Auto insurance giant Progressive Corporation has recently increased insurance rates for policies that are sold through agents and consumers. The hikes were very minimal and for the most part, were up by just 1%.
Motorists, who had to make adjustments to their lifestyles due to the recent economic crunch, are still paying less, with many motorists opting for less coverage in their auto insurance and driving older model cars.
Progressive Corporation believes that with the country’s current weak economic prospects, some policyholders might take advantage of their auto insurance policies and file false claims for injuries or damages sustained during car accidents. The company is also concerned that some individuals might acquire auto insurance just for this purpose.
Glenn M. Renwick, the car insurer’s chief executive officer and president said that Progressive Corporation is worried that people might use the personal injury protection provision of insurance policies for fraudulent activities. He added that although speculative at this point, they are not ruling out this scenario, not until they see encouraging signs in the economy.
During the company’s quarterly earnings call on Wednesday, the insurer announced that this year, fees on policies sold by agents were increased by 2%-3%, while premiums on auto insurance policies sold to consumers via the Internet or phone went up 1%.
Unfortunately, this recent exercise failed to effect direct positive gains to the company’s bottom line, as customers ended up paying fewer auto insurance premiums by declaring more deductibles and driving older model vehicles — a powerful and telling indication of a weak economy.
Progressive is known in the industry to employ aggressive marketing strategies and have been successful in wresting market share from car insurance companies who have higher fees and premiums. One promotional strategy of the company is to offer better rates to consumers without hurting benefits and coverage of policies.
Even with the downturn, the company has shown resiliency and stability. Last month, the giant insurer reported earnings of $3.5 billion, which was up 1% from the same period last year. Progressive Corporation also announced healthy margins in the third quarter amounting to 40 cents per share.
A month ago in October, Progressive Corporation registered a net gain of 16 cents per share, with premiums increasing by 3% to $1.3 billion from the same period a year ago. Progressive comes out with an earnings report every month.
Progressive is just one of the elite insurers in the country that still managed to generate profits and gains despite the weak economic and business conditions.