(Bloomberg) — Progressive Corp., the fourth-largest U.S. auto insurer, said it will begin increasing rates for some risky customers who participate in a program that allows the company to electronically monitor driving habits.
The decision to lift premiums is a shift for Mayfield Village, Ohio-based Progressive, which previously highlighted how customers can agree to a rate and then win discounts for safe behavior. Its Snapshot program rewards customers who drive fewer miles, avoid hard braking and minimize travel from midnight to 4 a.m., according to the company's website.
"In our new program that we just began to roll out, we are affording more customers discounts for their good driving behavior while for the first time, increasing rates for a small number of drivers whose driving behavior justifies such rates," the company said in its annual report this month.
Chief Executive Officer Glenn Renwick has said Snapshot could help the company encourage safer behavior and retain the most valuable customers. He has lamented the reluctance of some potential customers to sign up for the offering. That unease could increase under the new strategy, according to Jonathan Adams and Jamie Dranoff of Bloomberg Intelligence.
"This is a key policy shift," they wrote in a report Tuesday. "The decision to raise prices for some bad drivers may discourage customer acceptance of Snapshot, whose sales grew 28% in 2014."
The program will apply to new customers and is being tested in Missouri, Amanda Lupica, a spokeswoman for Progressive, said in a phone interview. It is likely to roll out in additional states in May or June, she said.
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