4. Progressive
Short Overview
• Auto insurer founded 1937
• was the first insurer
o to enter the high risk market
o offered high service for customer
• does things different compare to other
insurer when setting a premium
o price (on finer level)
o drivers history
o continuously search of new opportunities
5. History
• 1937à Joseph Lewis founded Progressive Insurance
Industry in Cleveland, Ohio offering drive-in claims
service with the ability of customers to pay over
time
• 1956à Progressive started to write auto insurance
for high risk drivers and became dominant player
5
6. History
• 1988à Son of Lewis, became the CEO and got the
idea of dealing with insurance in a more innovative
way
• The next years Progressive achieved in technology
introducing:
IMMEDIATE RESPONSE SERVICE available 24/7
• 1993à Give Comparison Quotes to people
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7. Reasons for
Differentiation
• Proposition 103 in California 1988
• It was the best thing that happened to this
company(...)I decided from then on, anything we
did had to be good for the consumer or we weren't
going to do it.” (Lewis 1988)
8. Reasons for
Differentiation
• Innovation culture of the company
• “Looking for opportunities to do things different and
new“ (Founder: Joseph Lewis)
10. Innovations
• fast reliable service with high educated staff, which
was highly paid
• could now compete with the big opposition like
Allstate and State Farm
• higher goals with sophisticated staff and ideas
• always venturesome
10
11. Information Transparency
• Customers: very price sensitive
• High costs for workforce
• à Preposition103 à Customer Orientation
• Reducing workforce
• Increasing direct sales
• Comparison Quotes
• Website
11
12. Customer Segmentation
• Different sources/variables into calculation
• More detailed risk estimation
• Extensive and state-of-the-art software
• Competitor with lower rate à higher risk of losses
• High satisfaction with Immediate Response
• Fast service
12
14. • High-tech method for calculating auto insurance
premiums on a pay-as-you-go basis.
• Tracking mileage, time of day and where driving
occurred.
• Example: A mile driven at 2 a.m. was four or five
times more expensive than one driven at 7 a.m.
Autograph
GPS
satellites
Mapping
technology
Internal
computer
When and
how much
a vehicle
was driven
14
16. • Drivers who signed up for Autograph were offered:
Ø Theft recovery
Ø Remote door unlocking
Ø Travel directions
Ø Low-battery detection
Ø Emergency assistance help
• Using autograph, consumers are paying 25% less
than “traditional“ products...
• Does Autograph offer a competitive advantage?
75%
25%
Premium Calculation
Autograph
Traditional
1.100
policyholders
Progressive Customers
16
17. Barriers to Consumer
Acceptance
• Higher Premiums for consumers who commute at night
• Monthly fee for the additional set of services (GPS-
based)
• Cost of installing GPS transponder, cellular system , etc.
• Lack of privacy
• Focus on new technologies, losing sight of the insurance
business
No
Yes
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23. Images
• Alphamen (2012). Decision Making. Retrieved Nov 18, 2012 from
http://alpha-men.net/wp-content/uploads/2012/01/decision-
making.jpg
• Allen Kleine Deters (2011). Do You Ask Good Questions?.
Retrieved Nov 18, 2012 from http://
allenkleinedeters.wordpress.com/2011/11/28/do-you-ask-good-
questions/.
• PORHOMME (2008). Insurance companies want to track us by
GPS. Retrieved Nov 18, 2012 from http://www.porhomme.com/
2008/09/wtf-insurance-companies-want-to-track-us-by-gps/.
• Progressive Insurance (2006). Progressive Headquarters Sign.
Retrieved Nov 18,2012 from http://www.flickr.com/photos/
progressive_insurance/4838281534/in/photostream
• Progressive Insurance (2007). Progressive Immediate Response
Vehicle, Arriving in the Rain. Retrieved Nov 18, from http://
www.flickr.com/photos/progressive_insurance/4834844557/in/
photostream.
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