The CEO of one of State Farm’s top competitors says she welcomes the challenge that her company will face as self-driving vehicles cut into the number of accidents in the decades ahead.
Tricia Griffith, the CEO of Progressive Insurance, visited the Illinois State University campus Thursday to deliver the keynote address at Business Week. In an interview, Griffith said Progressive is already planning for an insurance market where self-driving cars have reduced the frequency of accidents—and theoretically the need for insurance as it exists today.
“If you’re a good CEO you’re thinking about when that happens, and when the frequency of accidents goes down, how are you going to react? Do you have a plan for replacing revenue when the market gets smaller?” Griffith said on GLT’s Sound Ideas.
Griffith regularly meets with Progressive’s strategy team, which guides the company’s exploration of new-business opportunities—beyond the obvious mergers and acquisitions.
“Some we know will work. Some won’t. But if you have a whole portfolio that you’re investing in now, you’re gonna be ready as frequency (of accidents) plummets,” said Griffith, an ISU grad.
There are expected to be 3.5 million (at least partially) self-driving vehicles on the road by 2025, and 4.5 million by 2030, according to the Insurance Institute for Highway Safety. High-end automakers like Tesla already have limited autonomous-driving features in their vehicles. Rivian Automotive, the electric startup that will be making vehicles in Normal, is leaning heavily into autonomous driving.
The stakes are high for the largest U.S. auto insurers. State Farm is the country’s largest auto insurer, and Ohio-based Progressive ranks No. 4, with around 9 percent market share as of 2016, according to the Insurance Information Institute. Geico, Allstate, and USAA are also in the Top 5.
“We welcome it. We welcome the innovation. We welcome the opportunity to grow even when we think frequency (of accidents) will absolutely be reduced,” Griffith said.
Progressive is known for its iconic “Flo” character in TV commercials, with a customer experience very deeply rooted on the web. The company is now on a bit of a hiring spree, as it tries to grow profitably, Griffith said. The company added 6,660 new external hires in 2016, another 6,000 in 2017, and 1,000 already in 2018, she said.
“We have been growing like wildfire, and it’s been really incredible,” she said.
Progressive sees a lot of opportunity for growth, given that it only has around $30 billion of the $300 billion auto and home industry, Griffith said. That hiring was in anticipation of growth.
“Being lean is really important. But not to the detriment of being able to service your customers,” he said. “So it’s a balancing act of making sure you’re lean so you’re cost-competitive, but that you hire enough people to help out especially when a claim happens.”
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