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Insurance report: driver behavior better risk predictor than standard demographics

“The consumer was right all along,” said Progressive President and CEO Glenn Renwick. “For most, the rates they’re paying are higher than the risk they actually present, and in many cases, much higher.”

The Trucker News Services

7/27/2012

If you’ve ever felt like like you’re not seeing your good driving habits reflected in your insurance premiums — you’re right.

The majority of drivers who are lower risk subsidize the minority of higher-risk drivers, says Progressive Auto, which also covers commercial trucks.

A report released earlier this month by Progressive analyzed 5 billion driving miles and concluded that actual driving behavior is the best predictor of driver risk, not factors such as age or make and model of vehicle driven.

In fact, according to the study, “loss costs for drivers with the highest-risk driving behavior are approximately two and a half times the costs for drivers with the lowest-risk behavior … .”

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“The consumer was right all along,” said Progressive President and CEO Glenn Renwick. “For most, the rates they’re paying are higher than the risk they actually present, and in many cases, much higher.”

The report found that adding key driving behaviors such as actual miles driven, braking and time of day of driving can predict the likelihood of a claim far better than traditional rating variables alone.

“Actual driving behavior predicts a driver’s risk more than twice as strongly as any other factor,” said Renwick.

According to Richard Hutchinson, general manager for usage-based insurance at Progressive, “The name of the game is the quantity of data and the quality of analysis and insight.”

The Trucker staff can be reached to comment on this article at editor@thetrucker.com.

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