Progressive Follows Leaders To the Homeowners Arena.Progressive Corp., the fifth-largest auto writer, is beginning to offer a product that's been a mainstay for its biggest competitors: homeowners insurance. Progressive, Mayfield Village, Ohio, rolled out its first homeowners product in March in Arizona Arizona (âr'əzō`nə), state in the southwestern United States. It is bordered by Utah (N), New Mexico (E), Mexico (S), and, across the Colorado R., Nevada and California (W). . Analysts see Progressive's new homeowners line as a way to expand business, but they are concerned about how the insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. will handle the catastrophe Catastrophe, from the Greek Καταστροφή (katastrephein), literally means "to turn" (strephein) "downwards" (kata-). risk. "To get to their stated goal of being No. 1 in auto by 2010, Progressive needs homeowners to achieve penetration," said Mark Lane of William Blair
The top four auto writers based on net premiums written are State Farm Group, Allstate Insurance Group, Farmers Insurance Group and Nationwide Group. Combined, they control 38% of the auto market. They also control 45% of the homeowners insurance market. That ability to sell other products to existing customers is a powerful one that has not escaped Progressive's attention. Consumers increasingly want to package auto and homeowners coverage, said Richard Hutchinson, Progressive's agent business general manager. Because Progressive has a base of. 30,000 independent agents and most buyers of personal lines use agents, packaging products makes sense, said Blair Sanford of investment bank Cochran, Caronia & Co., San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden . "The question is whether the shareholders are ready for the cat exposure," Sanford said. As Progressive adds states to its homeowners coverage, it will face challenges in Florida, Texas and California, states that make up Progressive's largest markets but are also high in catastrophe risk. Insured losses from U.S. catastrophes totaled $8.2 billion in 1999, making last year the fifth worst for catastrophic losses since 1949, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the Property Claims Services unit of the Insurance Service Office Inc. Progressive's homeowners policy initially will be offered through 50 Vanguard Vanguard Any of three unmanned U.S. experimental satellites. Vanguard I (1958), the second U.S. satellite placed in orbit around Earth (after Explorer 1), was a tiny 3.25-lb (1.47-kg) sphere with two radio transmitters. agents in Arizona, where the product has been test-marketed. Progressive's Vanguard program, which has been rolled out in about half of the 48 states in which Progressive writes business, offers independent agents an opportunity to sell a more competitively priced product, earn higher commission level or both. Progressive's homeowners coverage will be available through its direct sales channel later in 2000. |
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