Once a non-standard carrier, Progressive expanded programs to write all classes of drivers in 1993 and along the way became the largest writer of automobile insurance through independent agents and the fourth largest auto insurer in the country. Always innovative and sometimes contrarian, the $7.2B (NWP in 2001) carrier successfully combines a regimen of direct sales (via telephone and the Web) with independent agency sales, the latter representing about 70% of its total premium volume.
Progressive writes through about 35,000 agencies, an astounding number compared with other independent agency companies. The carrier is rarely the primary market for auto for an agency, and I assume that's largely a consequence of its past non-standard focus. But rather than allowing broad but shallow representation to create a growth stultifying impediment, the carrier has responded with innovation, especially by using technology to improve the efficiency of insurance distribution. Perhaps more than any other carrier, Progressive has driven technology down the road less traveled, finding fertile fields of opportunity and profit where others imagine only miasmatic fens.
It was a particular pleasure recently to travel to Cleveland to visit with Chris Garson, Agent Business IT Director for Progressive Insurance and a half-dozen of his managers who focus on agency Web and interface areas. The group wanted me to see the new agency Web-based quoting/issue software they're testing and will be rolling out soon. Along the way, I had a chance to ask questions about and come to better understand the larger Progressive picture.
I'll get to the agency side of the Progressive Web offering shortly, along with the carrier's work on interface download, software integration, and now hybrid interface. But first it's worth spending a few paragraphs on the carrier's direct marketing, sales, and service initiatives, an effort that one would expect to undercut the carrier's independent agency efforts.
Progressive and direct distribution
Most personal lines carriers choose to use agents (captive or independent) or to distribute direct (selling and servicing), but not both at the same time. Generally those carriers that try to sell direct through their Web sites turn the customer over to an agent for servicing (and pay the agent a commission, even if reduced). Progressive, on the other hand, has challenged conventional wisdom by maintaining apparently successful parallel distribution systems - and even found ways to develop some synergy between the two by getting multiple benefit from its marketing and technology efforts.
Channel conflict is problematic in most industries and generally assumed fatal in insurance, yet Progressive thrives. Why? How? According to Garson, broadly speaking there are two kinds of consumers: 1) those who want to buy through an agent (the majority), and 2) those who want to buy direct from the carrier. Selling direct isn't really a form of competition with agents, he maintains. It's just a way of serving that part of the market that wouldn't go to an agent anyway.
Is Progressive correct in its assessment of the marketplace? Its significant continuing growth via its agency sales force would suggest that direct sales don't come at the expense of agents. On the other hand, direct sales are now 30% of the carrier's premium volume, up from 10% in 1998. In any case, Progressive.com demonstrates an evenhanded commitment to both forms of distribution.
A prospect can get a quote and then buy through Progressive or be directed to a local agent.
From Garson's point of view, Progressive.com doesn't disintermediate agents, but serves as a powerful marketing, sales, and service force to bring business to independent agents. As an example, when agent-represented insureds come to Personal Progressive (personal.progressive.com) the company's service site, the Web pages are bannered under the agency's name. Garson thinks that it's more likely that Progessive.com may disintermediate the carrier's own direct telephone sales effort than its agents, since people who buy direct may like buying direct through the Internet even better than by phone.
Progressive makes a point of not letting direct sales bleed into agency sales. Its direct sales force does not solicit agency expirations and agents are notified when their customers initiate activity through Personal Progressive.
Garson's group focuses on agency distribution and competes in a friendly way with a complementary Progressive group that focuses on direct sales. Each group watches the other, steals ideas when they seem to make sense, repurposes the other's relevant software and technical expertise, and generally tries to outdistance the other side, release to release.
From Garson's point of view, strategic technology competition within Progressive is part of a larger picture that applies to the entire industry. It makes a great deal of sense, he believes, for carriers to compete with one another through technology. Conventional wisdom among many agency advocates has it that using proprietary technology to gain advantage with agents is a short-lived, losing proposition, yet Progressive has done pretty well over the last 15 years pursuing such a course.
In Garson's view, technology-based competition creates continuously more efficient and effective environments for agents. Critics would counter that non-standard, proprietary technology solutions tend to make agents less efficient. Garson replies that agents vote every day on carrier technology (among other things) by directing business to one market rather than another. His job is to find ways through the use of technology to better please agents and thus garner their economic votes.
Progressive.com
The carrier has won and continues to receive many awards for its consumer site, having been recognized by Gomez for six years running as the best insurance site. That might not mean anything, except that the high level of Web traffic to Progressive.com strongly suggests that it is, in fact, well received by Web consumers. Why? What insights can independent agents carry into their own sites?
