Progressive 2009 Annual Report Download - page 20

motorcycle business was considerably off the pace of
2008, when the spike in gas prices caused an increase in
motorcycle and scooter new unit sales.
Retention of auto customers improved, driven by a con-
tinuing shift in our customer characteristics towards more
stable preferred customers. Retention of Special Lines cus-
tomers was down slightly versus 2008, which we believe
is likely a function of economic pressures that reduced
consumers’ propensity to use and insure their recreational
vehicles. Customers’ perception of our service, as meas-
ured by our Net Promoter®Score did not improve in 2009.
However, our commitment to making gains in the cus-
tomer experience remains as strong as ever.
In total, we grew our policy base in Personal Lines by
nearly 476 thousand, or 5%, to almost 11 million policies.
Average written premium per policy was down about
2% in our auto programs and flat in our Special Lines
programs. In total, net premiums written were up 5%.
We made further progress during the year in meeting
the broader Personal Lines needs of more preferred cus-
tomers. We added two more providers to our Progressive
Home Advantage®program, through which we package
auto and home insurance for consumers. We’ve also con-
tinued to roll out an umbrella product, which we now offer
in 30 states. In 2009, our new preferred auto customers,
including those combining their auto and homeowners
policy with Progressive Home Advantage, grew approx-
imately 20% within our Agency business and about 30% in
our Direct business. We’ve learned much about cross-
selling and are gaining insights around household loss and
acquisition economics in contrast to the policy level view
we have historically taken. In short, we are excited by the
opportunity to broaden the spectrum of customers we
serve to include those with whom we expect to have a
much longer relationship.
We also made advancements during the year with our
usage-based insurance program, MyRate®
, which is now
in 19 states. Our experience with multiple variations of our
MyRate model deployed in 2009 has led to the development
of a “MyRate 2.0” model, which we’ll be rolling out in 2010.
We think this version presents a more appealing consumer
proposition and is aimed at a segment that we know dis-
plays markedly better loss experience. Today, well over
100,000 Progressive customers enjoy the benefit of con-
trolling their premium through MyRate.
Our 2010 plans include ensuring that we remain a leader
in our core segments, continuing to grow capabilities and
customers in preferred and multi-product households, fur-
ther improving our cost structure, and continuing to provide
distinctive products and services valued by consumers.
26
Personal Lines
2009 2008 Change
Net premiums written (in billions) $ 12.5 $ 11.9 5%
Net premiums earned (in billions) $ 12.4 $ 11.8 4%
Loss and loss adjustment expense ratio 71.5 73.5 (2.0) pts.
Underwriting expense ratio 20.9 21.1 (.2) pts.
Combined ratio 92.4 94.6 (2.2) pts.
Policies in force (in thousands) 10,940.6 10,464.9 5%
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