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New technology from Progressive brings change, controversy to auto insurance industry

With competition growing in the lucrative, risky and increasingly crowded world of automobile insurance, many insurers are using innovative incentives to identify, entice and retain their best customers. It’s a game in which the best customers — the ones who provide the most benefit to the insurance company’s bottom line — are those who pay their premiums on time, while posing the least risk.

Progressive Insurance Co. has made headlines lately for developing a new technology called Snapshot that helps identify and deliver incentives to their best customers. Snapshot is a tiny device attached to a car’s onboard diagnostic computer that collects data about drivers, including their speed, how hard they press their brakes and overall driving habits. Progressive then offers discounts on insurance premiums based on the driving habits data it collects on insureds over a six month period.

According to insiders at Progressive, it is nearly impossible to disguise actual driving tendencies over the long haul, so the Snapshot six-month window of constant monitoring successfully identifies insureds’ true driving habits.

But with technological progress often comes controversy. The Snapshot device has been characterized by some critics as an intrusion on privacy and an attempt to spy on customers in their vehicles, a place that many consider a sanctuary outside the home. Some controversy stems from misinformation, as bloggers have warned that bad drivers may get saddled with surcharges for unsafe driving habits identified by Snapshot.

Progressive, for its part, denies the program punishes unsafe drivers, adamantly contending that use of the Snapshot device “won’t make customers’ rates go up.” In response to privacy concerns, Progressive points out that the Snapshot program is entirely voluntary, not mandatory. And because Snapshot doesn’t rely on a GPS unit, a user’s location cannot be tracked by the company. What’s more, there is no camera in the device to record the driver’s image. At least for now, the privacy concerns appear to be overblown and unfounded.

Snapshot represents an important advancement in the auto insurance industry, one that potentially can benefit customers and insurance company bottom lines alike. Whether the new technology will prove as successful at retaining and bringing in new customers as Flo, Progressive’s TV spokeswoman, remains to be seen.

Nonetheless, other companies likely will attempt to replicate Snapshot, making individualized insurance linked to driving habits the norm and rendering the antiquated system of tracking accidents, age and car value to determine auto insurance rates obsolete.

Jonathan H. Schwartz contributed to this report.


  1. “Better Drivers Pay Less for Car Insurance and One-of-a-Kind Program From Progressive,” Feb. 1, 2011, Progressive Press Release.
  2. “Auto Insurers Get New Window on Driving Habits, “ Erik Holm, The Wall Street Journal, Feb. 3, 2011.
  3. “Car Gadgets Threaten Drivers’ Privacy,” John P. Mello, Jr., PC World, Jan. 26, 2011. 4. “Tracking Devices to Cut Car Insurance Rates,” Joe Donohue,, July 28, 2008.

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