Progressive Corp. CEO Genn Renwick says the auto insurer has received 6,000 claims from Superstorm Sandy as of Nov. 2 and “more often than not” they’ll be total losses.
Renwick told analysts during a conference call on Friday that he anticipates more claims as policyholders get are able to return home or are able to call in claims since many were displaced by flood or power outages. Hopefully, he says, “we can get as many of the unreported claims in within the next few days so we can get on those as quickly as possible.”
Renwick says about 80 percent of claims are from New York and New Jersey, with another 10 percent from Pennsylvania and Connecticut. About two-thirds of claims are from flood damage and about one-third are from wind.
Progressive in October reported net income of $653 million after nine months—down 14 percent compared to last year.
The insurer should have “a pretty good estimate of our exposure [from Sandy] by the time we will produce [October] results in about 12 or 13 days,” Renwick says on Nov. 2.
Progressive has been seeking rate increases to match a trend in escalating frequency and severity of claims. This has, predictably, affected new business. In a letter to shareholders, Renwick says new business production in the third-quarter dropped about 5 percent compared to last year in both agency and direct auto, and 1 percent in both special lines and commercial auto.
“While not a desired side-effect, the trade-off with margin improvement is an easy one for us to make,” he writes.