Case 4: Progressive Corporation
1. How has Progressive’s strategy evolved over time? Is it sustainable? Answer:
Progressive began in 1937 by Joseph Lewis and Jack Green, and over the years, it became the number three player in the US private passenger auto insurance industry through competitive pricing and by continuously improving our products and services. Progressive’s customer value proposition was “Fast, Fair Better”. The Progressive was constantly looking for ways to provide insurance to customers at a reasonable price compared to competitors; using sophisticated data mining techniques t price its policy, which had proven very profitable. In 1990, Progressive launched Immediate Response, the core of the concept was to get an adjuster to the policyholder as soon as possible after an accident occurred to help reduce the policyholder’s trauma. It also allowed Progressive to get an accurate estimate of repair cost and increased the probability of making a quick settlement without the additional cost of lawyer involvement. Through continuous improvement, the Immediate Response had reduced the average claim settlement cycle from 42 days to 6 days and reduced cost. In 1994, Progressive introduced a telephone customer claims service available 24 hours a day, 7 days a week. In 1997, Progressive became the first insurer to sell insurance over the Web. In 1998, Progressive launched Personal.Progressive.com to help customers manage their policies. Information transparency is key at Progressive. To differentiate sales through agents, in 2004, Progressive launched a second brand called “Drive Insurance by Progressive” to demonstrate Progressive’s commitment to the independent agency channel, and provided separation and clarity with respect to the carrier’s direct business, While executing on its Immediate Response, its standard policy writing program and its Internet initiative, Progressive continued to innovate with new products. In 2000, Progressive operated...
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