This article is part of our insurance innovators interview series.

Dave Pratt progressiveDave Pratt, General Manager, Usage-Based Insurance, Progressive

Q1: In your view, what has been the greatest innovation in the P/C insurance industry in recent years? Explain.

Pratt (Progressive): One of the biggest shifts we’ve seen in our industry over the past decade is the emergence of usage-based insurance. It’s changing how carriers price and how consumers think about auto insurance.

We’ve found actual driving to be more than twice as predictive of future losses than other nondriving variables traditionally used to price insurance.

We’ve advanced our usage-based program, Snapshot, as the technology itself has advanced. What once used a large piece of equipment that required a mechanic to install has evolved into a small, pocket-sized device that plugs into a car’s on-board diagnostic port, transmitting driving information to us via cellphone technology.

We’ve collected more than 12 billion miles of driving data through our Snapshot program, and we’re able to provide consumers with fairer, more accurate prices based on how they actually drive.

Q4: Describe one or more ways in which your company encourages innovation. (Feel free to describe any elements of the culture or process.)

Pratt (Progressive): Progressive is a test-and-learn culture, and over the years we’ve developed a number of programs to help foster innovation among our employees. One example is our Business Innovation Garage (BIG).BIG logo & door side shot

For more details about the Garage, see related article, “Where BIG Ideas Happen at Progressive: The Garage.
Progressive had a desire to better connect our 26,000 employees to solve problems across disparate business areas and geographic locations. An idea was born for having a separate business unit that could be a secure think-tank for innovating products and services at Progressive. That idea is now BIG—an internal incubator staffed by a garage manager and “mechanic” positions comprised of IT analysts working with partners across the business to collect and cultivate new business solutions, with the end goal of exploring and testing ideas before we actually invest significant time, dollars and resources.

BIG provides Progressive with an internal “lab” to test and learn in such a highly regulated environment like the insurance industry.

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