The Progressive Corporation (NYSE:PGR) Q4 2022 Earnings Call Transcript

Jim Haas: Adoption in the whole program overall has been up, and we’re happy with the adoption of both mobile and OEM. So we’re happy with both of those programs. We just offer different options to consumers depending on how they want to share that data. And so we’re just trying to get the biggest footprint we can and both have been increasing.

Michael Ward: Okay. So maybe just to elaborate on that. I think you guys mentioned that the take-up or the adoption wasn’t great for existing customers. And so, I’m just curious what — why might it be great for new customers than — is part of it, just the competitors raising rates currently or the shopping is up?

Tricia Griffith: Yes. I would just say it’s one of the things that new business when you’re asking for a bunch of data to kind of assess the rate to risk. When I talked about the current customers, we were doing that in 2020 because we knew people were struggling with their finances. Everything was going up from groceries to et cetera. So we did sort of a marketing campaign and just most people didn’t do it. I think you get sort of — just like anything, whether it’s life insurance or health insurance you sort of make that decision and then you stick with it. It’s something you don’t necessarily want to do again. So, it’s just easier to do a new business when we’re acquiring all the information we need for an accurate rate.

Operator: Our next question comes from Ryan Tunis with Autonomous.

Ryan Tunis: I had a couple on just the UBI stuff. So, the first one, just thinking about the collision detection. I’m curious if maybe that could potentially have some kind of impact on frequency because I would think that there’d be a lot of customers with kind of smaller dollar claims that wouldn’t want to tell their insurance company, they got in the crash and just to keep their — the rates where they are. So is there any possibility that you knowing that they got in the crash that potentially lead to you actually getting more claims in the door?

Jim Haas: Yes. Thank you, Ryan. It’s a good question. In this particular case, the way the crash detection algorithm works, it’s looking really for more severe accidents. It’s not trying to pick up fender benders. So, these are claims that we fully expect would have gotten reported either way. These aren’t small dollar claims, where somebody might just choose either not to repair or to handle it out of pocket. These are larger claims. So, we don’t think of it. We think we’ve gotten these claims anyway.

Ryan Tunis: Got it. And then I guess just thinking about some of the telematics. So one question I had was for the drivers that you find giving really big discounts to be like 40%, what — if you look at like kind of the traditional insurance rating variables you used that are not in telematics space, I don’t know, ZIP code, FICO, whatever, can you draw any conclusions about like when you’re giving really big discounts to customers, which of the variables tend to have been kind of the shakiest predictive indicators? That’s the first part. And then also I was just curious about is when you find yourself giving a surcharge for the continuous, like six months later, you gave the discount, how you’re giving a surcharge, what are the main reasons that you’re finding that you’re having to give a surcharge after getting a discount?