Cheap Vehicle Insurance, Progressive Improves Customer Base in a Couple Ways
Progressive made another big announcement on Monday aimed at getting Americans to try out its data collection program: regardless of who their current insurer is, drivers in every state with access to Snapshot can now take a 30-day test run with the device to see how much they could potentially save by switching to Progressive’s usage-based system.
That’s a pretty shrewd move on Progressive’s part. The company says it already has about 8.88 million active personal auto insurance policies as of May 2012, with an 8 percent share of the total personal car insurance market. And that share could grow if drivers insured with other top insurance companies realize they could be getting better rates from Progressive.
The long-term implications of this paint a very rosy picture for Progressive’s future. If safe drivers take Snapshot for a spin and find out that they could be getting significant savings based on their good behavior behind the wheel, they might jump ship to join Flo and her team. That means more customers for Progressive and fewer customers for the other guys.
But it wouldn’t simply mean more drivers joining Progressive. It would mean more good drivers joining Progressive, since the customers most likely to make the switch after giving Snapshot a test drive would be the ones who displayed the best driving habits and therefore got the best savings. So that could mean Progressive having a growing customer base of good drivers who file fewer claims, which means more of the premiums collected by the insurer stay with the insurer. Meanwhile, the people who test out Snapshot and find that their behaviors aren’t good enough to warrant a discount stay with the other guys, meaning the percentage of policyholders who are not so hot grows at those companies, and they have to devote more of the money they collect in premiums to paying and processing claims.