Progressive Corp. said its technology that tracks driver behavior to set insurance rates will help the company adapt as automated cars take the road.

The auto insurer offers a device called Snapshot, which plugs into a vehicle and monitors habits to calculate discounts for customers. As cars become more automated, the technology could be used by underwriters to design policies, Chief Executive Officer Glenn Renwick said Thursday.

“It gives us some very direct insight to the vehicle,” he said during a conference call. “That gives us opportunities to think about things differently, what might be insurable.”

Cars that allow motorists to read emails or watch a video while being ferried to their destination are still years away from widespread adoption. Still, automakers including General Motors Co. and Daimler AG are starting to roll out systems that take over the wheel in some instances. Nissan Motor Co. plans to bring affordable, fully autonomous vehicles to market by 2020.

Such developments could challenge auto insurers’ business, much the way that digital photography and video transformed the film-camera industry, Renwick said. Automating driving can reduce the risk of human error, which is currently the main cause of car accidents, he said.

Auto insurance will have “more to do with information that comes from the car than the classical segmentation with regard to characteristics of the driver,” Renwick said.

Prior to Snapshot, Progressive was a pioneer in using metrics such as credit scores to determine rates. The practice is now used widely in the industry. The auto insurer said in April that the monitoring device had helped it log more than six billion miles (10 billion kilometers) of driving data.

State Regulation

In the U.S., the federal government oversees vehicle safety and each state regulates insurance and licenses motorists. Insurers and state authorities will have to decide how to assign liability and responsibility for an accident if a machine rather than a person is driving.

Those impediments could delay adoption. Still, the pace of change isn’t keeping Progressive from thinking about opportunities, Renwick said.

“We’ll just continue to refine estimates over time,” he said. “But along with those estimates, we’ll also be starting to ask, ‘What does an insurer look like in the future?'”

Progressive climbed 0.2 percent to $27.12 at 10:54 a.m. in New York. The company has rallied 29 percent this year, beating the 25 percent advance of the Standard & Poor’s 500 Index.
(Editors: Dan Kraut, Pierre Paulden)