Progressive Plans Initiatives After ‘Disappointing’ Second Quarter

In a recent letter to shareholders recapping Progressive’s second-quarter financial performance, President Glenn Renwick wrote that “disappointing” results were “well within our control.”

The letter was a part of the insurer’s quarterly report to shareholders, accompanied by a conference call in which Renwick and other executives hosted a Q-and-A session on Friday. Progressive reported a steep 52 percent drop in second-quarter profits compared with the same period last year. It was the lowest quarterly profit in at least three years despite a rise in written premiums.

In his letter, Renwick highlighted the premium growth as “notable and positive,” but downplayed its significance because of the parallel contraction of company profits.

“While the immediate condition is serious, the diagnosis and treatment plan is well within our control,” Renwick said.

Progressive has built its reputation in recent years on strong direct-to-consumer sales that often see prospective policyholders forgoing local agents to buy auto insurance online directly from the coverage provider.

Overall, the number of direct insurance policies in force in the second quarter saw a 7 percent increase when compared with the same period last year. Agency policies saw a smaller increase of 5 percent when comparing the two periods.

Between January 2009 and June 2012, the share of Progressive auto policies sold directly to consumers went from 39 percent to 45 percent.

Snapshot at Center of Future Plans

Last month, Progressive opened its usage-based insurance (UBI) program, called Snapshot, to policyholders of other insurers. The move was aimed at pushing consumers to “shop for auto insurance when they might not have otherwise done so,” Renwick said.

The company is banking on prying those customers away from competitors in an insurance marketplace where policyholders shop around less often. But those who do shop switch carriers about 43 percent of the time. A J.D. Power and Associates study released in April found that “competitive quotes” often push customers to new insurers.

Snapshot is currently available in 43 states, with plans to expand “depending on regulatory approval and business results,” Renwick said.

During the conference call with shareholders, a participant highlighted Snapshot issues he had with the program’s in-car diagnostic device, claiming he had to get an additional device after installing the first in a foreign-made car.

Renwick said he believed that the issue was an anomaly, adding that “if it was a significant issue, I’d know about it.”

Snapshot is a unique tool that gives the insurer flexibility in a rigid, highly competitive marketplace, according to Renwick.

“Going back almost close to five years, you really haven’t seen a rate-rising environment in auto insurance for a while,” he said in the conference call. “I think there will be some market disruption and we go into that with more tools than we’ve had before, whether it’s Name Your Price or the Snapshot. So we actually feel very good about looking forward to ’13, ’14.”

More Mobile Device Functionality Planned

The insurer also showcased its future offerings on mobile devices, including several mobile quoting features aimed at nabbing more business.

One feature, which will be available in some states, allows motorists to buy up to three separate policies from a mobile device after getting a quote.

The insurer has also introduced a smartphone application in some states that utilizes the device’s camera to photograph a driver’s license or policy card to get an instant quote for coverage. Progressive will also be offering more quoting and purchasing features on tablet devices, according to the quarterly report.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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