Case Type: business competition/competitive response; new product.
Consulting Firm: ZS Associates 2nd round job interview.
Industry Coverage: Insurance: Property & Casualty.
Case Interview Questions #00114: Your client Progressive Corporation (NYSE: PGR), also known as Progressive Casualty Insurance Company through its subsidiaries, is a major insurance company that provides personal automobile insurance, and other specialty property-casualty insurance and related services in the United States.
Progressive has just learned that its major competitor GEICO has announced the initial roll-out of a new program in Texas. GEICO calls the new program “Pay as You Go” in which a GPS tracking device is installed in each insured car as part of the program, and reports the location of the insured vehicle on a minute-by-minute basis and records the miles traveled. Progressive wants to know whether it should respond and how.
Additional Information:
- The client company Progressive is unremarkable in the industry, on par with the top five players (GEICO, State Farm, Allstate, Progressive, Nationwide Insurance).
- No particular competitive advantage exists. The auto insurance industry is rather commoditized.
- There is heavy price competition within the industry, and the industry is highly regulated.
Possible Answers:
The interviewee may focus on the following issues raised by this fact situation:
Coincidentally we are working on a similar program (GPS tracking of new cars) but with separate benefits to the owner, the dealer as well as the insurance company. If the proposal has to depend entirely on the benefits to the auto insurers (with some shared with drivers) it’s problematic. However the same device that tells Progressive how many miles you’ve driven can also be used for engine diagnostics and theft recovery.
Well written case study! Octo Telematics http://www.octotelematics.com, the European leader in these kinds of services, is now offering similar programs in the U.S. that focus on benefits to the owner, dealer and insurer, whether OEM or aftermarket.