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

Tricia Griffith: Yes. I’ll let Jim talk about that more. Similar platform doesn’t mean we’re all using the same data or the same models or using the data in the same way. So one, it’s expensive to get into this. Over these last three years, we’ve invested a lot. So, you just can’t all of a sudden turn on, understand your data early on, it’s different. In urban and rural, it’s different with your other segmentation variables. But Cambridge is the platform, but we’re not all sharing the same data and outputting the same exact thing. Jim, do you want to add anything?

Jim Haas: Sure. You’re right. Cambridge Mobile is our partner. We’ve had a great relationship with them. They provide the data collection mechanism that gets embedded in the app. And so, we do get that data from them. And you’re right, most people use them in the industry. I think, what’s different is we own our own algorithm. We use that data the way we want to, and we’ve learned a lot over the years about how to make the most out of that data. And I think you mentioned like everybody can see that. That’s not actually true. Most — in the entire industry, most algorithms for UBI are filed confidentially in the states. So, those are not shared with all of the competitors. So, we can’t see other companies’ algorithms, they can’t see ours.

So, we think we can — we’ve developed an advantage there, and we can maintain that. We also have an OBD device which we offer some of our customers pick, which gives us another source of data, which we think helps calibrate some of that as well.

Andrew Kligerman: Very helpful. And that’s pretty amazing, your accident response product, where you’ve got under 12 minutes to solve for some of the stuff on site. I’m wondering if you could share with us the fact that the impact on LAE and severity, any loss numbers? Anything you could share there to gain some insight into how that affects your loss ratios?

Tricia Griffith: Yes. I think that’s just too new. We’re just really dipping into this. We’ll probably have more on that in 18 to 24 months. Again, it’s something that we’re interested in. We’ve always been since probably 30 years ago want to make sure that we’re there for our customers and their greatest time of need. So, our — the biggest thing that we want to do there is to help our customers get help when they need it. And if we can use the data from the impact to start the claim going and get them back into the position they were before the accident, give them that peace of mind. That’s pretty important. And that could relate to a lot of great benefits in terms of retention, et cetera. But again, way too soon to be able to share much on that and we’ll probably have more in a few years.

Andrew Kligerman: Got it. And just real quickly, you mentioned 40% increased usage in UBI. Could you tell us the percent adoption, a percent of the overall book of business that you have?

Tricia Griffith: From the new perspective, which is what we share externally, it’s higher in direct. Jim, correct me if I’m wrong, about 15% in the agency channel. A little bit lower? Okay. A little bit lower in the agency channel, and then more in the direct. We offer it to everyone in the direct channel coming in. And obviously, we work with over 40,000 independent agents. Some feel more comfortable making that offering. Not all do it, but we’ve seen an increase since 2019, which makes sense. And it’s a perfect fix if you believe that you drive safely and maybe you’re driving less often for new business across the board as other inflationary pressures hit consumers.