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Progressive Insurance Case Study

Case Description If you‘ve ever been in a car accident, you know how it feels to wait for your claim payment to arrive. Insurance companies love to hold the money as long as possible to keep every penny of interest. Progressive Insurance is the notable exception to the industry rule: It tries to pay as quickly as it can – by getting claims adjusters out of the office and onto the street where they can interact with clients. The logic behind such a radical notion? Happier customers and more productive claims reps will more than make up for the lost interest revenue. At Progressive, that radical notion is enabled (in part) by IRV, which stands for “immediate response vehicle,” a fleet of SUVs loaded with enough communications gear – laptops, printers, and cell phones – to allow adjusters to settle claims right at the scene of the accident. That’s a big improvement over the scenario that still pervades the industry: Wait a week or two to see the car and make hand written notes, snap photos, drive back to the office, type it all into the mainframe computer, and issue a request for a check. Ten years ago, the IRV project involved just 10 adjusters in Florida. Today more than 11,000 mobile claims reps share a fleet of 2,600 IRVs. Not only did the program help improve customer retention by 20% last year; it has helped Progressive shave labor costs. Progressive’s mobile adjusters can handle nearly twice the workload they could a decade ago. IRVs have also helped revenues climb from $1.8 billion to more than $9 billion during that period. A wireless laptop provides around the clock access to Progressive’s mainframe computer. An adjuster can type a claim while sitting in a body shop and go over it with the policyholder right on the screen. The laptops also let agents use fax machines around the country as printers when a satellite office needs a hard copy instead of email. Agents spend hours every day talking to clients, auto shops, and other adjusters on their cell phones, but it’s the two-way radio feature that gets the most use. Dispatchers monitor agents’ locations, sending the closest adjuster to investigate a scene. Digital cameras let agents snap as many pictures as they need, upload them to Progressive’s computers for storage, and share them with the managers if necessary. Some adjusters even film short videos that are used to document traffic patterns at accident prone intersections. Each IRV includes an ink-jet printer to spit out paper copies of estimates, claims, and, of course, checks. Progressive has also developed e-commerce recommendation software that lets a competing car insurer’s end customer view Progressive motorcycle, boat, and RV Rev’d Jan 2013, August 2015

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Progressive Insurance Case Study insurance, but keeps Progressive from trying to sell those customers car insurance. Using service- oriented architecture, Progressive integrated its existing insurance sales software with those of other competitors. The website recognizes when customers are referred from an insurance rival’s site, and suppresses information about Progressive’s auto products. The system also lets Progressive offer non-rival products, so it can sell partners’ homeowners insurance, for example. But customers also have the opportunity to adopt Progressive IT components. The introduction of “the Snapshot” device was extended to both customers and prospective customers. Once plugged into a vehicle’s diagnostic port, the Snapshot records instances of braking, how many miles driven, and how often driving occurs between 12am and 4am. Potential customers can “test drive” for free and obtain rate quotes based upon their registered driving patterns. Current customers can obtain rate discounts relatively immediately. The Snapshot makes use of cellular phone networks to transmit data back to Progressive data centers. Users of Snapshot can view their driving pattern data online. However, neither speed nor geo-positioning systems (GPS) detail is captured or stored by Progressive hardware (so those data are not available).

Assignment questions: 1. Describe Progressive’s business model (i.e., how do they make money, what products/services do they provide). [list] a) Progressive offers car insurance redemptions the quickest in the industry by forgoing interest on funds deposited in the bank, instead quickly clears the claims and retains its customer base. b) Progressive is an auto insurance company best known for its prompt and quick settlements of its clients auto insurance claims. c) Able to meet their operational excellence by reducing waste in terms of delaying the claim process and increasing efficiency using IRV’s. d) The superior product leadership shown in delivering the claim quicker than its competitor allows brand retention. Which enabled the brand to increase its revenues from $1.8 billion to more than $9 billion during the launch of IRV. e) The brand retention is possible through customer intimacy thus provides the brand the competitive advantage using Information System such as the IRV. f) Progressive also offers motorcycle, boat, and RV insurance. g) “Snapshot” product offers existing customers and new prospective customers an opportunity to obtain free rate quotes based on personal driving patterns.

