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

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

In its latest P&C industry update, the analyst firm 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 (see chart, page 11).

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.