Allstate Insurance Launches ‘Drive Wise’ Test in Illinois

Published February 21, 2011

If your own safety and security aren’t reason enough to drive cautiously, Allstate Insurance is hoping money may entice drivers to slow down and drive less.

The insurance company is offering discounts to drivers who voluntarily install devices in their cars to record certain driving habits. Called Drive Wise, the pilot program is being unveiled in Illinois and could expand to other states depending on how well it is received, says Allstate spokesperson Christina Loznicka.

Illinois drivers who enroll in the program and plug the small device into their cars receive an automatic 10 percent discount on their coverage. Based on a performance rating calculated from data about driving habits, users are eligible for discounts of up to 30 percent. Drive Wise will not increase rates for drivers who use it.

Allstate looks at five factors when determining the performance rating. Extreme or hard breaking or accelerations will hurt the score, as will driving over 80 mph. The fewer miles you drive the better, and driving during certain times of the day can be beneficial.  Driving late at night or early in the morning, for example, could have a negative impact.

Privacy Concerns
Jim Fish, executive director of the National Association of Professional Allstate Agents, says on the surface Drive Wise looks like a good option for consumers, but he worries about what could happen after the initial pilot program. He says Allstate and the other insurance companies offering similar programs could begin using more controls to monitor drivers that some people may feel violate their right to privacy.

“It wouldn’t surprise me if they would eventually be able to see if people are driving while impaired,” he says.
Monitoring drunken driving or other potentially dangerous habits could be a positive step to safer roads, but Fish questions whether insurance companies should play the role of safety and legal expert or should instead leave that to legislators and law enforcement officers.
Joel Ohman, a certified financial planner and founder of the Web site, has similar misgivings about the program.

Temptation to Encroach
“One negative to behavior-based auto insurance is that as car insurance companies see success tracking what might be less intrusive minor habits, then they may be tempted to push the line further and further in the future and encroach upon one’s privacy and track additional things,” says Ohman.

For example, he says, it’s not difficult to envision a future where devices monitor whether someone is talking on their cell phone or texting, or whether or not both hands are on the wheel at all times.

Not a Tracker
Allstate spokesperson Loznicka says consumers should not be concerned about their privacy. She says the device does not act as a GPS to monitor where people go and will only record the five factors that determine the performance rating.

Both Fish and Ohman believe the best candidates for Drive Wise are those who are responsible and conscientious drivers and don’t mind being monitored every minute of the day.

“Because the people that are very good drivers, they are looking for lower rates and don’t mind being monitored, simply because they don’t do anything wrong,” Fish says.

Drivers who rack up fewer miles than the average person are also good candidates, he adds.

Other insurance companies have programs similar to Allstate’s Drive Wise, although they tend to monitor fewer driving habits. Progressive’s Snapshot is offered in 25 states and monitors how many miles a consumer drives, the time of day they drive, and how often they make sudden stops. State Farm Insurance offers its customers discounts based on the number of miles driven, through a program called Drive Safe & Save. Users average 5 percent savings on their premiums.

Kristi Eaton ([email protected]) writes from Tulsa, Oklahoma.