What can Progressive Insurance do to help its independent agents compete in an increasingly virtual insurance market?
That's the challenge facing Karen M. Barone, who was recently named national distribution leader for the agency business of the Mayfield Village, Ohio-based carrier, which markets coverage for cars, motorcycles and boats, as well as related policies.
Ms. Barone is charged with leading the more than 30,000 independent agencies representing Progressive in profitably growing their business.
Ms. Barone, who started at Progressive in 1990 as a manager trainee, understands the importance of providing independent agents with "ease of doing business," among other critical topics she recently discussed with us:
Q: What is Progressive's current distribution strategy, and what are your plans to advance it?
Ms. Barone: Our goal is simple–to be consumers' number-one choice for auto insurance. Our distribution strategy to meet that goal is to be available whenever and wherever people want us to be–which includes the broadest distribution of any auto insurer through independent insurance agencies, and direct by phone and on the Internet.
We've also been working hard over the past couple of years to provide agents with the policy features their customers are looking for, such as better homeowners discounts, loyalty discounts, and better rates for customers with previous insurance. The feedback we've gotten from agents to these changes has been terrific.
Q: You have said that technology will play a major role in Progressive's agent offerings. What enhancements are planned, and how do they fit in with your overall distribution strategy?
Ms. Barone: Technology is great, but only if it answers agents' needs and consumers' needs. Independent agents are busy–they need technology that makes their work easier.
We've asked agents if, for example, they'd like help in setting up more robust Web sites for their businesses. They've said yes, so we're making Web development services available to them at a discount.
This will give our agents visibility in the online space, where more and more consumers are shopping. It will also enable agents' customers to take care of their policies online, freeing up our independent agents to grow their business with new customers.
Q: It's a difficult time for agents both in getting new business and holding onto retentions. How is Progressive helping its agents tackle this challenge, and how are you crafting unique approaches to these two separate issues?
Ms. Barone: We continue to invest heavily in advertising the Progressive brand. This helps to drive business to independent agents' doors.
To hold on to those agents' customers, we've introduced some dramatic product changes in the last two years that help to keep customers' rates more stable. In July, we began rolling out what we believe to be the industry's only free, tenure-based loyalty program for our agents' customers. This will provide customers with big benefits–free–just for sticking with their independent agent and Progressive.
Q: Independent agencies are sometimes critical about Progressive's dual approach to distribution (using both independent agents and direct writers). How is Progressive demonstrating its commitment to independent agents?
Ms. Barone: More consumers choose to do business with independent agents than directly with Progressive–it's a fact. Our direct business makes up about 35 percent of our net written premium; independent agents make up about 65 percent. If we did not offer a direct option, we probably would not have captured the other 35 percent of the business.
Independent agents have always been–and will continue to be–critical to our success. Because of that, we invest heavily in our agency business. We have more than 200 sales representatives fanned out across the country who are dedicated to supporting our agents, and we continue to invest in delivering the technology, marketing materials and, more recently, Internet solutions to enable agents to market and grow their businesses.
We also continuously introduce new products and services. In the last couple of years, we introduced "Progressive Home Advantage"–a homeowners product underwritten by Homesite. We've also introduced a Progressive-underwritten umbrella product.
Our 24/7 claims service continues to lead the industry, and our relatively new service centers offer customers in 54 markets turnkey claims service. They can walk in the door with the keys to their damaged car and walk out in 15 minutes to a rental. We take care of the details, and we'll call the customer when the car has been repaired by a body shop and the work has been inspected.
Q: What do Progressive's independent agents tell you are their biggest needs, and how is Progressive responding?
Ms. Barone: Independent agents tell us their biggest needs are, first, more commission, and second, more marketing help. We continuously experiment with programs that award more commission and are investing heavily in the Progressive brand and agent co-op marketing materials that can help independent agents grow in their markets.
Q: Direct Internet sales are obviously a big part of Progressive's past and current growth. How are you helping independent agents to compete with this trend?
Ms. Barone: The in-person expert counsel that an independent agent provides appeals to a different customer than the ability to "do it yourself" on the Internet. The work we do year-round to help consumers understand the service that agents provide helps them to compete with the Internet.
One example is a series of stories we place in newspapers all around the country dedicated to explaining independent agents' roles. Just this year, those stories–including "Six steps to take if you're in an accident" and "The right insurance for your toys"–have reached more than 16.5 million readers.
In addition, we invest heavily in technology that allows agents to satisfy their customers by offering them the online options they want. For example, our agents can add an online policy service button to their Web site, which allows their customers to service their policies online. Agents can also add a quoting banner to their sites so consumers searching for insurance in their area can get quotes.
And, as I alluded to earlier, we recently partnered with Web.com so agents who don't have a Web site or who are unhappy with their site can get Web development services at a discount.
We know that more and more consumers are shopping online for car insurance but eventually buy from an agent. Agents without an online presence are missing out on a big opportunity, so we are helping agents bridge that gap with Web.com.
Laura M. Toops is Editor In Chief of American Agent & Broker, a member of Summit Business Media's P&C Magazine Group, which includes National Underwriter. Check out Laura's blog at http://agent-for-change.com/.
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