44 slides from Progressive Corporation (the)'s earnings presentation, Feb 28, 2023
Slide 1: Investor Relations Q4 2022: Telematics innovation at Progressive
Investor 2022 Q4 Relations Telematics innovation at Progressive
Slide 2: Information Relevant to this Presentation: Safe Harbor Statement
Information Relevant to this Presentation Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 Investors are cautioned that certain statements in this presentation and related comments by management during the earnings call not based upon historical fact are forward-looki
Slide 3: Information Relevant to this Presentation: Regulation FD
Information Relevant to this Presentation Regulation FD Disclosure Outlets Progressive disseminates information to the public about Progressive, its products, services and other matters through various outlets in order to achieve broad, non-exclusionary distribution of information to the public. The
Slide 4: Tricia Griffith, President & CEO
Tricia Griffith President & CEO INVESTOR RELATIONS Q4 4
Slide 5: Progressive had an excellent 2022 despite macroeconomic challenges
INVESTOR RELATIONS Q4 Progressive had an excellent 2022 despite macroeconomic challenges 95.8 +3% +10% Combined Policy-in-force Written Premium Ratio (PIF) Growth Growth Source: Internal data 5
Slide 6: Progressive's four cornerstones
Progressive’s four cornerstones Core Values —Who we are Purpose —Why we’re here Vision —Where we’re headed Strategy —How we’ll get there 6
Slide 7: Progressive's four cornerstones
Progressive’s four cornerstones Core Values —Who we are Purpose —Why we’re here Integrity, Golden Rule, Objectives, Excellence, Profit Vision —Where we’re headed Strategy —How we’ll get there 7
Slide 8: Progressive's four cornerstones
Progressive’s four cornerstones Core Values —Who we are Purpose —Why we’re here Integrity, Golden Rule, Objectives, We exist to help people move forward Excellence, Profit and live fully Vision —Where we’re headed Strategy —How we’ll get there 8
Slide 9: Progressive's four cornerstones
Progressive’s four cornerstones Core Values —Who we are Purpose —Why we’re here Integrity, Golden Rule, Objectives, We exist to help people move forward Excellence, Profit and live fully Vision —Where we’re headed Strategy —How we’ll get there Become consumers’, agents’, and business owners’ No. 1 d
Slide 10: Progressive's four cornerstones
Progressive’s four cornerstones Core Values —Who we are Purpose —Why we’re here Integrity, Golden Rule, Objectives, We exist to help people move forward Excellence, Profit and live fully Vision —Where we’re headed Strategy —How we’ll get there Become consumers’, agents’, and business People & Broad
Slide 11: Progressive's four cornerstones
Progressive’s four cornerstones Core Values —Who we are Purpose —Why we’re here Integrity, Golden Rule, Objectives, We exist to help people move forward Excellence, Profit and live fully Vision —Where we’re headed Strategy —How we’ll get there Become consumers’, agents’, and business People & Broad
Slide 12: We continue to take rate to stay ahead of trends
INVESTOR RELATIONS Q4 We continue to Aggregate Number Average rate take rate to stay rate change of states change per state 2021 ahead of trends Q1 0% - - Q2 2% 11 5% Q3 3% 20 6% We believe our Q4 3% 19 7% major rate increases Total 2021 8% are behind us 2022 Q1 7% 36 9% Q2 2% 17 5% Q3 2% 20 5% Q4 2
Slide 13: Growth is accelerating in Personal Auto
INVESTOR RELATIONS Q4 Growth is accelerating in Personal Auto YEAR-OVER-YEAR PERSONAL AUTO NEW APPLICATION GROWTH YEAR-OVER-YEAR PERSONAL AUTO PIF GROWTH 60% 10% 50% 8% 40% 6% 30% 4% 20% 10% 2% 0% 0% -10% -2% -20% -4% -30% -40% -6% Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Jan-
Slide 14: Progressive has been offering usage-based insurance for over 25 years
INVESTOR RELATIONS Q4 Progressive has been offering usage-based insurance (UBI) for over 25 years Personal 2014 Auto Discount and surcharge model 1996 2004 2008 2010 2016 2022 Autograph TripSense MyRate Snapshot® Snapshot app Continuous monitoring 1995 2000 2005 2010 2015 2020 2025 Commercial 2018 2
Slide 15: Agenda