One of the most striking things about the site is that it offers first-class comparative quoting. How odd that Progressive puts itself in the position of being compared to other carriers when most carriers detest the whole concept of comparative quoting! One's first reaction is to suspect that Progressive sandbags the other carriers, deliberately making itself look good. Watching the home page quote flow as well as a quick trip through Progressive's quoting process quickly dispels that notion.
The Progressive.com home page contains a continuously scrolling window that displays the results of competitive quotes generated through the site. Rather than showing Progressive usually winning these quote battles, it seems to me that Progressive is usually somewhere in the middle of the pack, which can include the likes of State Farm, Liberty Mutual, Farmer's, Allstate, and Nation-wide. Progressive rarely appears to be the low quote.
Is Progressive then acting as a generous public service site? Perhaps. On the other hand, perhaps it isn't trying to attract all business. Perhaps the carrier just wants to select the business that suits its underwriting strategy and is very happy to send away business that won't yield the right results. Some carriers trying to write business through the Internet report a pattern of adverse selection. Maybe Progressive has gotten through and is well beyond that potentially damaging phenomenon, in part, by using comparative quoting. Whatever the reality, by hosting good comparative quoting, Progressive generates much more traffic to its consumer site than it would were it only to quote itself. The carrier uses publicly available information to generate quotes for its competitors and must be doing a reasonably decent job of it, since quoted carriers haven't forced Progressive to turn off the spigot.
Over all, I think Progressive.com is very well designed and features excellent usability. Garson reported that Progressive's Internet team closely tracks the behavior of visitors to the site and can run usability experiments and immediately track the results. In one experiment, the carrier moved the home page link to its agency locator from the top left section of the screen to a location farther down the page. The carrier recorded an immediate surge in the use of the locator and has since concluded that the upper left section of Web pages tends to be something of a blind spot. Maybe that's because most sites use that area for their logo.
Besides offering competitive quotes, three other elements of the site seem to me to be especially interesting: Personal Progressive, Teens, and Español. Personal.progressive.com, launched in 1998, provides Web-based self-service, including policy information, quotes, policy changes, payment information, and claims information (including status, estimates, and coverage issues). Electronic bill presentment and payment is available through 400 CheckFree-powered Web sites.
Progressive.com makes a special attempt to interest and educate teenagers. Agents could learn something from this feature, but see one teen's critique. Progressive's Spanish language site, http://espanol.progressive.com/, acknowledges and serves the largest and growing U.S. minority group. Most other carriers and agents generally have been very slow to pay attention to our Spanish-speaking population. Progressive's effort is a likely harbinger of other language and cultural marketing and Web site focuses.
ForAgentsOnly.com (FAO)
Progressive uses technology strategically. It's part and parcel of the carrier's attempt to distance itself from the competition, reduce expenses, underwrite more effectively, attract customers, and interest agents. Not all attempts work and when they don't the carrier makes adjustments. Progressive seems to encourage and reward innovation more than it worries about making a mistake, a substantive difference from some of its risk averse competitors.
Internally, Progressive recognizes a division of labor between business responsibility state by state and the development and management of technical resources. State business managers have profit responsibility and deploy technical resources developed by Garson's team as they see fit. Thus, interestingly, a particular technology offering might be available for agents in one state but not another.
Since 1991 Progressive has supplied its agents with quote/rate/bind software called ProRater, a once-and-done solution. Initially a DOS program and more recently Windows-based, the high-usability software allows an agency to do a quick quote, then get an exact rate, and finally bind and submit an application - all electronically. The carrier has provided a complete point-of-sale program that transparently handles MVRs, credit scores, and underwriting generally. In most cases (close to 80%) business submitted through ProRater is processed overnight without human intervention with policies going out the next day.
Understanding that ProRater must be used within a context of other agency automation, Progressive supports significant integration with comparative rating and agency management systems. So for instance, data from a comparative rating session or agency management system policy detail can be used to automatically populate ProRater screens, where the transaction is completed and sent on to the carrier. Download into agent management systems (generally the next day) completes the processing cycle, thus providing agents a single-entry workflow.
ProRater doesn't allow agents to make policy changes and it isn't intended to provide policy inquiry, payment support, or claims inquiry functionality. In the past, those functions were provided through an agency call center and Client Profile, a proprietary policy, billing, and claims download system. Garson established Progressive's agency extranet, www.ForAgentsOnly.com (FAO) in 1997, and since then, many self-service functions have been added to the Web site.
The service is popular and successful with half of all endorsements now coming in via the self-service channel. Billing and other inquiry increasingly flows through FAO rather than the call center, along the way reducing Pro-gressive's (and presumably agency) overhead. The carrier also provides electronic dec sheets, improving the opportunity for its agencies to become paperless (and electronic dec sheets now represent 97% of NWP).
Progressive is very serious about usability, with ProRater, and now with FAO. The carrier maintains a usability staff and lab, follows explicit GUI (graphical user interface) principles, and does a great deal of usability testing with live observers and video cameras.
