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

Jim Haas: So when they opt into the program, it is — there is only continuous. You don’t get to pick at that. Obviously, we can’t force them to continue to monitor forever. So, we’ve got sort of — the program is designed around that and accommodates when people stop giving us data, if they do, but we certainly encourage them to continue to grow that data. The biggest discounts are available that way and the program’s design that we’d be monitoring continuously.

Operator: Please standby for our next question. Our next question comes from Tracy Benguigui with Barclays. Tracy, you have the floor.

Tracy Benguigui: Thank you. Even though you feel like you’ve approached rate adequacy in most states, I’m wondering, since you are growing quite quickly with lower ad spend, could you get away with getting even more rate? I mean, you did mention some of your competitors are exceeding you guys with rates. Do you feel like, it’s fine to be cheaper than some, given your risk selection?

Tricia Griffith: Well, we want to be competitive and we want to price to future loss trends. So, we continue to look at that and we will increase rates, should we see severity or frequency trends change, and that’s why I did give that data point in January. So we will stay on top of trends and we will continue to grow. And like John said, we haven’t opened up our aperture in terms of not looking at things that are important from our underwriting perspective. So we still have more leverage from that perspective. But now to — for me, it is all about using the data and pricing accurately as quickly as possible to match each rate to risk.

Tracy Benguigui: Got it. Could you also touch upon your initiative to raise retention amongst multiproduct customers that was mentioned in your filing yesterday? What are the key tenants to achieve that?

Tricia Griffith: We know that our customers and I think most consumers with insurance want stable rates. And so we want to be able to have, if possible, even in this kind of volatile environment what we call, small bites of the apple, to not have to increase rates like we had to in 2022 to stay ahead of trends. We also have very many offerings. So, we have whether it is in our Progressive Advantage Agency for we have a stable carrier of home, unaffiliated partners we work with to have more and more of those bundles, Wrights and Robinsons, we will continue to do that. And we really seek long-term to be sort of the destination company. And so whether it’s on our paper or not, we think of that in terms of our pillar of being where, when and how our customers want to shop and buy, so broad coverage.

So, on the Personal Lines side, we sell other people’s home, company when it doesn’t necessarily say where we’re going to go. On the Commercial Lines side, we also use our product as well as others for a small business, workers’ comp, GL, et cetera. So, it really is about following the customer and the more we’re able to offer them, even with the Progressive Advantage Agency where it’s — we work with a lot of different partners ranging from life insurance to travel insurance to jewelry insurance, the more that the customers have and the more that we’ve earned their trust, the longer they stay. So, retention continues to be the holy grail. We’re seeing positive improvement. We’ll continue to report on that as the quarters unfold, but we do know two parts of retention are really about having stable rates and having great service.

Tracy Benguigui: Great. And is there a segment you’re focusing more on? Agency, will that be more a focus versus direct?