Usage Based Insurance How? Hard braking, fast acceleration How much? Mileage When? Day or night Where? We do not measure. No GPS Driving data is integrated with traditional rating factors Claims history Vehicle make and model Financial stability Demographics The concept is to determine a customized insurance rate based on actual data from the vehicle.

Usage Based Insurance – Why do it? 1. It changes the way insurance is priced. 1. Introduces empowerment, gives customers more control over their insurance cost 2. Introduces behavior modification, potential to improve driving habits due to financal incentive. 2. It’s more fair: ties pricing to true exposure 1. Directly tied to individual driving behavior 2. Those who drive less, pay less 3. Those who drive more safely, benefit 4. Opportunity for customers to prove they perform better than the average person in categories we place them in (youthful operators, single, etc.) 3. It further differentiates our product and services and gives consumers choice. 4. It has the potential to reduce negative externalities, e.g., accidents, congestion and emissions

Who benefits? Personalized - those who seek control over their insurance costs Low Mileage - those who drive less, use public transportation Vehicles > Drivers – those who own an extra car Safe Drivers – those who demonstrate safe driving behavior Parents of teens - those who want knowledge for teaching young drivers to be safer behind the wheel Greens - those concerned about climate change or traffic congestion

How Does It Work

Telematics

On-line Reports

2009 MyRate Roll Out As of September 2009 Agency + Direct Direct channel Agency channel

9 DOI and Legislative speaking points 1.Customer signs up for MyRate program – optional; participation discount 2.Simple, easy process: customer self-installs device; wireless transmission of data 3.Transparency: customer views trip history and detailed driving reports online - Including the projected discount for their next policy term 4.Opportunity for significant discounts: at renewal, the rating factor is calculated based on trailing 6 months of data.  Maximum discount amount is 30%  65% of policies receive a discount 5.My Rate classification levels, rating factors and actuarial support for our rating factors. 6.Societal benefits are reduced driving and safer driving which translates to less accidents, less GHG emissions, and reduced road congestion.