as the program moved through.
FEATHERSTON: I would add to that that this program aligns well with the values of our organization. We’re a mutual insurance company, we’re owned by our customers. We feel like this program is designed to really meet the needs of our customers, those that have teen drivers at a risky time in their life.
MCDONALD: Mike, did you have a question or comment?
MICHAEL WISE: I think this is an awesome, really awesome use of technology to solve real issues that we face in our culture as well as in the insurance business. Just to piggyback onto Jamie’s question, I’m just curious if you can relate some of the objections, some of the barriers, some of the obstacles that you had to overcome as an insurance company. Were there security and confidentiality issues that you had to overcome? Were there compliance issues that you had to overcome? You know, the common things associated with the insurance business. Can you speak to that?
WESTRATE: Certainly one of the biggest challenges – and we still face it everyday – is the reluctance of parents to enroll in the program. A lot of parents seem to think that, yes, teenage drivers really have an issue and a lot of them don’t drive very well but that’s not my kid and we just don’t need the program. Some parents are so busy they don’t want to invest the time and there are those parents that think this has kind of a “big brother” aspect to it, a feel, and so we just try to counter those notions through education and talking to parents about the program. Some parents just leap at this opportunity. Other parents have to work through these issues a bit.
WISE: My question is more related to, not so much your marketing barriers and obstacles with your audience, but more your internal insurance company barriers and obstacles.
FEATHERSTON: I would say one of the first barriers that we still are assessing on an ongoing basis is the cost of the program. This program is not inexpensive. The recording device has a retail price of approximately $900. Although we do receive a discount because of our purchase volume, we certainly want to see costs savings in other ways. We also had the expenditure of creating a custom software program to take that program to those customers at that Web-based application. Another issue that we faced along the way was we did have some compliance issues. At one point, in the state of Iowa, there were concerns about whether this program represented a ‘rebate’ to customers because it wasn’t contractually provided. They had some other issues going on in the state where they issued a few bulletins trying to restate their position on rebates. At this point we actually are restarting our program. We had put it on hold for a couple of months while they worked through what their bulletin would look like in the end. This program does now safely fall under their requirements as a loss control program.
That’s really one of the goals here. We want to save teens’ lives. The assumption is that this risky driving behavior that we can see going down, under this program, relates to claim costs. Unfortunately it takes quite a few claims to be able to, with any confidence, draw that conclusion that claim costs are correlated with risky driving behavior.
MCDONALD: Thank you. Paul has a question as well.
TINNIRELLO: Rick, very nice presentation. My question focuses a little bit more on the technology, in particular, about the device that is installed in each of the vehicles. In particular, how is the calibration done? Assuming that you have many, many people participating, based on different driving patterns I assume that the calibration is very sensitive, as indicated in your presentation. Is it either too sensitive or not sensitive enough, and how often does it need to be adjusted? And do you have any plans with further improving the calibration to make the feedback