Progressive 2012 Annual Report Download - page 49

Expanding our offerings in the mobile space remains an important initiative. Consumers have the ability to obtain a quote
and buy an auto insurance policy on our mobile website in all states and the District of Columbia. During 2012, we began to
offer the ability to quote up to three drivers and three vehicles on mobile devices. This multi-driver, multi-feature was
available to customers in 45 states and the District of Columbia as of December 31, 2012, and will be available in all states
in the near future. More and more of our Direct business quotes started on a mobile device.
During the year, we made the comparison rate experience available on a mobile device in most of the country. We also
launched a feature that allows consumers to use the camera in their mobile device to photograph their driver license and/or
current insurance card, to provide easy data fill for an instantaneous quote. This feature is available in 36 states and the
District of Columbia and will be rolled out to additional states in 2013. In addition, policyholders are able to make payments
and add certain endorsements from their mobile device, as well as receive identification cards and severe weather text
alerts. Furthermore, much of our agency-dedicated website is now accessible to agents for many brands of tablet
computers and mobile phones, including auto quote/buy, servicing, and reporting capabilities. We expect to continue to add
new functionality to our mobile website and mobile applications next year.
We continued the national rollout of a product model in our Commercial Auto business that began in 2011. This model,
which expands our coverage offerings, simplifies the quoting and claims experience, and provides incentives for customers
to stay with us longer, is available in 46 states, including 32 states added during 2012. We plan to continue the rollout to our
remaining three Commercial Auto business states in early 2013. We also offer our customers general liability and business
owners policies in the 49 states where we write commercial auto business, and workers’ compensation coverage in 14
states, through our Progressive Commercial AdvantageSM program; these products are underwritten by four unaffiliated
insurance companies.
We experienced the following changes in written premium per policy:
Change Over Prior Year
2012 2011 2010
WRITTEN PREMIUM PER POLICY
Personal Lines – auto 3% (1)% (1)%
Commercial Auto 10% 5 % (6)%
We increased rates in our personal auto business in 2012 in response to rising claims costs, driven primarily by increased
severity. For our Commercial Auto business, increases in written premium per policy in both 2012 and 2011 reflect rate
increases taken over the last several years, as well as shifts in our mix of business to Florida and for-hire transportation,
both of which have higher average premiums. Adjusting rates is a continuous process and we will continue to evaluate
future rate needs and react quickly as we recognize changing trends. See below for additional discussion on written
premium per policy for our Agency and Direct auto channels and our Commercial Auto business.
Another important element affecting growth is customer retention. One measure of retention is policy life expectancy, which
is our actuarial estimate of the average length of time that a policy (including any renewals) will remain in force before
cancellation or lapse in coverage. The following table shows our year-over-year changes in policy life expectancy:
Change Over Prior Year
2012 2011 2010
POLICY LIFE EXPECTANCY
Personal Lines:
Auto (1)% 2 % 5 %
Special lines 0 % (1)% (1)%
Commercial Auto 0 % 0 % (1)%
Although we experienced an increase in the number of personal auto renewal applications year over year, the length of time
these customers are remaining as policyholders has declined in 2012, primarily reflecting the effect of rate increases taken
in many states. Policy life expectancies for our special lines products and our Commercial Auto business have seen little
change over the last several years. Recognizing the importance that retention has on our ability to continue to grow
profitably, we continue to emphasize competitive pricing, quality service, and having the products and services available for
our customers as their needs change during their insurable life.
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