Hartford to enter pay-as-you-drive arena

10 Dec 2011

Hartford Financial Services Group Inc. plans to launch a pilot program next year using onboard telematic devices to price auto insurance. The system, called TrueLane, will roll out in the first half of 2012, according to the president of Hartford's consumer markets division, Andy Napoli.

With TrueLane Hartford is put in the company of insurers like Allstate Corp., Travelers Cos. and State Farm Mutual Automobile Insurance Co., which have been rolling out discount programs based on measurements of their policyholders' driving habits.

Leading the field with its Snapshot program, insurer Progressive Corp. uses a small device that plugs into a car's onboard diagnostic computer to measure when policyholders use their vehicles, how far they drive and how hard they brake. Customers who volunteer to install the device can get a markdown on their auto insurance of as much as 30%.

Typically, auto insurers have evaluated potential customers by comparing them with others who share similar characteristics. Over a decade ago, Progressive led a trend toward incorporating credit scores as a metric for measuring the likelihood that a customer will submit a claim. However, individual driving data collected by a telematics device in real time, trump any effort to pool people with similar characteristics. With an onboard device, insurers can offer discounts to people who drive in a safer manner than the usual metrics would suggest.

Napoli, who announced the Hartford pilot program at the company's annual investor day, said the TrueLane program will help "us to stay at the leading edge of pricing sophistication. The data is compelling. This capability has really redefined the way we think about pricing auto." According to Napoli, insurers that don't use telematics to price auto coverage will eventually attract poor drivers who were turned down for coverage by insurers that to.