Most drivers are paying less for insurance thanks to the ability for insurance companies to use terabytes of data. But according to Glenn Renwick, chairman, president and CEO of Progressive, the rise of the autonomous car could change the industry from one that insures drivers to one that insures the elements of the car. In a conversation at the Rutberg Global Summit Tuesday in Atlanta, Renwick covered Progressive’s 14-year history in trying to use data to set pricing, and the lessons he has learned.
Times have changed since 1998 when Progressive started installing devices in customer cars to get relevant data. For example, at first customers rebelled against the idea of having continuous monitoring that included GPS data, but Renwick said, “We think that there might be a time in the near future when that will change.”
For now, customers are monitored for a 6-month period with the Progressive device and then that collected data is sent to the insurer. GPS isn’t included. Yet, still, data such as hard braking, your lane changes and routes driven are enough to start making strong inferences about how you drive. “We’re moving away from correlation to causation,” he said.
There are huge ethical and regulatory aspects to his pitch. A “risk pool of one” is an oxymoron when discussing insurance. For every person paying less for insurance there’s someone who has to pay more. And since insurance is required to drive, this runs the risk of pricing out a population. Renwick danced around that issue, finally settling on the idea that driving is a privilege, and not a right and saying that regulatory bodies will have to address this.
“There’s no free lunch: some get to pay less and so some should be paying more,” Renwick said. “So you will see a sea change in how people are allocated [between insurers]. We saw it once before with the introduction of credit.”
He also didn’t have a great response to questions about what Progressive will do once the cars themselves are collecting the data, as opposed to the Progressive hardware. He clearly is ready to get out of data collection hardware, and said he had expected to be out of the business earlier, but the connected car is still in development.
As for the further-out technology of driverless cars, Renwick anticipates the shift to such vehicles causing both industry consolidation and also a shift in what a company like Progressive will insure. Instead of drivers, he suggested that the company could insure things like batteries or the LIDAR systems that make the cars work.
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