Breaking away

Rough Notes, Jun 2000 by Boone, Elisabeth

Flexible, pragmatic, and aggressive, Progressive expands its reach with new products and a choice of distribution channels

When you hear the name Progressive, do you automatically think "nonstandard auto"? If so, you're not alone-but you're definitely behind the times. Widely admired for its data-driven business model and sometimes eyed with distrust for selling direct via phone and the Internet, Progressive Insurance is aggressively expanding its product portfolio and making no apologies for its use of alternative distribution channels. To find out what's behind the company's move into the larger personal lines arena and how it's extending its powerful franchise, we'll talk with Daniel Lewis, Progressive's agency general manager for the Gulf division, who served as agent business leader from January 1999 to April of this year and spearheaded many of the company's Year 2000 initiatives. Then Bob Williams, a 20-year Progressive veteran who recently was named agent business leader, will present his perspective on the company's future direction in the rapidly changing personal lines marketplace.

Founded in 1937 by two lawyers as Progressive Mutual Insurance Company, the insurer wasted no time in establishing itself as an innovator, introducing the first time-payment premium plan for auto insurance and offering drive-in claims service. Peter Lewis, the son of co-founder Joseph Lewis and the brother of Daniel, joined the company in 1955 and today serves as its plain-spoken chairman.

In 1956, under Peter Lewis's direction, Progressive Casualty Company was formed to write nonstandard auto insurance. Progressive Corporation was organized as a holding company in 1965, and it went public in 1971.

Today Progressive is the nation's fourth largest auto insurer, not only offering nonstandard auto but also competing aggressively in the standard, preferred, and ultra-- preferred markets. Since 1992 it's been the #1 writer of private passenger auto insurance through independent agents. It's also the leading writer of motorcycle insurance, and it insures mobile homes, recreational vehicles, small fleets of commercial vehicles, and boats and personal watercraft. Progressive now is moving purposefully into new personal lines territory with both homeowners and umbrella products. It's represented by some 30,000 agents in 48 states and in 1999 posted net written premium of $6.1 billion. It's significant to note that between 1990 and 1999, Progressive recorded compounded growth of 23.3%, vs. 4.7% for the industry as a whole.

A simple strategy What. drives this unconventional insurer, and what accounts for its stellar performance in a market that many insurers find baffling and frustrating? Progressive's winning strategy is multifaceted but simple, and it's based on a powerful combination of next-generation technology and old-fashioned common sense. "Our formula for success is to offer competitively priced coverage for all drivers, from nonstandard through ultra-preferred, and to provide outstanding agent and policyholder service 24 hours a day, seven days a week," Daniel Lewis explains. "In 1989 we achieved a real breakthrough when we introduced Immediate Response(R) claims service. We get to the accident scene fast, and we take care of everything as quickly as possible. Superior customer service gives us better control of our loss costs. The company that does the best job in claims wins."

Another key ingredient in Progressive's success, Lewis notes, is ease of access. "We want to be the easiest, lowest-cost company to do business with," he declares. "Technology is an important piece of this commitment. In our point of sale system, while the agent is requesting a quote, he or she can immediately order an MVR, CLUE, or financial responsibility report on line, and coordinate this information with the application." This system, he notes, significantly reduces the possibility that a policy will be issued at a higher price than was quoted. "Accurate quotes at the point of sale save agents work and reduce the incidence of bad customer experiences," Lewis observes. "This translates into improved retention."

As part of its commitment to enhance agent productivity with technology, Progressive recently introduced Client Profile for Windows, a proprietary agency management system that's available to agents at no charge. "It's slick and easy to use, and it addresses all the objections agents have raised about going paperless," Lewis says. "At the end of the process, we'll be downloading policy information via the Internet, so we can eliminate paper and save our agents time and money."

Net savvy

Speaking of the Internet, Progressive views its Web site (www.progressive.com) as a quick, efficient way to interact with customers. A Web site feature called Personal Progressive (also accessible directly at http://personal.progressive.com) allows policyholders to access policy, claims, and billing information online, make payments, and update personal information. Such online access "meets a significant and increasing consumer demand," Lewis asserts. He cites a recent survey in which only 6% of agents said their customers wanted online access to policy information-- but such access in fact was desired by almost 60% of customers. "There's a big disconnect between what customers want and what agents think they want," he remarks. "When customers can access information directly, both we and our agents save money, and that helps us be more competitive."