According to Progressive CEO Glenn M. Renwick, “[t]here is a power shift to the consumer” prompted by the ease of obtaining insurance quotes online. Auto insurance premiums are going down. That’s right. Down. This is, of course, contrary to nearly every other segment of the insurance market, and great news for consumers.
The full MarketWatch article after the jump.
Progressive CEO says drivers doing more auto insurance shopping
Last Update: 11:33 AM ET Nov 3, 2006
CHICAGO (MarketWatch) — Empowered by the Internet and bombarded by ever-increasing auto-insurance advertising, consumers are shopping more aggressively for insurance, and prices are coming down, according to the chief executive of Progressive Corp. (PGR), the nation’s third largest auto insurer.
“There is a power shift to the consumer,” President and CEO Glenn M. Renwick said during Progressive’s third-quarter conference call Friday.
He said that at times in the auto-insurance industry, growth has come from rising premiums rather than an increasing number of customers, although “we are not seeing that now.” Renwick called the pricing atmosphere “deflationary” and said that for customers facing renewal in particular, pricing was an important factor.
“We want to make sure we don’t lose them to someone else at a price we would be comfortable with.”
Renwick said other insurers also are lowering rates, with part of the impetus being that the frequency of accidents has either stayed steady or dropped every year since 1999.
More auto insurance price quotes are being generated by “electronic agents,” which indicates that more consumers are using the Internet or other non-traditional ways of shopping for insurance. “It is definitely a growing trend,” Renwick said.
Renwick also spoke of the company’s planned partnership to offer homeowners insurance through a partnership with Homesite Insurance Group. Renwick said the estimated rollout date was around Jan. 20, with the product being offered through independent agents in Ohio, Pennsylvania and Oregon. Progressive will earn a commission on polices that are sold through its direct-to-consumer marketing.
Progressive, already a heavy advertiser, has increased its advertising substantially in 2006, including non-traditional media such as the Internet, the company said Friday.
But the company plans “no major changes” to its typical 10% to 10.5% commission paid to agents who bring in new customers.
Policies in force for Progressive’s drive, or agent, business dropped 1% in September from the same month last year to 4.5 million. For its direct-to-consumer business, policies in force rose 5% to 2.4 million. Its special lines policies in force, which includes motorcycle, watercraft and other vehicles, rose 8% to 2.9 million, and its commercial auto business rose 9% to 506,000 policies in force.
Shares of Progressive dropped 13 cents to $23.48 in recent trading.
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