Progressive CEO Glenn Renwick had some tepid comments regarding its Snapshot usage-based insurance program on the company's financial results call this week.
According to Bloomberg, Renwick said that 40% of its Snapshot prospects say "no way in hell" would they adopt the program. Privacy concerns are the biggest cited concern, Renwick said.
Selling Snapshot has been “a bigger burden” than many in the company would have assumed given that it can lower customers’ rates, he said. “Intellectually, I kind of go ‘Why wouldn’t 100 percent of people take this option?’”
But insurance customers aren't thinking just intellectually. There's been plenty of downward pressure on auto insurance prices in recent years anyway — and revelations about the federal PRISM program have thrust privacy into the spotlight. That was always going to be a big hurdle to jump for insurers who want to get more insurers on usage-based programs — but it can't be any easier now.
As Bloomberg notes, Progressive has tried to make the case about poor drivers subsidizing good ones with its Rate Suckers campaign — but overall marketing performance has been "short of a breakout," Renwick said. The percentage of direct-channel policyholders who have tested Snapshot has risen about 15% in the past two years.
“We’re body-punching here,” Renwick said in the call, according to Bloomberg. “We’re trying to find the message that actually moves the needle. I think we now understand how significant a burden it is to try to educate consumers to do something that was not the natural buying or engagement process.”
Another interesting note from the article is that Warren Buffet has not indicated any interest in UBI or telematics from GEICO's perspective. Considering GEICO's market share, advertising reach, and pricing strategy — and taking into account Buffet's business acumen — should insurers pause before diving headfirst into telematics? That's something to chew on this weekend.