ATENEO DE DAVAO UNIVERSITY
COLLEGE OF BUSINESS AND GOVERNANCE
PROGRESSIVE INSURANCE
CASE STUDY
MGT. 428
MWF 12:25-1:25pm
SUBMITTED BY:
CHERRY MAY BIROG
KENNETH MAGARIN
KATHY MONTINOLA
CHARLENE ELAINE LOPEZ
KARLO SEPARA
JOHN AMTHONY JUNSAY
JANELLE ARBOLEDA
I. Background
Progressive Insurance, an automobile insurer based in Mayfield Village, Ohio. It has approximately $1.3 billion sales in 1991 and had grown $14.5 billion on 2006. They are offering lower prices and better service than its rival and that makes them one of the countries largest auto-insurer.
II. Statement of the Problem
* How will they maintain their position in the long-term trends in the market? Knowing that there is no stable in the market today and everything may change as time passes. * How will they innovate new more things to be able to satisfy their customer * How will they improve the services and poor performances of their employees
III. Objectives
* To maintain their position in the market. * To be able to meet the needs, wants and likes of the customers. * Continue to serve and innovate new things to become more successful
* To satisfy their customers
IV. Strength, Weaknesses, Opportunities and Threats
Strengths
The Company exercises efficiency and effectiveness to their operations by providing the following innovations:
- They open a hot line that will bring them closer to their customer.1-800-AUTO-PRO, a cutting-edge auto insurance rate comparison shopping service. Consumers no longer had to call several companies to compare auto insurance rates — in one phone call to 1-800-AUTO-PRO, they'd receive a Progressive quote and comparison rates for up to three competitors. Plus, if customers wanted to buy from Progressive, they could purchase an insurance policy directly and immediately on the phone. Today, this service is available by dialing 1-800-PROGRESSIVE (1-800-776-4737).
- Another great innovation from the company is when they created the Immediate Response® Vehicle (IRV), a specially marked and outfitted vehicle that brought trained claims professionals to wherever customers needed them — even to the scene of an accident
- Currently, Progressive is one of the largest auto insurance groups in the United States, thanks to innovations including comparison rates and 24/7 customer and claims service. Our growth continues at a steady pace, too: Between 1996 and 2005, Progressive grew an average of 17 percent per year, from $3.4 billion to $14 billion.
- Company offer lower and better service than its rival, thus achieving a higher level of value compared to their competitor.
- With the innovations in the operation of Progressive insurance, the company manages to lessen their cost and maximize their profit while building strong customer relationships and create value for their customer.
WEAKNESSES
Customer Service
Progressive company created a helpline or Immediate Response® Vehicle (IRV)( a specially marked and outfitted vehicle that brought trained claims professionals to wherever customers needed them. Thus customer service is badly needed. Representative who assist the customer over the phone are the front runners of the company. They have the direct connection/interaction with the customers, thus they need to assist and handle the customer well. We’ve read a lot of bad comments regarding the customer service of progressive of insurance. Some say, representative were not that helpful and impolite, etc. We need to keep in mind that a customer do not forget his experience if treated badly or made to understand their needs are found to be insignificant. In fact, the poor customer experience will also be shared with family and friends. However, in a customer's mind, the business linked with poor customer service gets rejected no matter how high grade the service or product delivers. In the competitive surrounding, it will be important to have one well-established customer care unit that can play a key role to distinguish the company. For having the effective results, there should be customer care training so as to teach the staff members how to listen carefully to all the customer queries and seek out means to extract real customer needs. It is through right training that call center agents will be able to convert the customer needs into management information for the purpose of making decisions.
OPPORTUNITIES
New Services
Progressive insurance company is one the top car insurance company in the United States. They have a well established name when it comes to car insurance. Having a great reputation, it would be in their advantage if the company creates a new service in line to their car insurance service. They can venture to life insurance, real property insurance and the likes, while applying the same innovations and methods that they apply to their current operations. It would be easier for them to penetrate the market knowing that they have a strong and well establish name.
TREATS
Intense Competition
One of the biggest competitors of Progressive Insurance Company is the State Farm Insurance. When searching for auto or homeowners insurance, it is undoubted that State Farm insurance will be one of the first options that will be found. State Farm insurance is one of the largest insurance providers in the world and rightfully so since, although their prices can tend to be high, they are very reliable and have excellent customer support. Progressive Insurance Company may have low rates, but reliability is more important and that is what State Farm insurance brings to the table that some of its competitors do not. They do not just offer car insurance; they also have homeowners insurance, life insurance (term and permanent), banking, and mutual funds options.
Bad Economy
United States of America is still experiencing a bad economy. Companies have been rocked by one uncertainty after another since 2000, including recession, corporate scandals, terrorist attacks, war, and a tripling of oil prices. Bad Economy is the greatest potential to derail consumer spending. People tend to spend less to insurance and prioritize their basic needs (food, shelter, clothing, and Water).
V. FINDINGS
Our main finding is that Progressive, a pioneer at writing insurance over the Web, relies almost exclusively on its in-house IT organization for major technology initiatives. Progressive Insurance, which built its brand on giving customers more options, offers up to 10 different billing plans depending on the state.
POSITIVE
- Lower operating cost (because fewer people are involve in handling claims) - Reduction in claim layouts (because claimants often accept less money if it’s given sooner and with less hassle - Faster service with less hassle
NEGATIVE
- No single innovation conveys a lasting advantage. - The system may become unstable - Fraud - Poor customer service (front liners, call center agents)
VI. Alternative course of Action
Continue the same course of action where progressive insurance out-operated its competitors by offering lower prices and better service than its rivals. What enabled Progressive to have better prices and service was innovations in operations, new and better ways of doing the day-to-day work of providing automobile insurance. The adjuster not only examines the vehicle but also prepares an on-site estimate of the damage and, if possible, writes a check on the spot.
Change the current situation where in they decided to change the rules for how to play the insurance game in order to compete with much larger companies. Expand the current situation and benefits where Progressive are an improved ability to detect fraud, lower operating cost and reduction in claim payouts because claimants often accept less money if it’s given sooner and with less hassle. It is the top 3 largest insurer but they must not just accept it. They must be motivated more to become the number 1 not only on United States but also all over the world. They are also poor in Advertisements and their campaigns were notably unsuccessful so might as well they need to give importance in that area.
VII. Recommendation
They shall continuously meet the needs of the customer to the best of their ability in order to meet their satisfaction. They should also maximize profits through the efficient management of their assets and liabilities to generate high returns to their shareholders as well as strengthen their company’s position. They are committed to succeed with dedicated people and well considered strategies in hand. Progressive insurance can confidently look ahead to meeting the challenges of the future and to sharing successfully partnerships with its clients. They must improve their front liners and the call center agents. Motivate their employees to become more efficient and effective in their work. There are lots of opportunities that they can engage into, like opening another product or services. It woukd be easier for them to capture the market because they are well known with a great reputation. In business, reliability is very important, that makes the other competitors up in line so they must improve their own organization to be more reliable and trust worthy company. No single innovation conveys a lasting advantage. Progressive Insurance Company can develop their current operations by strengthening their connections with their customer /claimant. They can do this by developing their website, making it more interactive to their claimants and user friendly. They can create a chat support in their website, for the claimant to received updated information regarding their services.
We also recommend that Progressive Insurance should implement a new billing system to support a wide range of customers. 