1. Progressive Corporation A Case Study Scott Campbell - Christina Connolly - Maureen Stafford MBAM 619 2/16/09

3. Consumers See an Increase in Taxes Federal Government Revenue, in Billions, by Major Source, 1965–2008 2008 Federal Reserve & Spending Book of Charts More Government control on taxes and regulations.

4. Driving Trends Transportation Services Index Bureau of Transportation Statistics We see an steady growth in the number of drivers on the road.

5. DMV Milestones Assigned Risk Plan: Requirement of carriers to underwriting non-standard risks 1983: The high accident rate of younger drivers prompts provisional licensing of drivers between ages 16 an 18. 1984: A new financial responsibility law requires that uninsured drivers involved in a vehicle accident have their driver licenses suspended for a year. 1988: Proposition 103 1991: The Vehicle License Fee classification was assessed based on the vehicle market value or vehicle purchase price Department of Motor Vehicles

7. Competition

8. Competitive Analysis

9. Auto Insurance Industry Value Chain Insurance Provider (Progressive / State Farm / Allstate / GEICO)‏ Independent Agency Writer Customer (Driver)‏ (80-90% “Standard” / 10-20% “Non-Standard”)‏ Direct Writer (Internal Sales Force or Mail / Phone / Internet)‏ Sources: Siggelkow, Nicolaj. “Progressive Corporation,” Harvard Business School Case. Rev. 5/14/98 http://www.iii.org/media/hottopics/insurance/distribution/ (Accessed 2/13/09)‏

10. Auto Insurance Industry Value Chain Source: Siggelkow, Nicolaj. “Progressive Corporation,” Harvard Business School Case. Rev. 5/14/98

11. Industry Analysis Threat of Substitutes Low threat of substitute due to the legal requirement of auto insurance and the limited number of competitors in the non-standard market Threat of New Entrants Low barrier of entry for established insurance companies desiring to target non-standard customers, as demonstrated by Allstate Indemnity Power of Customers Non-standard customers did not hold much power due to the necessity of the service and limited companies willing to meet their needs Growth Rapid industry growth is not likely, and becoming less lucrative due to legislation General customer movement was between providers Competitive Environment Competition is extremely high, necessitating innovation of tactics and infrastructure to win over customers and maintain profit under new legislation

12. Value Creating Activities Inbound Logistics Marketing/Sales After-Sale Service Human Resources Infrastructure Technology Marketing/Sales After-Sale Service Human Resources Infrastructure