Innovation at Progressive Insurance

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INNOVATION AT PROGRESSIVE – Pay As You Go Insurance1

Progressive had captured 10% of the market and as the largest writer of auto insurance wrote 80% of its insurance premiums through independent agents. As an insurance company, it displayed strong characteristics of success, incrementally attained. Their methodology seemed to have a close correlation to the design rules for innovation, as expressed by Gary Hamel2. According to Hamel, “no company outperforms its aspirations”. For Progressive their goals were ambitious but they were able to prove that they could outperform the average. They had the unique ability to finely segment using the appropriate information, data mining and statistical analysis, possessed the necessary proprietary software and the challenging strategy; they seemed to have all the prerequisites necessary to expand their market share.

Their business definition was fairly elastic, expansive and changing. As Hamel suggests they defined themselves on the basis of competences and assets. They knew they had great software, namely their “Claims Workbech”, they had good data, but most importantly they had great assets, which were their employees. Their philosophy was to hire the best and pay the most; an open market for talent.

Progressive showed that they had a cause and did not only run a business. The basis for the implementation of their fast service, was that overall it would cost the business less and more importantly provide their clients with immediate service in the most efficient and equitable way. These efforts seem to set the preconditions to success.

Their Immediate Response Program (IR) which utilized over 350 local claim offices and over 1400 IR vehicles, seemed to be comparable to the concept of cellular division, each unit being responsible for their own claims. This model provided the opportunity to nurture the entrepreneurial abilities of the agents. The managers had an on-hands advantage and the results were...
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