Progressive Q1 Profits Up, March Down as Ad Campaign Debuts

Progressive’s latest financials show that the insurer’s first-quarter net income jumped 20 percent compared with last year, but March income was dragged down by poor security gains and hailstorm-related losses that month in the Southeastern U.S.

First-quarter profits this year were $308.6 million compared with the $257.6 million posted for the first quarter of 2012.

For the month, Progressive saw $74.2 million in profit this year compared with $76.3 million last year, amounting to 3 percent drop.

Much of that drop had to do with a wide swing in security gains, which saw a 48 percent decrease from $36.2 million in March 2012 to $18.7 million last month.

Progressive’s Premium, Policy Numbers Jump

The insurance company posted $1.3 billion in earned premiums this month and $4.18 billion for the quarter, both of which were an 8 percent increase compared to March and the first quarter of 2012.

The company, which bases most of its operations on a direct-to-consumer insurance model, is also continuing to write more policies through its direct channels.

Progressive saw a 3 percent jump in all direct auto policies, which include personal, special lines and commercial policies. Personal auto policies alone saw a 1 percent jump.

However, the number of policies under its agencies stayed flat between March 2012 and 2013, according to the company’s financials.

Progressive also reported “unfavorable developments” in its personal auto sector over higher numbers of claims under bodily injury and property damage coverage and larger claim sizes that were all “late emerging.”

Those developments, mostly in policies under its agencies, impacted the company’s “incurred but not recorded” reserves, it said.

Tens of Millions in Claim Losses from Mississippi, Georgia Hailstorms

Last month, the insurance provider saw a glut of claims from hailstorms that struck states in the Southeastern U.S. Mississippi and Georgia accounted for 90 percent of the $30 million in catastrophe-related losses for the month.

Last month’s losses from natural disasters made up most of what Progressive lost for the entire quarter, with the insurer’s $46 million in catastrophe-related losses in the first quarter this year dwarfing last year’s $16 million in first-quarter disaster losses.

New Campaign Recasts Snapshot Discount Program

Progressive’s latest advertisement campaign, called “Rate Suckers,” recasts its flagship program Snapshot that can dole out discounts to consumers who adhere to safe driving habits. The program measures those habits through a data-capturing device plugged into a vehicle’s diagnostic port, with certain habits like driving less leading to lower prices.

The insurance carrier had used quirky spokeswoman Flo as the face of the Snapshot campaign but is shifting gears in its latest commercial, directed by Ruben Fleischer, who helmed recent Hollywood films “Zombieland” and “Gangster Squad.”

Snapshot can repel “rate suckers” who, without Snapshot, would inflate the price of premiums because the industry typically uses pools of drivers within an area to determine prices, according to the company. Jeff Charney, the company’s chief marketing officer, said the campaign is meant to cast a “rate sucker” as possibly anyone a safe driver knows, like “your mom, the guy next door, the waiter at your favorite restaurant.”

“We all probably know somebody we’re subsidizing,” he said in a statement. “Snapshot helps solve that problem; showing consumers that their good driving can reduce the impact other drivers have on their rate. This campaign is our line in the sand to the industry and a wakeup call to consumers.”

Accompanying the debut of the “Rate Suckers” campaign earlier this month was a survey the insurance company conducted with 500 consumers. The survey findings included:
–63 percent of those surveyed responded that they didn’t know that “bad driving of others affected their car insurance rates.”
–89 percent of those surveyed responded that they “would be upset if they found out they’re paying more to offset the costs of underpriced drivers.”
–Consumers between 18 years old and 34 years old had the “lowest awareness of any age group” of that fact.

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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