63% of Drivers Don’t Know They Pay Higher Rates to Subsidize Bad Drivers

April 9, 2013

Progressive Insurance recently surveyed 500 consumers about their knowledge of auto insurance pricing and found 63 percent of respondents didn’t know that the bad driving of others affected their car insurance rates.

The survey also found:

  • Men were less likely than women to think bad drivers affect everyone’s rates;
  • At 30 percent, young consumers (ages 18-34) had the lowest awareness of any age group;
  • 89 percent of respondents said they would be upset if they found out they’re paying more to offset the costs of underpriced drivers.

Progressive conducted the survey in conjunction with its new, national marketing campaign, where “Rate Suckers” jump and attach themselves to passing cars.

“A Rate Sucker is simply an over-the-top manifestation of an underpriced driver and can be anybody—your mom, the guy next door, the waiter at your favorite restaurant,” said Jeff Charney, Progressive’s chief marketing officer. “We all probably know somebody we’re subsidizing. Snapshot helps solve that problem; showing consumers that their good driving can reduce the impact other drivers have on their rate. This campaign is our line in the sand to the industry and a wakeup call to consumers.”

Insurance companies commonly price consumers by comparing them to drivers with whom they share basic characteristics, like age, gender, or vehicle year, make and model. These factors do not directly reflect individual driving habits, but until Snapshot, there wasn’t a simple, reliable way to include how a driver actually drives when calculating a customer’s rate. The result: Rate Suckers paying less than the risk they present, and good drivers paying more to cover the costs.

Progressive introduced Snapshot to give drivers a way to save more by showing they drive safely. Snapshot measures the number of times a driver brakes hard, the time of day and the number of miles they drive. With more than 6 billion miles of driving data, Progressive has found that adding these key driving behaviors predict the likelihood of a claim far better than traditional insurance rating variables alone, enabling Progressive to provide larger discounts, averaging $150 annually, to lower-risk drivers.

“It seems obvious, but the best indicator of someone’s likelihood to get into an accident is their actual driving behavior,” said Dave Pratt, general manager of usage-based insurance at Progressive. “Having that information helps us provide a more personalized rate that gives people who drive safely the discounts they deserve. Not surprisingly, most customers who try Snapshot save money, are happier, and stay with us longer.”

To view the Rate Suckers TV ad, directed by Zombieland’s Ruben Fleischer, visit http://youtu.be/vM6-12aprf8.

Source: Progressive Insurance

Was this article valuable?

Here are more articles you may enjoy.