Progressive: Pay-As-You-Go Insurance

Pay-As-You-Go InsuranceCase Analysis

About Progressive

Joseph Lewis founded Progressive Insurance Industry in Cleveland, Ohio.

Motive was “to delight the customer, maybe even shock the consumer a little for competitive advantage by delivering the unexpected”

Progressive and the Insurance Industry

1956 - Progressive started to write auto insurance f or high risk drivers and became dominant player

1969 – Motor Insurance Business 1971 – Went Public with headquarter to Mayfield Village, Ohio

Exhibits Details

Exhibit 1 Property Casualty – Product Line

Exhibit 3 Auto Insurance Distribution Channel

Exhibit 4 Market Share

Exhibit 10 Growth Rate of Progressive, Auto Insurance Industry and Property Casualty

A History of innovation

1990 First insurance

provider to provide 24 hour claims

service at the accident site

Propositon 103

1992 First insurance

provider to offer

competitor quotes as well

as its own.1800 AUTOPRO

1994 Launched

Immediate Response

Vehicles (IRVs) allowing claims agents to settle many claims at

the accident site.

1995 First major insurance

provider with a presence on the Internet

Website

IMMEDIATE RESPONSE

IMMEDIATE RESPONSE

The major innovation was progressive’s implementation of fast service.

Progressive had rewired itself for round-the-clock service and created new positions.

Advances in wireless technology and cell phones.

Seamless flow of information.

“Hire the best” and “Pay the most”.

1800 AUTOPRO 1-800-AUTOPRO - Auto Insurance Rate Comparison

Shopping Service.

No longer would customers have to spend endless amounts of time calling around to compare auto insurance rates.

One phone call to AUTO PRO would give customers a Progressive quote and comparison rates for up to three competitors.

If the customer was satisfied with the Progressive quote; he could buy the policy directly on the phone or locally through an independent agent.

Autograph

GPS Satelli

tes

Mapping

Technology

Internal

Computer

When and how

much a

vehicle was driven

Cost absorbed by Progressive were: GPS Transponder Cellular Communication System Small Computer

Drivers who signed up for Autograph were offered: Theft Recovery Remote Door Unlocking Travel Directions Low-battery Detection Emergency Assistance Help

Around 1100 policy holder voluntary took Autograph program and found they are paying 25% less on premium than they paid using traditional system.

APPLICATIONs

S Curve

Progressive

Progressive

ADVANTAGES

• Increased efficiency

• Improved customer response

• More calls completed on the first visit

• Improved payment cycle

• Up-selling and cross-selling insurance

policies

• First-mover advantage

DISADVANATAGES

• Higher premiums for consumers who commute at night

• High cost

• Lack of privacy

• Focus on new technologies, losing sight of the insurance business

Recommendations

• DO NOT EXPAND RIGHT AWAY

• TIME FOR RESEARCH

• STAY IN TEXAS AND EXPAND SLOWLY

• FOCUS ON BIGGER CITIES ONLY

LEARNING OUTCOMES

How

pote

ntial r

oles

of i

ncre

me

ntal a

nd

disr

uptive i

nnovati

on

hel

ps i

n creati

ng a

nd s

ustai

ni

ng fir

m c

ompetitive

ness.

Understa

nd t

he stre

ngt

hs a

nd li

mitati

ons

of c

urre

nt tec

hnol

ogies a

nd a

pply t

he

m i

ntellige

ntly t

o

meet t

he

nee

ds

of eac

h a

pplicati

on.

Develop the ability to assess and where necessary, improve the process of innovation.

THANK YOU!