NU Online News Service, May 17, 11:56 a.m. EDT

Progressive could be the biggest beneficiary if increasing personal-lines rates trigger more shopping behavior among consumers, as the Mayfield Village, Ohio-based insurer typically gains share when rates rise, according to a Stifel Nicolaus report.

In its latest property and casualty industry update, analyst firm Stifel Nicolaus says auto and homeowners rates are expected to accelerate throughout 2012 as auto loss-cost inflation worsens and as insurers continue to adjust to weather-related losses in recent years. For homeowners insurance in particular, Stifel Nicolaus notes that, despite rate increases, earned premiums are still falling behind rising loss costs.

Stifel Nicolaus says, “Rising rates should stimulate more shopping behavior, and based on its historical record of gaining share when rates rise, Progressive should be the biggest beneficiary.”

In its investment conclusion, Stifel Nicolaus says Progressive “should see particularly rapid policy-count growth, considering its focus on low-cost products and its status as the nation's largest independent-agency auto insurer, where price competition is probabl the most immediate.

The report adds that Progressive could also benefit from State Farm customers' increased shopping.

As for other personal-lines insurers, Stifel Nicolaus says, “Allstate has historically lost market share when industry rates rise, and that trend is likely to worsen in 2012 as 2011's wave of departing agents seek to recapture prior customers.

GEICO, Travelers and The Hanover Group should all see improving margins from personal-auto-rate increases, according to the report, although they likely will not see policy-count growth on par with Progressive in the rising-rate environment, judging by historic trends.

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With Rising Personal Lines Rates, Progressive to Benefit from Increased Shopping

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