One of the things I miss from my days working on personal lines is the fun of balancing pure ratemaking with marketing concerns in the auto insurance market.
While I want to see adequacy in the rating on any book I work with, it is (to me, anyway) a heckuva lot of fun to also play with the art of maximizing revenue in a competitive environment.
Ideally, an insurer wants to keep its profitable customers as long as possible, to maximize revenue…which in turn suggests that tactically sacrificing a little short-term profit in order to increase loyalty is a good idea.
Similarly, if a segment of a competitor’s book is believed to have a bit of fat in their rates, it can be a very entertaining experience trying to identify members of that segment…and to figure out how much incentive those folks need to incent them to move.
These are all things that flittered through my mind when I encountered this wire service story reporting on Progressive’s recent investor call:
Auto insurer Progressive Corp. concedes rival Geico Inc.’s trademark talking-gecko and caveman advertising campaigns are “clearly superior” to its own, but contends that pricing prowess positions it to win in a longer fight for customer business.