#GoBlue Wheaton College

The Problem: Cellphones Distract

Drivers

Any Type of Cellphone Use o Causes 28% of all traffic accidents

o Increases crash risk at least fourfold

People who Text and Drive

o Up to 23 times more likely to crash

o 35% reduction in reaction time

Prevalence o 73% talk on cellphones in car

o 26% text and drive

Solution: End Cellphone

Distraction with #GoBlue

Develop a Road-Safety Smartphone App

Promote Driving Safety

Reduce Auto Claims

Protect Allstate Family

Create Incentive Program

Maximize Program

Effectiveness

The #GoBlue App

#GoBlue o Locks phone function

o Collects texts

o Synced with Bluetooth

Accrual Requirements o Physically enabled

o Smartphone and Bluetooth synced

o Car in motion

Mileage Reimbursement o Allstate customers get premium reimbursement for #GoBlue use

Similar Technology

Other Apps on the Market: o DriveMode (AT&T)

o Text’n’Drive (iTunes)

o iZup (Illume Software)

o Drive First (Sprint)

o Otter (One Touch Text Response)

o DriveSafely

o Textecution

o Safe Driver Pro

Customer Scenario

Daniel

Age: 28

Miles per Year: 12,000

Car: 2010 Chevy Cobalt

Yearly Premium: $3,312

Usage Discount Table

% Use of GoBlue

App

% Discount

Received

Daniel's Annual

Savings

20% 1.1% $40

40% 2.2% $75

60% 3.3% $110

80% 4.4% $150

Potential for Saving Dollars

Complete Elimination = Not Possible

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Potential Savings

CompleteElimination

CellphoneRelated Claims

Losses from cellphone related claims: $3.2 billion/year

Program Cost Example: Illinois

#GoBlue is practical

o 2010 in Illinois: Cellphone

distraction claims cost

Allstate $124.5 million

o #GoBlue use can reduce

cellphone distraction

claims

Illinois: Cellphone Distraction Cost

CellphoneDistraction:124.5M

Other ClaimsCosts:320.5M

If 10% of Illinois uses #GoBlue

Mileage

Percentage:

Claims

Savings:

Reimbursement

Cost:

Net Allstate

Savings:

Estimated

Investment

Value (5 yrs):

20%

$1.3M

$700K

$550K $685K

40%

$2.5M

$1.4M

$1.1M $1.4M

60%

$3.8M

$2.1M

$1.7M $2.1M

If 30% of Illinois uses #GoBlue

Mileage

Percentage:

Claims

Savings:

Reimbursement

Cost:

Net Allstate

Savings: Estimated

Investment

Value (5 yrs):

20% $3.8M $2.1M $1.7M $2.1M

40% $7.5M $4.2M $3.3M $4.1M

60% $11.2M $6.3M $5.0M $6.2M

If 50% of Illinois uses #GoBlue

Mileage

Percentage:

Claims

Savings:

Reimbursement

Cost:

Net Allstate

Savings:

Estimated

Investment

Value (5 yrs):

20% $6.2M $3.5M $2.7M $3.4M

40% $12.5M $7.0M $5.5M $6.9M

60% $18.7M $10.6M $8.1M $10.1M

Final Implementation

+

Discount on Bluetooth Devices Promote Jawbone with Allstate

customers

Provide support and education Run #GoBlue Ad Campaign with

Jawbone products

Pioneering Safety

1967 • Worked with government to initiate widespread seatbelt use

1970 • Began anti drunk-driving campaign

2006 • Facilitated a student initiated “Keep the Drive” Campaign

2009 • Introduced “X the Text” Campaign

2013 • Revolutionize hands-free driving with #GoBlue app

There is No Alternative

Implement #GoBlue

Lead industry into new era of safe driving

"I tend to think about customers not in economic terms as to how much can we make off them, but as to how do we fully meet their needs and capabilities and how do we differentiate ourselves so we keep winning them." -- Thomas Wilson, President and CEO of Allstate

Appendix

Slide 2: Cellphones Distract Drivers 1. The National Safety Council

http://www.nsc.org/Pages/NSCestimates16millioncrashescausedbydriversusingcellphonesandtexting.aspx

2. Monash University

http://www.distraction.gov/content/get-the-facts/facts-and-statistics.html

3. Virginia Tech Transportation Institute http://www.distraction.gov/content/get-the-facts/facts-and-statistics.html

4. Transport Research Laboratory of England

http://www2.potsdam.edu/hansondj/DrivingIssues/20081008102118.html

5. Nationwide Mutual Insurance Co. (Survey) http://www.edgarsnyder.com/car-accident/cell-phone/cell-phone-

statistics.html

Slide 22: National Legislation Trend 1. This image was taken from the D'Amore Law Group's page and was originally produced by the IIHS,

http://www.personalinjurylawupdate.com/damorelaw/page/2/

o The green states are 100% hands free states and are primary enforcement laws, meaning that the driver

can be pulled over by an officer simply for cellphone use without a hands free device. States in blue are

secondary enforcement states, meaning that the driver must commit some sort of violation first, but then

the officer may additionally enforce the cellphone ban upon pulling a driver over

Appendix

Slide 3: End Cellphone Distraction 1. Our full thesis, "Thesis: Allstate should develop a road-safety smartphone app to reduce frequency and severity of

Allstate auto insurance claims. This app used in conjunction with a premium reimbursement incentive program will

precipitate widespread driving safety improvements within the Allstate Auto insurance customer base."

