Innovation at Progressive – Pay-As-You-Go Insurance
Innovation at Progressive: Pay-As-You-Go Insurance.Prepared forDr. Venkat VenkateswaranPrepared byAnna KavalchukMGT-436602/07/2017How does Progressives performance as an auto insurer compare to that of typical insurancecompanies? How has its performance changed over time? What explains the difference inperformance?Progressive is an auto insurance company, which is performing better that their competitors in the auto insurance industry and the property-causality insurance industry. In the period between 1990 and 1999 their growth rate of net premiums earned was always higher that this of the competition. As we can see, the industry grows between 3 and 7%. The average is around 5%. Progressive on the country continuously improves the years after 1990 with 8% in 1991 and 11% in 1992, 24% in 1993 and 36% in 1994. After 1994 Progressive’s change in earned premiums dropped to 11% and increased again in 1997 to 39%. The average growth rate based on net premiums earned is approximately 20% in the given period. This is an average of 15% better performance than the completion.These performance differences are due to a different strategy in Progressive’s business. Progressive has
ambitious goals and uses various tools to reach those. They define themselves by competencies and investments in the right assets. Traditionally the competitors searched for and investments in the right assets.Progressive started in 1956 to insure non-standard drivers with high risks and could grow to become the market leader in this category of their fine risk calculation and customer segmentation. They use very extensive software to get unique customer segmentation based on advances in technology, data mining, different information sources and statistical analysis. Next to good software and information resources they also invest in the best sales representatives. Progressive claims in the case that they “hire the best” and “pay the most”. People that had been hired based on performance and experiences. Senior employees handle more complicated claims, whereas beginners handle ones without any serious damages. I believe that the most important decision was to be a customer centric organization, it has a good impact on both company and their