(Image source: Progressive Insurance.)
Progressive Insurance (Mayfield Village, Ohio) has introduced Smart Haul a usage-based insurance (UBI) for small commercial automobile for owner operators and small fleets that have an electronic logging device (ELD). While Progressive boasts that it is the number-one truck insurer in the U.S., the new policy is the insurer’s first UBI program for commercial truck drivers. A pioneer of UBI, Progressive is combining its experience from its long-standing Snapshot program with a new market appetite based on the government mandate for commercial drivers to use ELDs—thus adapting the insurer’s personal lines UBI expertise to small commercial business.
The Smart Haul program presents an excellent example of an insurer leveraging the investments it has made in risk technology to meet additional market needs, according to Matt Josefowicz, president and CEO of research and advisory firm Novarica (Boston). “Progressive has built a tremendous amount of expertise in telematics over the past decade, which positions them as a service provider in this new market,” he comments. “Whether they do this on a fee basis or use it as a value-added service for new insurance clients, it demonstrates how insurers are thinking more broadly about the value they’re able to deliver to clients.”
“Small commercial is a personal product. Most small businesses are owned by single individuals, who generally behave the same way personal buyers do when given the choice to do so,” Josefowicz adds.
ELDs automatically record driving data, including the hours of service in a day, and were recently mandated (April 1, 2018) for the vast majority of owner-operators and small fleets that operate interstate. ELDs have been widely used voluntarily by larger fleets since 2015. The Smart Haul program collects the same data collected as part of the Federal Motor Carrier Safety Administration’s (FMCSA) mandate.
Minimum Savings of 3 Percent
Drivers purchase their own ELD, and allow Progressive to obtain their driving data from their ELD vendor. Smart Haul offers qualifying truckers a minimum savings of 3 percent on their initial Commercial Auto policy period for simply signing up and sharing their ELD driving data. If driving history warrants, writers can save more, according to Dave Lubeck, Business Development Consultant, Progressive. New qualifying truck customers that use an ELD and sign up for Smart Haul save an average of $1384 on their Commercial Auto policy premium for the initial policy term.
“We continue to build partnerships with various vendors, and already have existing contracts with some of the leading ELD vendors in the market,” Lubeck comments. “Once the customer’s consent is provided, we contact the ELD vendor and they provide the customer’s most recent driving data to us. Following this process protects the privacy of the trucker.”
Smart Haul is completely device agnostic, as compared to Progressive’s Snapshot program, which uses a specific device or mobile app provided by the insurer. “Using Smart Haul does not require the driver to get another device,” Lubeck notes. “Additionally, Smart Haul was built using a rating model created with heavy truck driver data and utilizes information already collected by the ELD as part of the Federal Motor Carrier Safety Administration’s (FMCSA) final ELD mandate.”
Progressive believes that turning the ELD requirement into an opportunity to save some money for safe driving will appeal to lots of truckers, according to Lubeck. “We’re just collecting enough data from the ELD to be able to provide a more personalized rate based on something they can control, their driving habits,” he says. “When the driving data is analyzed we are looking at the collective information once per year, and not constantly monitoring a driver.
Smart Haul’s Smart Play
Smart Haul is a smart play in addressing a market created by a recent regulatory mandate, opines Karlyn Carnahan, Head of analyst firm Celent’s (Boston) property casualty practice for the Americas. “Sole proprietors are less likely to have ELDs in place—and may be struggling with the work of choosing which device to use, how to be sure it complies, how to fund it and all of the work required to assure compliance,” she comments. “For smaller commercial operators, getting a discount and getting help with compliance is a nice add-on differentiator.”
Those that fall under the requirements of the FCMSA ELD law still have time to choose their device if they’ve been using an AOBRD (Automatic On-Board Recording Device) Carnahan notes. “This move allows Progressive to either tap into the data from those who have already chosen their ELD,” she says.
Currently policies with 10 or more vehicles are not eligible to enroll in the Smart Haul program. However, Progressive sees a lot of opportunity to understand more about commercial vehicle usage for underwriting applications and fleet management, Lubeck acknowledges. “Early market response to our Smart Haul program has been encouraging, and we expect it to continue to grow as market utilization of ELD devices increases and truckers develop richer telematics driving histories,” he says. “We’re also evaluating applications for our other lines of businesses as well.”
Negotiating Drivers’ Privacy Concerns
From its early experimentation with UBI, Progressive understands the privacy concerns that individual drivers—and small commercial operators—may have about sharing telematics data beyond what the government requires, Lubeck affirms. “In the early years of Snapshot consumers had concerns around ‘Big Brother,’ and over time we find that more and more people are accepting in sharing their habits with us in turn for a possible discount,” he elaborates. “We feel the same will happen for Smart Haul. When programs are new and different, there are always questions. We’re confident that as Smart Haul grows and truckers better understand the program, they will continue to be more and more accepting.”
“Building the Smart Haul program is a culmination of years of data collection, investments in research and development to determine rating models, forming relationships with leading ELD vendors in the market, and making sure we do right by truckers, who we know are still getting comfortable with using an ELD,” Lubeck adds. “As the number-one Commercial Auto insurer, Progressive is constantly looking for ways to better quote and reward our customers. Each day we are finding that more and more truckers are enthusiastic about being rewarding for something they can control, their driving habits. We’re excited to provide truckers the opportunity to save money on their insurance, which can be a big part of their overall expense.”