Slide 4: The #GoBlue App

Slide 5: Similar Technology 1. All information from our presentation was taken directly from AT&T's DriveMode website, which can be accessed

here, http://www.att.com/gen/press-room?pid=2964

Slide 6: Customer Scenario 1. Policy Estimate obtained using quote calculator found on Allstate.com

2. Mileage Estimate derived from USDOT Federal Highway Administration

http://www.fhwa.dot.gov/ohim/onh00/bar8.htm

Appendix

Slide 7: Usage Discount Table #GoBlue Mileage discount calculated based on comparisons with DriveWise and Allstate Good Driver discounts.

Discount Percentage = Percent Use/18. Ex. 60% use divided by 18 = 3.3% x $3846 (yearly premium) = $128.00.

Slide 8: Potential Savings 1. 3.2B in yearly losses for Allstate due to cell phones calculated based on 11.4B (total claims expenses) multiplied by

0.28 (percentage of claims derived from cell phone distraction) = 3.2B

2. Elimination of Cell phones Saves at least 2.4B for Allstate: This very conservative estimate takes into account a

certain percentage of accident claims derived from cell phone use (0.8B) which would have happened regardless

of cell phone use. This is a generous allowance for error. The #GoBlue program is based on the approximation

that #GoBlue App use will reduce cell phone users’ crash risk by 50%. This also is a conservative estimate.

Slide 9: Program Cost in IL The figure 124.5M is derived from an extrapolation of Allstate’s national financial statement data for 2011. Nationally in

2011 premium and expenses were 16.5B and 11.4B respectively. Based on this ratio and the fact that Allstate

premium written in the State of Illinois for 2010 was 638M, the figure 444.5M was utilized as an approximation of

Illinois claims expenses for Allstate. Subsequently, 2010 Illinois claims as a result of cell phone distraction were

calculated: 444.5 x 0.28 = 124.5

Slides 10-12 and 25-26: Allstate

Claims Savings

1. Illinois 2010 Aggregate Calculations

A. Claims Savings Estimate:

- Claims Costs = 444.6M

- Cellphones: cause 28% of accident claims: (444.6)(0.28) = 124.5M

- Drivers are 4x as dangerous with cellphone use, #GoBlue makes drivers (at

least) 50% safer – this is the factor of increased safety.

B. Claims Savings Based on #GoBlue Use:

- (a.Cellphone claims value)(b.%Use in Population)(c.Avg Mileage

Usage%)(d.Factor of increased safety from App use) =

Allstate Savings in Avoided distracted driving claims

- (a.124.5) (b.0.3) (c.0.4) (d.0.5) = 7.5 Million in Allstate Savings given 30% of

Illinois Customer base enrolled in #GoBlue and given that 30% using #GoBlue for

40% of total driving miles on average.

C. If 30% of Illinois Allstate Customers use #GoBlue for 40% of miles driven,

Allstate saves 7.5 Million in avoided claims from distracted driving.

Slides 10-12 and 25-26: Allstate's

Reimbursement Costs 2. Illinois Aggregate Calculations:

A. Reimbursement Cost of #GoBlue

- Premium Written in 2010: 638M

- #GoBlue Cost = (%Illinois Use within population)(2010 Premium written)= #GoBlue users' Premium Total

- (AverageMileageUsage% / 18) = % Discount for GoBlue Users in Population

- (a.%Discount for #GoBlue Users in Population)(b.#GoBlue users' Premium Total) = Cost of

Implementation given 30% population use and 40% of miles driven by population with #GoBlue App

engaged.

B. #GoBlue Users' Premium Reimbursement Total = (0.3)(638)= 382.8

- (40/18)= 2.22 % discount for #GoBlue Users based on 40% AVG Mileage Usage

- (a.191.4) (b.0.02222) = $4.2 Million

C. If 30% of Illinois Allstate Customers use #GoBlue for 40% of miles driven, Allstate will pay 4.2 Million in

Reimbursement Costs

Estimated Investment Value (5 yr. Investment) = Future Value Function

PV=Net Allstate Savings

Number of Years = 5 (short-term fixed income securities)

Interest Rate = 4.5% (average Portfolio return for Allstate’s current income investment strategy

as seen in the 2012 Q4 earnings call presentation)

Appendix

Slide 13: Jawbone Partnership Jawbone provides high quality Bluetooth products. The industry and customer reviews consistently support this.

http://www.consumersearch.com/bluetooth-headsets

Slide 14: Precedent of Safety All State sets the standard for auto safety

http://www.allstatenewsroom.com/channels/History-and-Timeline/releases/history-timeline-1970s

Slide 14: All State Initiatives All State initiates campaigns for safe driving.

http://www.allstatefoundation.org/teen-driving

National Legislation Trend

Hands-Free Driving States as of 2012 1

© IIHS

Allstate Corporation’s

2012 Q4 Earnings Call Presentation

Allstate Corporation’s

2012 Q4 Earnings Call Presentation

If 20% of Illinois uses #GoBlue

Mileage

Percentage:

Claims

Savings:

Reimbursement

Cost:

Net Allstate

Savings:

20% $2.5M $1.4M $1.1M

40% $5.0M $2.8M $2.2M

60% $7.5M $4.2M $3.3M

If 40% of Illinois uses #GoBlue

Mileage

Percentage:

Claims

Savings:

Reimbursement

Cost:

Net Allstate

Savings:

20% $5.0M $2.8M $2.2M

40% $10.0M $5.7M $4.3M

60% $15.0M $8.5M $6.5M