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Will better data help accelerate these auto insurance stocks?

By Ben Levine for Kapitall.

For a few years now, auto insurer Progressive ( PGR ) has offered a service called " Snapshot ," giving customers use of a technology that plugs into their cars and records driving data in exchange for premium reductions. The data recorded includes miles driven, times of day while driving, driving speed, and braking.

After gathering enormous amounts of data, insurers believe they will have more reliable predictors for driver safety, and hence better premium designations.

Even if he were the most timid driver on the planet, a 17-year-old in a Ferrari is almost certain to get an exorbitant insurance rate quote. Better driving data would make the process more nuanced, and hence more competitive.

Some say that before long insurance telematics will be standard ; however, at present time the option is user-selected. With this optional service, safe drivers are more likely to sign up than dangerous drivers, since they stand to earn greater premium reductions. What's more, knowing that a Big Brother of insurance is watching, drivers are almost certain to drive more safely, whether consciously or not.

Because Progressive isn't currently raising premiums when Snapshot records shoddy driving. The obvious conclusion? Snapshot constitutes a relatively long-term investment in actionable information down the road, the groundwork of a Big Data initiative.

Do you think investing in telematics will be profitable for insurance companies in the long run? Take a look at the list below and let us know what you think in the comments.

Click on the interactive chart to view data over time.

1. The Allstate Corporation ( ALL , Earnings , Analysts , Financials ): Engages in the personal property and casualty insurance, life insurance, retirement, and investment products businesses primarily in the United States. Market cap at $25.38B most recent closing price at $58.47.

2. General Motors Company ( GM , Earnings , Analysts , Financials ): Operates as a global automaker. Market cap at $60.27B, most recent closing price at $37.95. Is the parent company of the OnStar Corporation and National General Insurance.

3. Mercury General Corporation ( MCY , Earnings , Analysts , Financials ): Engages in writing private passenger and commercial automobile insurance in the United States. Market cap at $2.55B, most recent closing price at $46.56.

4. Progressive Corp. ( PGR , Earnings , Analysts , Financials ): Provides personal and commercial automobile insurance, and other specialty property-casualty insurance products and related services primarily in the United States. Market cap at $14.90B, most recent closing price at $25.16.

(List compiled by Ben Levine. Monthly return data sourced from Zacks Investment Research. All other data sourced from finviz.)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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