INVESTOR RELATIONS Q4 Agenda 01 / Personal Lines Telematics 02 / Commercial Lines Telematics Jim Haas Cory Fischer Business Leader Business Leader Personal Lines Commercial Lines Telematics Product Development 15
Slide 16: Personal Lines Telematics
INVESTOR RELATIONS Q4 Personal Lines Telematics 16
Slide 17: We've continued to innovate in telematics
PERSONAL LINES TELEMATICS We’ve continued to innovate—improving our core program, expanding to use data from new sources, and powering new services for our customers SNAPSHOT PARTNER DATA FOR PRICING TELEMATICS AT NEW BUSINESS VALUE-ADDED SERVICES 17
Slide 18: Historically, Snapshot offered an upfront participation discount with six-month monitoring
PERSONAL LINES TELEMATICS As a reminder, historically, Snapshot has offered an upfront participation discount and required customers to monitor for only six months Snapshot data is used to apply a permanent discount or surcharge 1 Customer 2 Customer 3 Driving data used to 4 Customer receives regist
Slide 19: Initial Snapshot program (circa 2010) offered only discounts
PERSONAL LINES TELEMATICS Initial Snapshot program (circa 2010) offered only discounts 80% 60% Note that our goal 40% with UBI is to price more accurately. Surcharge 20% 0% Discount -20% -40% -60% March 1 Category Category 2 Category 3 Category 4 Category 5 Category 6 2010 Source: Internal data 19
Slide 20: Introduced the possibility of a small surcharge in 2014
PERSONAL LINES TELEMATICS Introduced the possibility of a small surcharge in 2014—first step in the direction of more accurate pricing 80% 60% 40% Surcharge 20% 0% Discount 10% -20% participation discount -40% -60% March 1 Category December Category 2 Category 3 Category 4 Category 5 Category 6 2010
Slide 21: Moved to price closer to what the data would suggest
PERSONAL LINES TELEMATICS But we’ve built on that and moved to price closer and closer to what the data would suggest 80% 60% 40% Surcharge 20% 0% Discount 10% -20% participation discount -40% -60% March 1 Category December Category 2 February3 Category Category 4 Category 5 Category 6 2010 2014 201
Slide 22: Moved to price closer to what the data would suggest
PERSONAL LINES TELEMATICS But we’ve built on that and moved to price closer and closer to what the data would suggest 80% 60% 40% Surcharge 20% 0% Discount 10% -20% participation discount -40% -60% March 1 Category December Category 2 February3 Category September Category 4 Category 5 Category 6 201
Slide 23: Moved to price closer to what the data would suggest
PERSONAL LINES TELEMATICS But we’ve built on that and moved to price closer and closer to what the data would suggest 80% 60% 40% Surcharge 20% 0% Discount 10% -20% participation discount -40% -60% March 1 Category December Category 2 February3 Category September Category 4 December Category 5 Categ
Slide 24: Snapshot helps retain the least risky drivers and shed riskier drivers
PERSONAL LINES TELEMATICS 10% +6% 5% +3% 0% 0% Snapshot helps retain the least risky drivers -5% (who earn bigger discounts) and shed -10% riskier drivers -15% -16% -20% Large discount Moderate discount Small discount No discount or surcharge Source: Internal data for 6 month policies on their first
Slide 25: Now rolling out a continuously-monitored program (Snapshot 5.0)
PERSONAL LINES TELEMATICS Now rolling out a continuously-monitored program (Snapshot 5.0) Snapshot data is used to adjust rates at each renewal 1 Customer 2 Customer 3 Driving data used to 4 Customer receives registers app or determine rate at continues to Snapshot plugs in device renewal monitor an
Slide 26: Continuous rating results in steeper factors and larger participation discount
PERSONAL LINES TELEMATICS Continuous rating results in steeper indicated and selected factors and a larger participation discount 80% 60% 40% Surcharge 20% 0% Discount 15% -20% participation discount -40% -60% March 1 Category December Category 2 February3 Category September Category 4 December Cate
Slide 27: Snapshot enrollment rates are up about 40% since January 2019
PERSONAL LINES TELEMATICS Snapshot enrollment rates are up about 40% since January 2019 Share of new applicants who have enrolled in Snapshot 1.4X 1.2X 1.0X Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2019 2020 2021 2022 Source: Internal data 27
Slide 28: We've continued to innovate in telematics