For the last three years, Progressive agents have had to use two different technologies/methodologies: ProRater and FAO, the former to submit business and the latter to do everything else. Some other carriers have been much more aggressive about consolidating all their agency services to their agency portal. With a history of being the first to deploy a number of insurance technologies, it's looked perhaps as if Progressive has fallen behind the curve.
Not so, according to Garson. The carrier has waited to bring ProRater-type POS functionality to FAO because acceptable performance required broadband Internet connections and too few of its agencies were so equipped. The picture is changing rapidly, however, and the carrier expects most of its agents to have DSL or better connections by sometime next year. So Progressive is on the verge of adding POS functionality to FAO. Over time, ProRater will be retired in favor of server-based rating (SBR).
Progressive has established a number of agency pilots in Ohio to test out its server-based rating embedded in FAO. The carrier will begin its production rollout during the third quarter of this year and hopes to complete the process by next summer
Because server-based rating is hosted and available through the Internet and browsers, agents will no longer have to install local software (as they did with ProRater) and rates will always be up-to-date. SBR should reduce Progressive agency support costs significantly.
The SBR initiative has three expressions: consumer, agency, and vendor. Each expression uses the same underlying rating engine, but with a different and appropriate face. Each expression has significance to independent agents. Progressive makes it possible for select agents to imbed consumer rating into their Web sites and by opening a vendor alternative Progressive will encourage integration between comparative rating packages and its server-based rating, an approach consistent with what it's done with ProRater in the past. By the way, the vendor version is ACORD XML compatible and screenless. That means rating, management system, or other vendors should be able to take advantage of the technology and integrate it into their offerings with minimal fuss.
I spent some time observing FAO (agency-oriented) rating and it appears to be both fast and easy to use. Progressive was quick to point out that FAO rating can't match the speed of locally executing ProRater because of Internet-imposed lag time, but they're confident that response time won't be an issue for agents.
The hosted rating has some nice usability touches. For instance, it can accept dates being keyed seven different ways and will convert them to its standard format on the fly. It's extremely easy to tell the system to populate the screen with another driver or vehicle and the agency can establish standard default coverage levels. Progressive makes use of name and address driven data pre-fill from third party sources in its direct telephone sales operation. That minimizes the amount of data that actually needs to be key-entered. Progressive expects to offer the same service through FAO. Thus, in many cases, the drivers and vehicles in a household will appear automatically and will only need to be confirmed, not keyed. FAO quoting includes the ability to print, FAX, or e-mail (the link to) a proposal.
Error handling can be a problem for server-based rating. One common solution is to take the user back to the offending page, highlight the problem, and require the user to fix the problem and then resubmit for a quote. But poorly designed error logic can require the user to return to one page then another to finally create acceptable input - a clumsy and frustrating process. Another common technique for error handling with server-based rating is to return an error code and then let the user review her submission and make corrections. That approach can be inordinately time-consuming. Progres-sive takes a third approach. Any problems discovered along the way are pulled together and presented on one screen for re-entry or completion. From my point of view, Progressive's error consolidation technique is clear and efficient.
SEMCI, Transformation Station, and hybrid interface
Progressive is clearly, well, progressive. It understood early on the important advantage once-and-done has over traditional submission workflow - even when it's buttressed by electronic transmission. It put together, then improved ProRater, along the way supporting integration from comparative rating and management systems. More recently it provided agents with policy change, inquiry, and other important functionality through its FAO site. The carrier provides its agents a flow of high quality referrals from its direct business. And now the carrier is improving on ProRater and consolidating quoting/submission to its FAO agency self-service site. A lot for agents to like, but not quite all some agents would like to see.
One agent contingent wants Progressive to become part of the SEMCI/Transformation Station solution sponsored by IVANS/Applied Systems and embraced by AMS, DORIS, The Travelers, The Hartford, user groups, and the IIABA. According to Garson, Progressive isn't likely to join that party. The reason? Progressive simply couldn't be Progressive within the real-time rating environment envisaged by Transformation Station.
Why not? Garson points to the complexity and sophistication of behind-the-scenes processing the carrier uses to determine when MVRs should be ordered and the tailoring of the quoting experience for each individual agency - along with underwriting routines, pre-fill (to come), and all that Progressive does to create a complete once-and-done environment. Transformation Station, on the other hand, has a different orientation - one that attempts to automate the traditional two-stage process: quote, then send an application to the carrier for final rating, underwriting, and so on.
A second agent contingent acknowledges the value of what Progressive has done with FAO (soon to have server-based rating), including the difficultly or impossibility of duplicating that richness within a SEMCI/Transforma-tion Station context, but they're eager for Progressive to bind its Web site in some practical way to agency management systems. That is, agents should be able to move between their management systems and FAO, with log-on, navigation, and pre-fill of the FAO site being taken care of transparently out of the management system. That's the approach I've elsewhere called hybrid interface.
