Progressive 2015 Annual Report Download - page 66

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The Agency Business
Growth Over Prior Year
2015 2014 2013
Net premiums written 1% 5% 6%
Net premiums earned 0% 6% 6%
Auto: policies in force 0% (2)% 1%
new applications 2% (7)% (3)%
renewal applications (4)% 3% 2%
written premium per policy 4% 4% 5%
Auto: retention measures:
policy life expectancy – trailing 3-months 5% (7)% 1%
trailing 12-months (2)% (2)% (5)%
renewal ratio (0.1)% 0.1% (0.1)%
The Agency business includes business written by more than 35,000 independent insurance agencies that represent
Progressive, as well as brokerages in New York and California. The increase in new application growth for 2015, compared
to 2014, was due in part to an increased competitive position in the marketplace this year, generated by the roll out of our
current product model, which features more preferred pricing along with more sophisticated pricing for customers who
insure more than one product through Progressive. In 2015, we generated new Agency auto application growth in 27 states
and the District of Columbia, compared to 18 states in 2014, and 19 states in 2013, including eight of our top 10 Agency
auto states in 2015.
Rate increases were the primary factor in the year-over-year increase in written premium per policy in each of the last three
years. In 2015, written premium per policy for new and renewal Agency auto business increased about 3% and 4%,
respectively, compared to 2014.
We are starting to see our retention metrics improve, including our trailing 3-month measure. With our inflow of new
business growing during the course of the year, it would appear that our auto product is attractive in the marketplace and
we believe that, with our loss results, the rate level is currently sustainable. We continue to pursue efforts to build upon this
momentum.
On a year-over-year basis, Agency auto quotes were relatively flat for 2015. Our Agency auto rate of conversion (i.e.,
converting a quote to a sale) increased for 2015, compared to 2014, as we saw an increase in conversion rates on a year-
over-year basis much higher toward the latter part of 2015.
The Direct Business
Growth Over Prior Year
2015 2014 2013
Net premiums written 11% 12% 7%
Net premiums earned 10% 11% 8%
Auto: policies in force 9% 7% 6%
new applications 13% 10% 6%
renewal applications 5% 8% 4%
written premium per policy 4% 3% 3%
Auto: retention measures:
policy life expectancy – trailing 3-months 5% (4)% 8%
trailing 12-months 0% 3% (2)%
renewal ratio 0% 0.5% 0.3%
The Direct business includes business written directly by Progressive on the Internet, through mobile devices, and over the
phone. We experienced new application growth in our Direct auto business for 2015, due to greater demand by consumers
to shop and buy on mobile devices and the Internet, increased advertising spend, creative marketing, and competitors
raising rates. Out of our top 10 Direct auto states, nine states experienced an increase in new auto applications in 2015,
compared to eight states in 2014 and nine states in 2013.
App.-A-65