Progressive sees a large addressable market available to them. Both in personal lines - growing market share in auto and homeowners - as well as commercial lines. The opportunity for them is clearly largest in the Other Commercial Lines where they currently have a neglible market share. They could make a significant impact on the fragmented small commercial insurance segment (~ $100 billion of premium), which is most similar to personal lines.
Progressive’s growth portfolio
In very McKinsey-style fashion, Progressive outlined three “horizons” of their growth portfolio. Each horizon adds additional revenue, but will take longer for the revenue to emerge and contribute to Progressive’s bottom line.
Horizon 1 is continuing to execute on their core business. They outlined several initiaties that are underway to pursue their goal of becoming consumers number one choice for auto and other insurance. Their biggest opportunity here is the continued expansion into the $91 billion homeowners market. The acquisition of ASI and the rollout of the new HomeQuote Explorer are two examples of recent investments in this segment.
Horizon 2 is expanding into new products and services that build off of their core competencies. This includes making a bigger play in small commercial insurance. They can run a similar playbook in small commercial as they have in personal lines. They noted more details forthcoming on their small commercial strategy.
Horizon 3 is more abstract. It could be anything, but it shows that they are thinking about the long term future - in apparent contrast to many other companies. Progressive noted that they need to invest in all three Horizons concurrently.
As an example of how their strategy plays out over time, they gave an overview of the history of Snapshot. Twenty years ago they rolled out the first device in Houston that would eventually become Snapshot. They have now collected over 20 billion miles through the Snapshot program.
Progressive’s personal auto actions
We want to continue to lead in the UBI space…We are doing some work on distracted driving to see if there are new variables that we can include in our scoring algorithm. We’re also testing ways to potentially provide better feedback to consumers, to help them become safer drivers. And we’re evaluating ways to identify more third-party data opportunities so we can expand the footprint of our Snapshot product… - John Curtiss, Personal Auto Product Development Leader
Progressive outlined four actions they are taking in personal auto.
- Pricing for advanced safety features
- Leadership in UBI with Snapshot
- Transportation network company (TNC) endorsement
- Organizational agility and responsiveness
A $0.5 trillion opportunity
So overall, when you step back and you look at the entire P&C industry, it’s over a $0.5 trillion opportunity and we believe that we have the ability to really increase our share of the pie in every single one of those pie charts..our industry is dynamic, it is going to continue to change. And that excites us. We love change and I think the companies that win are the companies that are nimble, that continue to tweak their models as things change and the companies that skate to where the puck is going. - Tricia Griffith, CEO
I could not agree more. There is an opportunity available for insurance companies that are nimble, listen to their customers, and skate to where the puck is going. Progressive does a great job at that.