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Amid scrutiny on industry underwriting, Progressive CEO says rates are justified

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This story is part of a series on race and gender diversity in the U.S. insurance industry and the ways regulators and companies are approaching this topic.

Black representation in insurance grows slowly as industry seeks to diversify

Insurance regulators weigh ban on underwriting factors they say harm minorities

NYDFS regulator plans to engage more directly on diversity with insurers, banks

Female insurance leaders work against odds to open doors for other women

To boost female leadership, insurers need to shuffle succession plans, CEO says

It is still harder for a woman to succeed in insurance than a man, CEO says

➤ Progressive's CEO feels respected in the insurance industry but has also felt the effects of unconscious bias against her because of her gender throughout her career.

➤ The mother of six said the insurance industry "has a long way to go" to improve gender and race diversity in its leadership.

➤ The CEO also said the industry’s current approach to pricing insurance policies is appropriate.

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Progressive CEO Tricia Griffith
Source: Progressive

As one of the few women leading a U.S. insurance company, Progressive Corp. CEO Tricia Griffith has experienced unconscious bias throughout her career. In a recent interview with S&P Global Market Intelligence, Griffith talked about what the industry needs to do to increase diversity at a time when regulators are taking a hard look at the way insurance practices and products impact communities of color. The following is an edited transcript of that conversation.

S&P Global Market Intelligence: Has the insurance industry always felt like a welcoming place to you?

Tricia Griffith: I started in 1988 as a claims rep trainee, so literally walking into body shops, crawling under cars, meeting with attorneys. As a young woman, a 22-year-old at that time, we were required to wear suits and hose and high heels. Walking into a body shop with that outfit on and then going onto a dolly underneath a car, it was very intimidating and also not as welcoming because they assumed I didn't know what I was talking about. But that sort of thing motivates me, and it motivated me to get other young women involved in claims because that's really the product that we are selling.

One of the reasons why I stayed with Progressive is because of our core values, and people really do live them. They're not a poster on the wall. I think I was probably more paranoid about being seen as a female in my earlier years until I got more confident. At Progressive, I had lots of opportunities. I never ever felt held back as a woman. I did make sure that I got comfortable in my own skin being not only a woman in the insurance industry, but a mother of six. At one point in my career, because there were so few women in claims leadership, I would hesitate to talk about things that were happening with my children, and I had to kind of get over that because that's a big part of my life and who I am. And then as CEO, I think Progressive welcomed me, and people in the industry knew who I was because I had had so many different roles.

I will say I went to an event a couple of years ago ... with my husband, and he rarely comes with me. It was a big event out in Seattle, and it was all CEOs and people brought their spouses. So when we go into this room of really high-powered CEOs of big industry, tech, not just insurance, immediately people would walk up to my husband and say, "Where are you a CEO from?" And he'd say, "My wife's a CEO."

Because the majority of CEOs are male, [they] assumed he was a CEO. But that was more of an obvious unconscious bias on their part versus people not respecting me. I have felt very respected in the industry and the board I'm on, outside of Progressive, and in other areas and forums that I'm on, like the Business Roundtable.

What do you think of the NAIC's Special Committee on Race and Insurance and the work they're starting to do?

I've been watching it. What I would say is, insurance prices are clearly based on the customer's probability to have an accident or make a claim, and the loss costs that are associated with it show range of risk. We use a lot of different variables. A person's race is never used to determine the price they pay for insurance. So if I was living in a house with you and another female and we were the same age and had the same car and the same driving record, maybe each of us had a speeding ticket, we would all pay the same price regardless of race, income, religion or ethnicity. There's a lot of things that go into rating variables, both non-driving and driving.

Where is the insurance industry in terms of making sure insurance products and practices don't discriminate against communities of color?

It's complicated because insurance is a state-regulated industry, and so we will react when things happen and when things change. When things are passed, we obviously follow those. But here's really how I see it, and really how insurance has worked for years from a regulatory perspective: We use data that's actuarially justified, and again ... risk is based on your proclivity to have an accident.

The regulators have three things that they need to make sure to protect the consumers of their state, and that is the rates shouldn't be excessive, and they shouldn't be inadequate or unfairly discriminatory. That's been in place for decades. When regulators regulate, that's what they should look at, so we'll follow the laws of each state accordingly. I believe that we want to make sure that we have a rate for every person and every profile, and basically we target a 4% underwriting profit from every customer that we serve.

Do you see the industry trending in a better direction in terms of getting women and people of color in leadership ranks?

It has a long way to go, but I think the wake-up call for every company and every CEO was, you're likely going to have to do things differently based on the injustice we've seen. If you've read any of my quarterly letters, I talk about the fact that this is the moment for more reflection, and we have to be bold. All the CEOs I've talked to ... we are all putting into place a lot more reskilling for people, a lot more creating jobs for high-level people. We know that we need to do something meaningful, and I've been very, very clear about that inside and outside of Progressive.

I don't want George Floyd and Breonna Taylor — and you can keep naming — all of their deaths to be in vain. I want to make sure that we don't lose sight of the fact that equality is key to our democracy.

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