Progressive Corporation, the country’s third largest car insurance company, sees a trend in the industry that is turning car insurance into a buyer’s market. According to CEO Glenn Renwick the development of the online insurance market has provided consumers the means to shop more aggressively for insurance. The result has been a price competition among insurers that has resulted in a drop in rates.
“There is a power shift to the consumer,” according to Mr. Renwick. He noted that the industry has seen cycles when the growth in revenue has been due to rising premiums rather than in increase in drivers. That is not the situation today, as he referred to the current business climate having a ‘deflationary’ impact on pricing. He added that for customers seeking renewal in particular, pricing was an important factor.
That speaks to the growing sophistication of the auto insurance shopper. Said Mr. Renwick, “We want to make sure we don’t lose them to someone else at a price we would be comfortable with.”
With regard to his competition, the Progressive CEO noted that other insurers also are lowering rates, with part of the impetus being that the frequency of accidents has either stayed steady or dropped every year since 1999.
The fact that Internet sales provide no opportunity for negotiation doesn’t seem to be deterring shoppers. More auto insurance price quotes are being generated by “electronic agents,” which indicates that more consumers are using the Internet. “It is definitely a growing trend,” Renwick said.