In this article we will take a look at all the biggest insurance companies and how they are using telematics devices in order to help them underwrite more custom tailored policies. We will take a look at State Farm, Allstate, and Progressive’s strategies for implementing telematics in their insurance policies. Generally, insurance companies implement telematics in one of two ways. Either a device is installed into your vehicle which reports important statistics back to your insurer every time the car is started or companies offer a phone app which when turned on will report GPS data back to the companies.
Progressive offers the Snapshot which is probably the coolest looking device out of the lot. It’s a small rounded grey device that has blue led stripes on the side and looks a lot like an oversized USB stick. The device works by plugging rite into your car’s OBD-II port. If you’re not familiar with this port it’s the port that mechanics plug their error code reader when you get a check engine light. This port lets whatever connects to it read the cars onboard computers. Usually the cars OBD-II port is located under the steering wheel. Once the device is plugged in you will probably forget all about it. This is a pretty simple and seamless way of implementing a telematics device into the car.
Allstate offers the Drivewise device. This works exactly like Progressive’s Snapshot. The only difference between the two devices is that the Drivewise is incredibly ugly to look at. The device is made out of clear sky blue plastic exposing the electronic board of the device. There are no LEDS included on the device and the enclosure is very rigid and rectangular. It looks like an ugly oversized USB stick and not something you want people noticing in your car. The device plugs right into the OBD-II port, the same way as the Progressive Snapshot.
State Farm offers a different way of implementing telematics. State Farm doesn’t offer a device that plugs into the cars OBD-II port like Progressive and Allstate, instead the company offers a smartphone app. Once you download and install the State Farm Telematics app all you have to do is open up the app when you start driving your car. Every time you have the app open while you’re driving the app with gather important information that State Farm finds useful. After enough data is gathered it is then crunched and you are provided a driving score based on hundreds of different factors. The better your score the more your insurance will be discounted.
GEICO has the most unique telematics strategy of all the insurance companies. GEICO is not offering telematics at all! Telematics is a new technology that has just started to be adopted by mainstream consumers. Although the technology seems promising, it hasn’t stood the test of time in the consumer car insurance industry. GEICO is taking a late adopted strategy and feeling out how consumers feel about this technology and how they are using it before they decide how they will approach the market. Sometimes it’s not about being the first to market, but being the one that eventually provides the best solution.