high costs and privacy concerns. "People were being tracked, and to some it seemed like a Big Brotherish thing to do," says Progressive executive Dave Huber.

Progressive's new test is an attempt to give customers more control. After signing up, a car owner will get the device and software in the mail. The customer would then plug the device into the on-board diagnostic port under the dashboard. The port is on all models sold in the USA since 1996.

Through the port, the device constantly tracks car speed. By comparing that with a clock in the TripSense device, the device figures how far the car goes, mapping it against the time of day.

At the end of each policy term, the customer would download the data and see what discount he or she would get. Customers can see all their data before deciding to send it to Progressive, and can decide not to send it ? and not get extra discounts.

In Minnesota, where the highway speed limit is 70 mph, drivers who go over 75 less than 0.1% of the time get an extra 5% discount. Drivers who avoid the most dangerous times ? midnight to 4 a.m. on weekends ? get bigger discounts than those who don't.

Other insurers will watch the tests closely.

"It's still experimental," says Julie Rochman of the American Insurance Association. "A lot more research needs to be done, but these certainly are issues that are interesting from an insurance and safety perspective."

"We're interested to see if the program could cause people to become safer drivers" ? perhaps by trying to stay under 75 to qualify for discounts, Huber says.