The last thing an insurance company wants to see is a customer -- especially a business customer with multiple vehicles -- going to the competition because of better pricing. At the same time, insurers can't offer everyone a deep discount, because that would put them out of business in short order.

State Farm Mutual Automobile Insurance Company recently made the headlines when it decided to use its own vehicle safety ratings to discount premiums for personal injury protection. Vehicles deemed by State Farm to be safe received more favorable rates.

Progressive Casualty Insurance Group Company is currently testing a more radical approach in Texas. Global positioning satellites (GPS) track where, when, and how far policyholders drive, then send that information to Progressive, which bills customers accordingly.

Drivers who do more nighttime traveling, for example, pay more than morning drivers. Urban drivers pay more than drivers in rural areas do. At stake for consumers -- and ultimately for businesses that operate company fleets -- is one of the biggest bills they must cope with.

State Farm Adjusts Premiums

Premiums have traditionally been calculated taking into account vehicle age, manufacturer and value; driver's age, gender, marital status, place of residence and driving record; and when, where and how much the vehicle is driven.

State Farm adjusted its premiums by launching its new vehicle safety program Jan. 1 in 44 states. Discounts of up to 40 percent are offered on the personal injury portion of insurance premiums, which represents about 15 to 20 percent of the bill.

Texas Program Measures Usage

In 1999 Progressive, based in Mayfield Village, Ohio, rolled out in Texas a pilot program that bills customers on when and how often a vehicle is driven. The Autograph product uses GPS to track vehicle use.

While Progressive has stopped taking new customers for the Autograph program and has no current plans to offer it in other states, the company hopes to make it widely available in the future after more cars are equipped with tracking units and Progressive links Autograph's data collection system with its claims system.

Privacy a Concern

Privacy is a nagging concern for Progressive; some consumers and businesses might be leery of having their whereabouts tracked, even if it means saving money.

Progressive says it doesn't and wouldn't sell its customers' data, and since the information is recorded in intervals instead of minute by minute, it would be difficult to track precisely where a vehicle has been.

Better Fleet Rates Down the Road?

What this could mean to you is substantial future savings on insurance coverage for your fleet. Progressive says that almost all of its Autograph participants saved at least 5% on their insurance. Some individual customers have reported savings in the 30% range.

Stay tuned.