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Case Description

If you‘ve ever been in a car accident, you know how it feels to wait for your claim payment to arrive. Insurance companies love to hold the money as long as possible to keep every penny of interest.

Progressive Insurance is the notable exception to the industry rule: It tries to pay as quickly as it can – by getting claims adjusters out of the office and onto the street where they can interact with clients. The logic behind such a radical notion? Happier customers and more productive claims reps will more than make up for the lost interest revenue.

At Progressive, that radical notion is enabled (in part) by IRV, which stands for “immediate response vehicle,” a fleet of SUVs loaded with enough communications gear – laptops, printers, and cell phones – to allow adjusters to settle claims right at the scene of the accident. That’s a big improvement over the scenario that still pervades the industry: Wait a week or two to see the car and make hand written notes, snap photos, drive back to the office, type it all into the mainframe computer, and issue a request for a check.

Ten years ago, the IRV project involved just 10 adjusters in Florida. Today more than 11,000 mobile claims reps share a fleet of 2,600 IRVs. Not only did the program help improve customer retention by 20% last year; it has helped Progressive shave labor costs. Progressive’s mobile adjusters can handle nearly twice the workload they could a decade ago. IRVs have also helped revenues climb from $1.8 billion to more than $9 billion during that period.

A wireless laptop provides around the clock access to Progressive’s mainframe computer. An adjuster can type a claim while sitting in a body shop and go over it with the policy-holder right on the screen. The laptops also let agents use fax machines around the country as printers when a satellite office needs a hard copy instead of email.

Agents spend hours every day talking to clients, auto shops, and other adjusters on their cell phones, but it’s the two-way radio feature that gets the most use. Dispatchers monitor agents’ locations, sending the closest adjuster to investigate a scene. Digital cameras let agents snap as many pictures as they need, upload them to Progressive’s computers for storage, and share them with the managers if necessary. Some adjusters even film short videos that are used to document traffic patterns at accident prone intersections.

Each IRV includes an ink-jet printer to spit out paper copies of estimates, claims, and, of course, checks.

But customers also have the opportunity to adopt Progressive IT components. The introduction of “the Snapshot” device was extended to both customers and prospective customers. Once plugged into a vehicle’s diagnostic port, the Snapshot records instances of braking, how many miles driven, and how often driving occurs between 12am and 4am. Potential customers can “test drive” for free and obtain rate quotes based upon their registered driving patterns. Current customers can obtain rate discounts relatively immediately.

The Snapshot makes use of cellular phone networks to transmit data back to Progressive data centers. Users of Snapshot can view their driving pattern data online. However, neither speed nor geo-positioning systems (GPS) detail is captured or stored by Progressive hardware (so those data are not available).

Assignment questions:

1. Describe Progressive’s business model (i.e., how do they make money, what products/services do they provide). [list]
2. Describe Progressive’s internal capabilities/competencies that are critical to the success of the business (i.e., success factors) [list]
3. Explain how Progressive’s use of IT hardware contributes to these capabilities/competencies? [table columns = capability, IT hardware component, contribution]
4. Describe or explain how the elements of Moore’s law relate to this case.[list or table]

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[1] Mainly adapted from “The Check is in the Car,” Business 2.0, July 2003, pp. 44-45
Discussion of Snapshot obtained from Progressive’s website (http://www.progressive.com/auto/snapshot-how-it-works/)