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Progressive Insurance Case Study

2. Describe Progressive’s internal capabilities/competencies that are critical to the success of the business (i.e., success factors) [multi-part list or table] a) Unique approach/ process compared to other brands in the industry  Compared to traditional insurance companies; Progressive enables its customers to reclaim their claim, instead of holding the money as long as possible to gain from interest. This business model primarily focuses on keeping customers happy through productive reps thus emphasizing on customer intimacy. The quick response allows brand retention to occur.

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b) Operation Excellence- (Efficiency) The mobile adjusters with portable laptops, printers, and cellphones allows progressive to reduce/save labor costs and subsequently the adjusters (handle nearly twice/thrice the workload) and representatives function more efficiently. The efficient use of portable communications systems which allows connecting dispatchers with agents to access the claim the site based on their current location. Additionally, instead of visiting Progressive offices, its IRV fleet is now able to finish all documentation on the site. Thus, this dynamic process allows Progressive to reduce its fixed costs and moreover become more efficient. c) Factor/Component that exceeds customer satisfaction Progressives- Special component i.e. IRVs and the two-way radio system, allows the company to ensure quick response times and timely claim process. The exceeding customer satisfaction signifies that progressive clients are satisfied with their service and enables perspective customers to compare progressive services to other companies.

3. Explain how Progressive’s use of IT hardware contributes to these capabilities/competencies? [table columns = capability, IT hardware component, and contribution] Capability Hardware Contribution Process involves Able to settle claims right Communications immediate insurance claim at the spot of the incident components such as documentation and printers, cell phones and settlements laptops Immediate/Real-time The use of wireless laptop Allows on the field agents Rev’d Jan 2013, August 2015

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Progressive Insurance Case Study insurance claim write-up with customer revision on the site. Moreover, easy and accessible nationwide printing.

connected to Progressive’s mainframe computer and fax machines around the country (cloud computing phenomenon). (Ink-jet printers equipped in each IRV)

Efficient dispatching of agents to the spot

Use of Two-way radio

Take photos and record video of accident scenes and accident prone intersections. All facilities provided in the IRV.

Use of Digital Cameras

Allows prospective customers free rate quotes based on driving patterns, and allows existing customers the chance to obtain rate discounts.

Add the “Snapshot” Device in vehicles.

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to carry out higher work load tasks and enables them to print hard copies of claim documents at any location. Thus, allows quick communication between agents and office staff (Managers). Easily be able to track and monitor each agent’s locations and send the closest adjuster to investigate a scene. This also Progressive agents to respond to accident sites relatively quicker. Agents can take photos as they need to upload onto Progressives online storage for claim documentation. Also, the adjusters film video and record traffic patterns at accident prone intersections. Ensures existing customers are happy by providing them the best rate from Progressive. Moreover, allows prospective customers a free rate quote without visiting an office or meeting with a representative.

Describe or explain how the elements of Moore’s law relate to this case.[multipart list or table]

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Progressive Insurance Case Study 

Inexpensive to upgrade/equip IRV system

Moore’s law states “hardware will continually become more compact, portable, and capable while current in use products become less expensive”. Progressives effectively utilizes the concept of portability and low cost associated with its IRVs. Its relatively cheaper to upgrade the hardware components which is another factor stated in the law; which is cost effective compared to other industry wide used components. Thus, Progressive has effectively switched to towards portable technology providing their builtin servers with valuable information about their customer and their claims. 

Key hardware tools becoming cheaper and portable

Technology advancement in the field of conventional office tools such as printers and computers have all incorporated portable features compared to being bulky and expensive. Thus, Progressives process enables use of portable printers and computers in its IRV help solve its customers’ claim on the incident site.

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