trending Market Intelligence /marketintelligence/en/news-insights/trending/3QMimljVa4Uh5y4LFslRFQ2 content esgSubNav
In This List

Michigan a swing state as Progressive's private auto growth rate tops GEICO's


Insurance Underwriting Transformed How Insurers Can Harness Probability of Default Models for Smarter Credit Decisions


The World's Largest P&C Insurers, 2023


The Worlds Largest Life Insurers, 2023


Essential IR Insights Newsletter Fall - 2023

Michigan a swing state as Progressive's private auto growth rate tops GEICO's

Progressive Corp.'s rate of growth in private auto direct premiums written in 2017 narrowly topped that of rival GEICO Corp. for the first time in 14 years.

Both groups showed high levels of premium growth in most markets from coast to coast, according to a review of data reported in annual statutory statements. But Progressive's rapid expansion in a state from which the group led by Government Employees Insurance Co. continued its retreat appeared to make the difference.

A top-line resurgence in the agency channel complemented the Progressive Direct companies' fourth consecutive year of double-digit growth in private auto direct premiums written as the overall group generated U.S. expansion in the business line of 16.1%. That represented an increase of just more than 4 percentage points from its 2016 growth rate. Progressive had not achieved a faster growth rate since 2003.

When excluding results for Michigan, a traditionally challenging market for auto insurers due to its unique no-fault statute, the groups' growth rates would have flipped, with GEICO expanding 16.1% and Progressive rising 15.8%. Michigan was the only state in which GEICO's private auto direct premiums written declined. Michigan private auto direct premiums written for GEICO Indemnity Co., the lone GEICO entity that wrote private auto business on a direct basis in the state in 2017, tumbled 13.5%. For Progressive, the Michigan growth rate of 21.5% was its fifth-highest in any state, trailing South Carolina, Georgia, Oregon and Texas.

GEICO Indemnity generated Michigan private auto direct premiums written of $237.1 million in 2014. But its annual volume in that market fell steadily in the three subsequent years, slipping to a five-year low of $131.5 million in 2017.

The 2017 results reflected a continuation of the divergence in Michigan growth rates from 2016 when GEICO's private auto direct premiums written in the state tumbled 20.8% while Progressive's rose 17.2%.

S&P Global Market Intelligence's RateWatch application shows that GEICO's cumulative approved rate changes in Michigan from 2013 through March 15, 2018, which includes a recently approved hike of 9.7% overall, ranked as its highest in any state. For Progressive, Michigan ranked 30th in approved rate changes using the same criteria, according to RateWatch.

Rate filings data show a steady erosion in policy count in addition to premium volume for GEICO Indemnity's Michigan private auto program. The number of policyholders affected by the most recent rate increase, which is scheduled to take effect for renewals on May 13, of 53,401, marked a decline of 52.2% from the program's peak as shown by the data in a filing that took effect in December 2014.

That was the exception to the rule, however. GEICO and Progressive achieved double-digit percentage growth in private auto direct premiums written in 41 states and 37 states, respectively, in 2017, with the two groups posting expansion in excess of 20% in eight states apiece.

Double-digit growth has been more commonplace this century for GEICO. But while its 15.9% expansion in private auto direct premiums written in 2017 represented the fifth straight year in which the group achieved growth in excess of 10%, the increase also served as GEICO's best result from that perspective since 2003.

The pace of the expansion is all the more impressive when considering that both groups grew off of substantially larger premium bases in 2017 than in 2003. Progressive's 2016 private auto direct premiums written were 2.3x higher than its 2002 volume; GEICO's 2016 production exceeded 2002's by nearly 3.8x.

Progressive's results as referenced in this article exclude the now-discontinued Australian business of Progressive Direct Insurance Co., but the group's 2017 growth rate still would have surpassed GEICO's had that geography been included. Its 2017 total includes a small amount of premium volume produced by ASI Select Auto Insurance Corp., a subsidiary of the Progressive majority-owned ARX Holding Corp. that introduced a private auto product in California late in the year. Progressive operates distinct agency auto business in the California market under the Drive and ASI brands.

GEICO parent Berkshire Hathaway Inc. reported in its 10-K that the insurer's voluntary auto policies-in-force grew 8.6% and premiums per auto policy rose 6.9% in 2017, with the latter increase attributable to rate increases, coverage changes and changes in state and risk mix. Progressive, too, showed growth in policy count and written premiums per policy across its primary distribution channels.