Glenn Renwick
Glenn Renwick

By his own admission Progressive Insurance CEO Glenn Renwick (and his company) may not be right about the impact certain macro trends will have on the insurance industry, but in his view “it’s important to have some views.”

Addressing an audience of insurance professionals in Austin, Texas, Renwick described his take on five macro trends currently on his radar: causal versus correlated data; the digitally responsive consumer; time as a design criteria; brand; and vehicle technology.

Some observations “may turn out to be right, some of them may turn out to be wrong,” but his company’s perception of these macro trends will affect the direction it takes going forward, Renwick said at the Mid-Year Property & Casualty Insurance Symposium hosted by the Insurance Council of Texas in early July.

Causal v. Correlated Data

It’s no secret that that the insurance industry, particularly the auto industry, uses proxy or correlation data – things like age, gender, location, driving record – in determining how much to charge for auto insurance.

“That shouldn’t be strange to anyone in this room. We spend an infinite amount of time trying to refine those correlation variables,” Renwick said. But, if you went to a consumer and asked, ‘”How would you want us to rate auto insurance?’ I think their answer would be mostly, ‘Based on how well I drive.'” …

As it turns out, actual consumer behavior behind the wheel “is an immensely powerful variable,” he said. And while Progressive will continue to look at variables like age, sex and driver records, the behaviors of individual drivers will play a greater role in determining risk.

“We’re starting to get to what I’m going to call the ‘statistic of one.’ We’re actually rating you as an individual,” he said.

Progressive’s Snapshot program currently utilizes a plug-in device to monitor driver practices. In February, the Mayfield, Ohio-based insurer announced a partnership with OnStar Corp., under which OnStar users will have the option to share with Progressive their driving data gathered through the system already built into their cars.

In the future “we won’t be in the business of plugging something in; the car will just talk to us. And we’ve got to position Progressive to have millions of cars talking to us every second to better understand what the driver/car combinations are doing,” Renwick said.

It’s all about rating accuracy and customer retention. “We feel that if we can get someone to the right risk, we can have a much longer relationship with that person,” he said.

Progressive’s CEO did note that while the ability to better understand individual driver behavior often results in lower premiums for safe drivers, it can work the other way around for the 20 to 25 percent of drivers who “are disproportionate users of loss costs.”

The Digitally Responsive Customer

“The fact is, we have become addicted to our portable pocket devices,” Renwick said. And with nearly a third of internet usage in the United States coming from mobile devices such as phones and tablets, Progressive is trying to make sure customers are able to interact with the company in the way they prefer without any one format seeming to be dramatically different from another.

About half of the company’s premium payments are now coming through mobile devices but “I’m pretty certain that we never told anybody that you could pay by a mobile device,” he said. It’s just something that consumers expect. It started with payments and now has moved into actual insurance transactions.

Mobile technology use in claims reporting is “still relatively embryonic” but will eventually take off, Renwick said.

“There will be technologies to allow the consumer, let’s say it’s a fender bender, to take a photograph of a fender and we will match that with 10,000 other fenders that were similarly damaged and you get an estimate right back at the same time you reported the claim. Those kinds of things are not happening today but are certainly possible and it just gives you a different conversation with customer,” he said.


“One of the things that I tend to suggest is that companies don’t own their brand as much as the consumer has the perception of that brand. All we get to do is give lots of clues so that the consumer can actually formulate that perception,” Renwick said.

He noted that in a 2014 survey Progressive was identified by consumers as a provider of homeowners insurance. “Now even though things have changed just a little bit, we didn’t do homeowners. So it’s interesting that consumers will actually attribute brand activities to you even though they’re not true.”

Progressive did enter the homeowners market in late 2014 with the purchase of Florida-based ARX Holding Corp., which offers homeowners, renters, condo, umbrella, flood and other property/casualty coverages through a subsidiary, American Strategic Insurance (ASI).

The company is looking to further expand its brand, strongly identified with Flo, the ever helpful insurance clerk, while being “very cautious and protective” of it, Renwick said.

“We really want to take that brand into what we are calling the destination era, which means that we will continue to make the product that we feel the most comfortable with, the product of auto insurance … but we would invite other companies that we respect to do business with us and be a little bit more of a distributor,” he said.

Such affiliations will enable Progressive to offer more options to consumers such as insurance for classic cars, pets, travel and weddings, “even if we don’t choose to manufacture” those products, Renwick said.

He said the strategy is evolving and that it is an exciting time for the company.

As Progressive continues its brand exploration, “we want our brand to stand for so much more as we work with other companies that present consumer needs where we might be a best distributor for them,” Renwick said.

Time as a Design Criteria

Around 15 years ago Progressive had a practice of surveying customers about claims experience and the results were generally good.

“Turns out we gave the survey at the same time we gave the draft, or checks. So, you know, things were good, remarkably,” Renwick said.

But subsequent investigations revealed a different story. The company realized that by surveying customers at the same time claims check were sent out it wasn’t getting to the true customer experience.

“Yes they got the draft, but then they had to engage in a very unfamiliar transaction,” such as the repair or body shop experience where the knowledge was “asymmetric,” he said.

Giving money back is one thing, “but getting cars back in the driveway is really what the consumers want,” Renwick said. “So we literally took a strategic redirection in our company to say – it’s more cars, not cash.”

Now it’s all about time and the customer experience, he said. “We’ve got to respect our customer’s time. We’ve got to make everything they do easy and high quality. That’s what we’re trying to do with our service centers and frankly there’s economics in it for us as well. Just as the Japanese did many years ago with just-in-time inventory, we want to make sure there’s no waste in the system.”

Vehicle Technology

Accident frequency is down and that trend can be traced largely to improvements in vehicle technology.

At this point it seems people “are the quality defects … [but] now we’re getting cars that allow us to be less of a nuisance as a quality defect. There are certain things that are getting done for us and we’re going to see that trend continue,” Renwick said.

Offsetting the decrease in accident frequency is a rise in severity, which can also be attributed at least in part to vehicle technology.

“These things don’t come at zero cost. When they are involved in an accident there are costs involved in it,” Renwick said.

What’s important now for the auto insurance industry is not whether we have autonomous cars or when we have them, it’s that “the journey that will get us there will be profound and it will be frequency reducing for sure,” he said.

“We don’t necessarily control the direction of technology. We are definitely trying to embrace it and make sure that we can account for it and frankly benefit from it,” Renwick said.

Take electronic stability control. “When that came out we took a look at our ongoing data to see did it have an effect? The answer is yes it did have an effect,” he said.

It turns out it has a “disproportionate effect on certain types of vehicles. SUVs actually benefit more from electronic stability control,” Renwick said. And the combination of SUVs and young drivers benefits from electronic stability control most of all.

The question for the insurance industry with the innovations leading toward vehicle autonomy is how to embrace these changes and how to price for them.

“It puts a much higher premium on those who can actually use data and use it very intelligently for their pricing logarithms. Maybe 35 or 40 years from now it will be a different ball game, but it’s going to be a big period in between,” Renwick said.

*This article previously appeared in our sister publication Insurance Journal.

Topics Trends Auto Tech Homeowners Market