PERSONAL LINES TELEMATICS We’ve continued to innovate—improving our core program, expanding to use data from new sources, and powering new services for our customers SNAPSHOT PARTNER DATA FOR PRICING TELEMATICS AT NEW BUSINESS VALUE-ADDED SERVICES 28
Slide 29: Lead-generation programs
PERSONAL LINES TELEMATICS Lead-generation programs: In this model, partners like Credit Karma invite their customers to opt in to share data and then market discounts to good drivers 29
Slide 30: Customer quotes with driving data and discount included
PERSONAL LINES TELEMATICS If the customer chooses to quote, we then get that driving data and include the discount right in the first price they see 30
Slide 31: Data at quote program
PERSONAL LINES TELEMATICS Data at quote program: We now also pull in data collected by OEMs during the quote when it’s available and the customer opts in, applying the discount or surcharge to the rate they see 31
Slide 32: We've continued to innovate in telematics
PERSONAL LINES TELEMATICS We’ve continued to innovate—improving our core program, expanding to use data from new sources, and powering new services for our customers SNAPSHOT PARTNER DATA FOR PRICING TELEMATICS AT NEW BUSINESS VALUE-ADDED SERVICES 32
Slide 33: Introducing Accident Response
PERSONAL LINES TELEMATICS Introducing Accident Response If we detect an accident, we’ll send help if the customer needs it, whether that’s an ambulance or a tow truck. 33
Slide 34: Key Accident Response features
PERSONAL LINES TELEMATICS Key Accident Response features No additional cost No UBI required Thoughtful EMS dispatch More than EMS Connection to insurance 34
Slide 35: Example 1: Accident Response can help us become aware of claims faster
PERSONAL LINES TELEMATICS [I was] unable to Example 1: Accident Response can help call for help at the time but help us become aware of claims faster called me. RESPONSE TIMELINE 0 min. — Crash occurs CUSTOMER 2 min. — Push notification delivered COMMENT 3 min. — Automated call 4 min. — Agent call A
Slide 36: Example 2: Faster establishment of the facts of the loss
PERSONAL LINES TELEMATICS Example 2: Faster establishment of the facts of the loss 0 min. — Crash occurs RESPONSE TIMELINE 2 min. — Push notification delivered 4 min. — Automated call (confirmed Yes and transferred to agent) Agent call Tow dispatched 12 min. — Claim filed Elapsed 12 minutes time 36
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Slide 38: Commercial Lines Telematics
INVESTOR RELATIONS Q4 Commercial Lines Telematics 38
Slide 39: Telematics is our most predictive rating variable
COMMERCIAL LINES TELEMATICS Telematics is our most predictive rating variable Predictive power Telematics Other rating variables Source: Internal data 39
Slide 40: Program overview
COMMERCIAL LINES TELEMATICS Program overview Introduced 2018 2020 For-hire truckers who maintain Target market hours-of-service logs Anyone else Data capture/ Customer’s electronic-logging Progressive-supplied transmission device (ELD) plug-in device • Participation discount at • If data is availabl
Slide 41: Our programs are performing well across many key metrics
COMMERCIAL LINES TELEMATICS Our programs are NB APPS WITH TELEMATICS (AS PERCENT OF CL AUTO NB APPS) performing well across many key metrics Smart Haul Snapshot launch ProView launch • Increased adoption • Higher conversion • Better profitability Progressive’s Commercial Telematics (enrolled) premiu
Slide 42: Telematics has its share of challenges
COMMERCIAL LINES TELEMATICS Telematics has its share of challenges Experience • Agents • Customers Supply chain • Hardware • Data transmission Big Data • Data management • Modeling Wherever possible, Commercial Auto leverages investments and learnings from Personal Auto 42
Slide 43: Near-term plans will help us grow and derive additional value from the data
COMMERCIAL LINES TELEMATICS 75% of trips stop in NYC Near-term plans will help us grow and derive additional value from the data • Simpler customer data-sharing consent • Device installation incentive • Automated discount application • Broader customer eligibility Also looking at new data sources an
Slide 44: Thank you
Thank you INVESTOR RELATIONS Q4