The Progressive Corporation
Progressive’s slogan related to consumer importance is fast, fair, and better. With this slogan to heart, it was ranked number three in the US private passenger auto insurance industry after State Farm and Allstate. Progressive was the first corporation in the auto insurance industry to operate sophisticated data mining techniques to price its policies that provided a very profitable high return on equity, high growth on delivering, and strong underwriting. This strategy was soon assumed by State Farm and Allstate. With premiums flatting and declining in recent years, many firms in the industry had diminished its rates. However, Progressive was feared of relentless underwriting losses and refused to follow the industry. While other leading firms of the industry had a broad line of other insurance products, Progressive centered primarily on auto insurance. The conventional insurance firms focused on the standard and preferred segments to evade high risk customers. Nonetheless, Progressive was a main firm taking care of the nonstandard segment by using its strategies to find the accurate rate to each policy.
Even since 1957, Progressive has always been focusing on nonstandard insurance. Most of the firms were not interested in nonstandard insurance due to its risks. However, the Chairman and CEO of Progressive, Peter Lewis said “take the best of the worst risks, charge the average of the worst risks, and make a ton.” In addition, Progressive offered a high quality claims service. He established information transparency strategy, a policy which shares information about prices, costs, and service with customers. Progressive’s objective was to discover lower than standard risks.
One of Lewis’s key approaches was called immediate response. His strategy was to lessen the policyholder’s suffering and distress by getting an adjuster to the policyholder as soon as an accident took place. This policy had become a big...
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