A man installs the device that lets Progressive Insuran... A man installs the device that lets Progressive Insurance monitor his driving habits. (Progressive)
Insurance companies have used data to assess driving behavior for a couple of years now, and learned there are three key things motorists do that separate high-risk customers from safer ones.

In the past, insurance companies used data like age, gender, location and credit score to predict whether or not you'd be a safe driver, and to set your rates accordingly. Turns out, watching when and how you drive is a much better way to judge how risky you are behind the wheel.

And while some customers may see prices go up, others will see prices go down, some saving as much as 30 percent for safer behavior.

"Driving behavior is our most predictive value," said David Pratt, the general manager of usage-based insurance at Progressive. Insurance companies have built a huge bureaucracy figuring out risk based on age, location and gender. But, Pratt said, "the scores we have created from actual driving behavior are way more powerful. So this will be very disruptive for car insurance companies."

And what are those behaviors that give insurance companies a peek into your future? How often you drive at night, how far you drive, and how hard you brake.

As cars become more connected and data becomes available, insurance companies can now make those determinations. In turn, they can offer steep discounts to safer drivers. Since the inception of its Snapshot program in 2010, Progressive Insurance has collected roughly 1.1 trillion one-second records from 8 billion car trips made by 1.6 million members.

Progressive isn't the only company turning toward what the industry calls usage-based insurance, or pay-how-you-drive insurance. Allstate offers a program called Drive Wise that measures data that includes mileage and braking, and then calculates a discount using the car's telematics system. Liberty Mutual offers a similar system and discount.

Progressive reviews the data every six months, but motorists don't need to wait that long to learn about their performance. A device installed in the car beeps when it counts a hard brake. Over time, that warning can help shape driver behavior.

Data shows a learning period of about two to three weeks, in which drivers realize how often their hitting the brakes hard, and then they change their behavior.

"And that is powerful," Pratt said, while speaking at a conference on emerging trends in connected-car technology. "Those people are having fewer accidents. We are saving accidents. We'd love to find ways to be more helpful like that."

Pratt thinks one of the keys going forward will be to ensure customers receive incentives for good behavior rather than penalizing them for bad behavior. Some interesting findings in the data Progressive has pulled from its recorders show other areas how this data can one day help drivers, although the company is still searching for ways to utilize it

For example, looking at 9.8 million car trips covering 63 million miles, Progressive says the average car idles for 26 percent of the time it is on the road.

Privacy concerns resonate with many customers across all the insurance industry programs. So participation in Snapshot, which is currently available in 44 states, is voluntary. Those who enroll, which has increased from about 20 percent to one-third of clients this year, receive a driver-installed device in the mail. The device does not track location.

Sometime soon, Progressive may not need such devices. Automakers like Tesla are already sending wireless software updates to cars. And when self-driving cars become mainstream, driver behavior will be irrelevant.

Pratt thinks that moment is still 20 years away. For now, he says 15 percent of the company's revenue is coming from Snapshot clients and discounted policies based on data remains a lynchpin in the emerging business model.

"Our strategy is not to change our margins," he said. "If we can attract better drivers, or if our competitors lose their good drivers and are stuck with their bad ones, they're in tough shape."

Pete Bigelow is an associate editor at AOL Autos. He can be reached via email at peter.bigelow@teamaol.com and followed on Twitter @PeterCBigelow.

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