Smart Auto Insurance Blog

Around 1% of those with auto insurance are using usage-based programs to try for discounts on their auto insurance premiums.  But according to NASDAQ’s “The rise of usage-based auto insurance,” that number is rising.  In the next five years, some estimate that as many as 20% of drivers could be using usage-based programs.  They even predict that 30% of drivers will be using them by 2020.  Usage-based insurance, or UBI, allows your auto insurance company to place a device in your car to monitor your driving habits.  They can determine when you drive, how often, how far, how fast you are accelerating, as well as your braking habits.  Companies advertise discounts of up to 30% when you use their UBI, if you are found to have safe driving habits.

When asked, drivers said that they are happy to give up some privacy in exchange for a discount on auto insurance rates.  Between smart phones and Facebook, people are used to giving up some of their privacy, so they willingly participate in UBI services.  In fact, companies who are not currently using this technology, or at least in the development process, are pretty far behind and risk losing some customers.  At some point in the future, drivers may end up paying higher premiums if they don’t allow their insurer to track their driving habits.  It’s unlikely that insurers will force drivers to share UBI information, but collecting this data will likely become the norm in the future.

Here is a summary of some of the companies offering usage-based insurance.  First of all, you do have to have a car that is newer than a 1996 model.  Drive Wise is offered in three states by Allstate, but they plan to expand the program later this year.  American Family Insurance has tested their product and is currently developing a plan to implement it.  Esurance has teamed up with Sprint to collect UBI data, but it is only available now in Texas.  GMAC collects data through OnStar.  The Hartford insurance works with Octo USA to collect data for their TrueLane program, currently available in five states.  Progressive’s Snapshot is available in most states and even non-customers can try it out.  Travelers has started using IntelliDrive in four states.  Safeco offers the Rewind program to some customers who are trying to avoid rising premiums after violations.  State Farm’s Drive Safe & Save program also works with OnStar and is available in 14 states.  Have you taken advantage of UBI yet?

Bristol West Insurance has announced on their website that Farmers, which is the parent company of Bristol West, has proposed to acquire AIG’s Personal Auto Insurance business.  This includes 21st Century Insurance Company all found on their website.  Once this acquisition is finalized, Farmers will be the 3rd largest auto insurance company in the United States.  Bristol West customers can expect to continue the excellent service they are used to.

Also in company news, Bristol West Insurance Group and the Foremost Group of Companies are combining.  Foremost has members of the Farmers Insurance Group of Companies.  Insurance documents will reflect the new Foremost brand for customers, but excellent claims handling, and customer service will continue.

Bristol West has received AM Best Rating of A (Excellent) for their various companies including Bristol West Casualty Insurance Company, Bristol West Insurance Company, Bristol West Preferred Insurance Company, Coast National Insurance Company, and Security National Insurance Company.

According to the article “California’s Largest Auto Insurer Plans Layoffs” on insurancenewsnet.com, Farmers Insurance Group is planning to cut hundreds of jobs as reported on Friday. 

The Los Angeles based auto insurance company told their employees they would be eliminating 554 jobs by the end of 2009, and that the total would reach about 750 by the end of 2010.  The job losses will affect the newly acquired company, 21st Century Insurance at The Woodland Hills complex, which currently has 979 employees.  This information was found in the the LA Times. 

This decision was made after carefully evaluating 21st Century over two months.  Senior Vice President Mark Toohey said that they hope to streamline operations with this effort.  Some of the displaced workers may be offered positions at 21st Century’s executive offices in Delaware, or transferred to other Farmers operations in California.

Owners of hybrid cars can get a discount on their auto insurance for being environmentally friendly according to the article “US Hybrid - Auto Insurance Leader Says Being Green Pays” by Lavonne Kuykendall of Down Jones Newswires. 

Farmers Insurance Group offers their customers driving hybrids a 10% discount which they started back in 2005.  The Senior VP of auto for Farmers, Brian Dwyer, believes it was the responsible thing to do according to this article.  The discount was first offered in California which is home to about 25% of all hybrid cars registered in the US. 

Currently Farmers insures approximately 90,000 hybrids in the US which is about 7% of all hybrids sold in the last ten years.  This is according to research from Edmunds Inc.  Dwyer also pointed out that it’s probably good for auto insurance companies and the country if more drivers switched to hybrid technology which combines the use of gas and electric engines to save on fossil fuels, ultimately protecting the environment.  Edmonds shows that about .8% of cars sold in the US since ‘99 are hybrids and in ‘09 hybrids are up to 2.6% of all cars sold in the US.  This increase may seem small over a decade, but it’s movement in the right direction and is very encouraging.