As it turns out Progressive has several initiatives underway to provide the kind of management system (or rating system)/Web site connectivity this second group of agents is looking for. For instance, today it's possible for AMS Sagitta and AfW users to be taken directly from their management systems to the home page of the right policy on the FAO site. If the agency isn't logged on, they're challenged to do so, and then the process continues. The Web site/management system navigates to the FAO policy area and the screens are automatically filled with data from Progressive's database. Garson reports that his group is looking for ways to do logon, more complex navigation, and new business pre-fill automatically and out of the context established by AMS software user. A second initiative, to be piloted this fall, will experiment with a connectivity solution that requires no new software from either vendors or carriers, yet handles all logon, navigation, and data pre-fill tasks.
Garson has written a paper that explains some of the ideas behind the Progressive approach. That paper, "Key It Once (KIO): a Successor to SEMCI?" is available for download on the soundingline.com site. Agents and carriers interested in practical solutions to interface, carrier Web sites, and related issues would do well to read it.
Though some agents may object to Progressive's business and technology strategy, it's hard to fault the carrier's acumen, commitment, or performance. In a world of marginal carrier performers, Progressive is a standout. And though, for valid business reasons I think, it isn't willing to roll-over to strident demands to be part of the Transformation Station approach, it has responded to agency concerns about workflow and double entry, providing integration and download interface. All indications point to near-term, practical solutions with FAO as well, this time by fostering some level of workflow and data integration between agency technology and FAO, thus addressing the ends agents seek though not necessarily by the means (some) agents demand.
I'm impressed with what Progressive has done so far and I'm eager to see them pioneer practical management system/carrier Web site integration solutions in the future. I hope that agents can be open minded enough to understand their value, vendors cooperative for the benefit of their agency customers, and carriers alert to these practical solutions that can serve both them and their agents.
Progressive.com contains a Teen section, presumably to help teens understand insurance, drive more carefully, and deal successfully with accidents when they happen. One could imagine an agent letting a parent of a young driver know about the service or even an agent to suggesting to a teen directly that he visit the page. My youngest son, James, is now 16 and learning to drive. I asked him to review the Progressive.com Teen section and report his findings. Here they are: (JA)
Progressive.com's Teen section contains five sections: "Vanity Plates", "The Quiz," "411 Guide," "Stars and Cars," and "What's your Story?" The page uses bright colors and skewed shapes in their design in an attempt to appeal to a younger crowd.
The "Vanity Plates" section is a puzzle that matches license plates that use numbers and letters to their meanings, like "10SNE1" or Tennis, anyone? The game is amusing, but doesn't have any relation to auto insurance.
Next, "The Quiz" is a series of questions used to determine one's "car personality;" that is, what kind of driver you are and what kind of car suits you. The questions range in topics from the contents of the trunk to your favorite color. Apparently, I'm a "calm driver" and I am suited for any mid-size vehicle. This is another game that wouldn't answer any questions relating to insurance.
The "411 Guide" explains what one should do if ever part of a minor fender-bending accident. This section proves to be the most helpful, although most of its contents are common sense. It explains that you should call the police, your parents, and your insurance company, stay calm, get the other driver's information, make sure nobody is badly hurt, etc. This section attempts to use supposed teen expressions such as "wig out," "'rents," and "fruit loop." I suppose that the purpose of these expressions is to seem friendlier and with it, but still, it's obvious that a teen didn't write it, so why pretend?
"Stars and Cars" is a horoscope section. Each sign has some little bit of advice or consolation pointed to those with that zodiac sign's personality attributes. Amusing, but again, they aren't answers to any real questions a teen might have.
Finally, "What's Your Story?" asks for story submissions of embarrassing accidents that occurred during a date relating to a car. The example story doesn't seem to be written by a teen because it is completely trite and stereotypical. There are no posted stories, so apparently they've had no submissions.
Overall, the purpose of this teen section is probably to make Progressive seem like a friendly and with-it company. Still, the content is mostly unrelated to insurance. There are hundreds of sites with quizzes and puzzles, so why would a teen go specifically to an insurance site to play games? The only reason a teen would likely go to an insurance Web site is probably to attempt to understand insurance, and quite likely at the instruction of his or her parents.
An informational teen section could be a very helpful resource, so here are my suggestions. First, teens can see through the gimmicks of games, and would likely want to be taken seriously, so drop the act. Next, teens are just entering the world of driving and likely have no experience with insurance companies and their nomenclature. The section could be used to explain what insurance is, what kinds there are, what they cover, and all the related nomenclature. This practically undeveloped section could be a portal to basic understanding that the inexperienced lack, and a veritable resource for parents and young drivers. - by James Ashenhurst
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