Progressive Corp., the fourth-largest U.S. auto insurer, said it will begin increasing rates for some risky customers who participate in a program that allows the company to electronically monitor driving habits.

The decision to lift premiums is a shift for Mayfield Village, Ohio-based Progressive, which previously highlighted how customers can agree to a rate and then win discounts for safe behavior. Its Snapshot program rewards customers who drive fewer miles, avoid hard braking and minimize travel from midnight to 4 a.m., according to the company’s website.

Progressive’s Annual Report includes the following discussion:

In recent years, we have employed a “discount only” model for usage-based rating. This approach has not maximized the full segmentation power of Snapshot, but it has facilitated consumer adoption. In our latest model, introduced in one state in December of 2014, we are taking a significant step by affording more customers discounts for their good driving behavior, while offsetting with surcharges for a small segment of drivers whose driving behavior is clearly indicative of such rates. We’re also offering a Snapshot enrollment discount that varies at the customer segment level—higher for more preferred drivers. We are excited by the competitive benefits and growth potential we foresee.

In its annual report this month, the insurer said that a new program that began rolling out recently affords more customers discounts for their good driving behavior while for the first time, increasing rates for a small number of drivers whose driving behavior justifies such rates.

Chief Executive Officer Glenn Renwick has said Snapshot could help the company encourage safer behavior and retain the most valuable customers. He has lamented the reluctance of some potential customers to sign up for the offering. That unease could increase under the new strategy, according to Jonathan Adams and Jamie Dranoff of Bloomberg Intelligence.

“This is a key policy shift,” they wrote in a report last Tuesday. “The decision to raise prices for some bad drivers may discourage customer acceptance of Snapshot, whose sales grew 28 percent in 2014.”

The program will apply to new customers and is being tested in Missouri, Amanda Lupica, a spokeswoman for Progressive, said in a phone interview. It is likely to roll out in additional states in May or June, she said.

‘Immediate Benefit’

The insurer is switching to offer immediate discounts to new Snapshot customers, instead of having them wait 30 days, David Pratt, general manager for the program, said in an interview. After a year, he expects most people will retain the discount or get a better rate. About 20 percent might pay more, he said.

“The hope is that the immediate benefit will encourage people to sign up,” he said.

Related Carrier Management article:

During a fourth-quarter earnings call, Progressive executives also discussed aggregator websites for personal auto insurance (like Google Compare), Progressive’s alliance with homeowners insurance provider American Strategic Insurance, and strategies for growing in the agency channel.

See related article, Progressive CEO Tackles Aggregator Question in Advance of Google Launch Analyst.