progressive innovation

7/30/2019 progressive innovation

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GROUP 2:

ANKITA DHAWAN 114106ARPIT DARAK 114108BHAVESH AGARWAL 114109CHANDANI GARG 114111DARSHIL CHOKSHI 114113

Pay as you go Insurance
http://www.progressive.com/


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PROGRESSIVE

Founded in Cleveland Ohio in 1937 by Joseph Lewis

1956- Started writing auto insurance for high risk

drivers 1971- Company went public

1987- Exceeded $1 billion in premiums

Motto-

The less you drive, the less you pay

It had captured 10% of the market and as the

largest writer of auto insurance wrote 80% of its

insurance premiums through independent agents


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INSURANCE INDUSTRY

Insurance business is of shared risk

The earned premiums were the insurers main source of

revenue

Other source of revenue was from investment income

Insurers expense included commission paid to agents &

salesperson, claims, adjusters and litigation fees, underwriting

expenses

Auto insurers find it difficult to make money by insurance but

make profit by investing premiums

Auto insurance was sold through dedicated and independent

agents and directly to customers by telephone and internet


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BUSINESS MODEL

Pay as you drive (PAYD) means that the insurance premium is

calculated dynamically, typically according to the amount

driven.

Coverage is based on the odometer reading of the vehicle.

Coverage is based on the number of minutes the vehicle is

being used as recorded by a vehicle-independent module

transmitting data via cell phone or RF technology.

Coverage is based on other data collected from the vehicle,

including speed and time-of-day information, driving actions

in addition to distance or time travelled.


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AUTOGRAPH

GPS technology was started being used for civilian purposes

So it developed a method of calculating and setting insurance

premium on the following basis

It relied on GPS satellites, mapping technology, and internal

computers to determine when and how much a vehicle was driven

It is called Autograph

With this model actual usage is metered and you pay on the basis

of what you consume

Adopting GPS and wireless technology to record the actual usage of

policyholders cars including times during and conditions under

which they were driven


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FEATURES

It tracked mileage, time of the day, and where driving

occurred

It involved costs of installing GPS transponder, cellularcommunications systems, small computers, cabling and

connectors in each car

The system was powered by vehicles battery

Market test was carried out initially in Houston and then

expanded to the state of Texas


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IT INTEGRATION

Ability to finely segment its customer base

Price segmenting consists of data mining and extensive

statistical analysis of customer behavior Newer strategy- Failure to yield should result in a higher

premium increase than speeding

Its software looked for correlation between drivers, vehicle

characteristics, variables in a credit scoring model etc.


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ORGANIZATIONS CULTURE OF

INNOVATION

A culture to experiment, but do so responsibly

Reward people for taking risk, but punish them for notstopping the wrong ones early

Major innovation was of implementing fast service


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CRISIS

1988- California passed Proposition 103, a referendum

designed to regulate auto insurance companies, and

roll back escalating rates

Led to reduction of workforce by 19%

Payment of $60 million in refunds


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ABERNATHY UTTER BACK MODEL


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IMMEDIATE RESPONSE SYSTEM

Respond immediately to the policyholder at anywhere and at

anytime

Claims were handled 24 hours a day Technological advancement in wireless technology and cell

phones made it possible

This fast service would cost the business less and more

importantly provide their clients with immediate service in themost efficient and equitable way.

It was later advanced to Mobile Claims Office


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THE CHASM MODEL


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PROCESS OF IMMEDIATE RESPONSE

Customer meets with an accident

Calls up progressive

Telephone Agent takes down the necessary

information

Hands over the claims to local claims office

Use of Centralized database

Dispatch IRV vans and claims Representative

Process the claim


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SELECTION AND RECRUITMENT

Claim handling was assigned according to complexity of claims

and experience of claim representative

Believed in hiring the best and paying the most For immediate response to be a success, claims had to be

reported at the earliest, but customers were not accustomed

to do this

So to encourage customers to do so, claims Reporting index(CRI) was introduced


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COMPARISON QUOTES:1-800 AUTOPRO

Introduced 1-800-AUTO-PRO, a cutting-edge auto insurance

rate comparison shopping service.

Consumers no longer had to call several companies tocompare auto insurance rates

In one phone call to 1-800-AUTO-PRO, they'd receive a

Progressive quote and comparison rates for up to three

competitors. Plus, if customers wanted to buy from Progressive, they could

purchase an insurance policy directly and immediately on the

phone.


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DILEMMA

1. Whether Autograph should be expanded nationally ?

This Will include major time and cost expenses

Approval for regulations at the state level

2. Whether Autograph should be made available to its

policyholders ?


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PEST ANALYSIS

PROPOSITION 103

Regulatory for autoinsurance cos

Dominance by handful of companies

44% market capture by 10 largestcos

1/5th market capture by two largestinsurance cos

Using IT Integration tools foreffective premium packages and

clearances

GPS and wireless technology as

Technological competitive Weapon

Reduction in Processing time toInduce Customers

Justifiable Premium mechanism

PEST


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REASONS FOR EXPANSION

Social and environmental benefits from more

responsible and less unnecessary driving

Commercial benefits to the insurance company from

better alignment of insurance with actual risk

Improved customer segmentation

Potential cost-savings for responsible customers


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LEARNINGS FROM THE CASE

Converting specific technology for commercial purposes

Synchronizing employees growth with organizationalgrowth

Converting industrys loophole into its own strength


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Thank You

progressive innovation

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