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Allstate Crowdsources to Test Usage-Based Insurance Product

Allstate crowdsources to test usage-based insurance product; employee, agency owner testing of Drive Wise product will provide telematics feedback about driving habits.

Allstate is bringing together two hot tech trends --crowdsourcing and usage-based insurance -- to drive growth. The Northbrook, Ill-based insurance company plans to use the crowdsourcing technique to put its usage-based insurance product, Drive Wise, in the hands of employees and agency owners around the U.S. This will help the company identify opportunities to continue enhancing the device as the company looks to expand its telematics footprint.

Drive Wise is available in Illinois, Ohio and Arizona, and Allstate plans to roll it out to additional states in 2012. The upcoming crowdsourcing effort aims to get the device used by a large group of real consumers, according to the company. Previous internal testing has given Allstate more than 11 million miles and 350,000 hours of driving data to help identify the safer driving habits that can earn participating customers driving discounts on their auto insurance.

[Read more about the growth prospects for telematics-powered auto insurance.]

"Our early experience with Drive Wise indicates telematics technology has the potential to save lives, reduce injuries and save millions of dollars in property damage each year," said Bob Otis, SVP of Allstate's auto product operations, in a press release. "Launching this crowdsourcing test of our unique, usage-based insurance device, will help us create a better product for our customers, while encouraging our employees and agency owners to examine and improve their own driving habits."

For example, internal data for the usage-based insurance product has shown dramatic changes in driving behavior by employees. For example, only 25 percent of drivers in the initial group of testers scored in the ideal "safe zone," but over the course of the test, that figure rose to 75 percent.

[Find out how Allstate's EVP of technology and operations, Suren Gupta, is driving innovation at the company.]

Employing advanced telematics technology, Drive Wise uses the OBD-II port, the diagnostic port found under the dashboard on most cars after the 1996 model year, to track driving behavior. Drive Wise participants can plug in the small, wireless telematics device, and then go online to learn about their driving habits to see what they can do to become safer drivers. The web portal also displays the potential performance discount a customer may be eligible for based on their driving habits.

During the first policy term of using the telematics device, participating customers are rewarded with a 10 percent discount through Allstate's Drive Wise program. Driving discounts in subsequent policy terms shift to a performance rating approach, where customers' driving behavior and total mileage driven determine the savings. Rates will not go up based on driving scores, but savings of up to 30 percent can be earned by drivers with the safest driving scores and lowest mileage.

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio

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