Take that, Geico caveman: MetroMile remakes car insurance with data


Ever wonder why insurance companies have the most ridiculous ads (Geico caveman, Aflac duck, Mayhem Allstate guy)? It’s because they’re all basically offering the exact same service, so they have to out-guffaw each other to claw off each others’ customers. But a new startup called MetroMile, is launching on Wednesday in Oregon with a new type of insurance that uses driving data to charge customers per-mile rates.

The company and idea were created by David Friedberg — also the founder and CEO of The Climate Corporation — and Steve Pretre, who will lead the startup as its CEO. Friedberg brought in Climate Corp’s investors (as well as Climate Corp itself) to back MetroMile, and the company has already raised $4 million from NEA, Index Ventures, First Round Capital, and SV Angel, in addition to Climate Corp.


Customers using MetroMile’s new service — which is only available in Oregon because it needs state approval — place a device called the Metronome into their car’s onboard diagnostic car port, called the OBD-II. You might have never noticed it, but the OBD-II is standard port on all cars built after 1996, and has to be accessible in the front dashboard within three feet of the driver. The port is one of the ways that car data is being unlocked for third party developers (see my GigaOM Pro report, subscription required).

After the Metronome is plugged in, it accesses all the car computer’s data, and specifically collects (for this initial product) information about how much the customer is driving. The cellular connection in the Metronome enables MetroMile to process the data in the cloud, and the Metronome also has GPS to track distance. I was wondering if a cell phone app would have the brains to do this just as easily (and clearly more cheaply), and Friedberg told me in an interview that they need the data to be collected by a device to avoid fraud and ensure accountability.

MetroMileOnce MetroMile has the driving data, it can charge its customer only for how much — or how little — they’ve driven per month. Drivers who only occasionally use their car — say for weekend trips — would pay much lower rates than a person who commutes in their car an hour every day, each way.

While the idea sounds boringly simple, it’s meant to target a specific set of drivers that doesn’t drive all that much and who for years have been subsidizing those drivers that do drive a lot through traditional car insurance programs. Most of the accidents are done by drivers that drive a lot, says Friedberg. This new type of low mileage demographic tends to be young, urban, environmentally conscious, and maybe even a member of car sharing groups like Zipcar.

That target demographic is alive and well in MetroMile’s initial city, Portland, where the dream of the 90’s are also alive, and everything has a bird on it. MetroMile said it can offer this type of driver insurance for 20 to 50 percent less cost than traditional insurance, with equal or even superior coverage. Friedberg told me that MetroMile has discussed its insurance products with car sharing companies, but that the company is really targeting car owners, as car sharing drivers are still a small slice of the population.

MetroMile also shows the customer their driving data through an online dashboard. Down the road, MetroMile could offer other types of services using car data. I could envision a service that gives recommendations for how to cut down on driving (to save fuel costs), in the same way that Opower provides recommendations for lowering energy consumption.

In that way, MetroMile, like the Climate Corporation, could have a planet-friendly slant. Once car drivers know more data about their own driving habits, their likely inclined to drive their car more efficiently.

The traditional insurance companies are also looking at using devices and data to create new products, and the New York Times had an interesting article on this trend this weekend. Friedberg says that standard insurance companies won’t readily accept pay-per-mile insurance rates because then they would be forced to raise rates on the drivers that drive a lot more, to cover the lower mileage drivers; drivers that face higher rates then would just defect to competitors, said Friedberg. Car drivers are also wary of what types of data the car insurance companies are collecting with these new devices, and also how the insurance companies would use such data.

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