Progressive investors hear about AI strategies, successes

Progressive President, CEO, and AI Director Susan Griffith filled investors in on the company’s artificial intelligence personal auto insurance strategy last week, including predictive and Gen AI.

“We have a history of innovation, and so we are really concentrating on AI across the board and have been for a while,” she said during the company’s Q4 2025 earnings call.

“But if you go way back, into 1995, we were the first to put our auto rates online, like we saw the future, and we did that, and that was before Google was even in existence. And what a great bet that was because over half of our private passenger auto is on the direct side and increasing more of our Commercial Auto.”

Progressive has been working on predictive AI modeling using unstructured and voice data, and will continue that work, according to Griffith.

“We are working a lot on AI and have a lot that we are focused on,” she said. “We have an inventory of items that we’re doing across, really, the enterprise… to make sure we’re doing the right thing for our customers [and] our employees; just making insurance easier to understand, easier to work with. So whether it’s digital or agentic, we’re going to continue to focus on that.”

Griffith said that AI was used in its recent marketing commercial campaign, “Drive Like An Animal,” which took less time and money to create and is working, according to Progressive’s new prospect measurement.

“We’re going to have business models, rigorous controls, and we’re going to continue to invest in this,” she said. “We’re going to continue to lean into now, Gen AI. We recently formed an AI Strategy Council… This AI Strategy Council is sort of looking to where the puck is going in the next three to five years. So think of, one, clearly efficiencies — we’re going to want those. But how is this going to change our industry? How is it going to change Progressive? How is it going to change how customers shop, et cetera? And they should report to my team in a few months. We’re going to continue to evolve that because we think the puck will move because this is going really fast.”

Over the next year, Progressive plans to work with vendors and conduct tests on its AI process, Griffith added.

“I’m super excited about the promise that AI holds for Progressive, and I’m excited about all the work we’re doing,” she said. “As with past innovations, I’m confident we will be a leader in our execution, and we’ll do it responsibly… We’re seeing efficiencies when you look at our data, and I think that will continue.”

When asked how AI agents could change the overall personal lines distribution market, Griffith said she expects differences between direct and agency business, with less complex direct policies changing dramatically.

“I think there’ll still be the desire for more complexity to talk to a human,” she said. “But for some easy policies, and if I think it flows well, we should be able to change as these evolve and get better and better. Independent agents, I think it’s a little bit different. Oftentimes, customers go to independent agents for more complexity of needs, feeling confident in their decisions. We’ve seen that especially on the Commercial Line side, where it’s a little bit more of a complex policy coverage contract, and so they want to be able to kind of have that knee to knee.

“But I do think it’s changing if we can make it easy for our customers, one of our strategic pillars… We want to be aware when and how customers want to shop and be serviced and some of that might be through an agentic AI agent.”

Griffith also told investors that Progressive will continue to evolve its usage-based insurance (UBI), including for customer safety and pricing. She said it’s “getting better and better and more closely to price to the whole curve with surcharges and discounts.”

Chief Investment Officer Jonathan Bauer added that Progressive’s UBI capabilities allow it to understand driving behavior and technology changes via its access to tens of billions of driving miles annually.

“With our Snapshot, customers are now allowing us to continuously monitor their driving behavior,” he said. “We will pick up any tech-enabled changes in loss costs over time and adjust our rates as individual drivers harness technologies to different degrees.

We also have the capability to accept data streams directly from OEMs and third parties on an individual-vehicle basis with consumer consent. This has been part of our UBI technology for many years, and our UBI capabilities extend beyond our own devices and our own applications.”

During the call’s Q&A portion, Vice President and Chief Financial Officer John Sauerland was asked about first-party claim frequency trends. He said as the market tightens up, so does Progressive.

“We are always analyzing frequency at the coverage, at the state, at the most finite level we can,” he said. “Our product managers are constantly assessing what they think the future looks like to ensure that our prices we are setting today ensure that 96 or better combined ratio moving forward.

“And as the market loosens, we do think sometimes we see some loosening in claiming behavior. It’s, again, tough to tease out relative to everything else going on in the marketplace. Additionally, we watch coverages very closely when things like recessions happen because claiming behavior changes there as well. We are certainly in a softening environment. The availability of insurance is certainly opening up relative to where it’s been, and that can have influences on first-party claiming behavior.”

Sauerland reported Progressive added nearly $9 billion in net premiums written last year, and almost 3.7 million additional policies in force.

Through Q3 2025, statutory results for the private passenger auto market rose above 2024 by nearly 2 points to 18.5% market share.

Last June, A.M. Best reported that Progressive ranked the No. 1 U.S. automobile insurer in 2024 at 16.4% market share. State Farm came in a close second at 16.2% market share after leading the market the year before.

Over the previous year, Progressive saw direct premiums written (DPW) increase 22.2%, reaching $70.84 billion, while State Farm’s DPW rose 17% to $69.76 billion.

Bauer told investors last week that what made 2025 even more exceptional was that, along with that growth, came remarkable profitability. He said Progressive’s No. 1 focus is to grow as fast as it can at a 96 or better combined ratio.

In October, Florida Gov. Ron DeSantis announced that Progressive would refund nearly $1 billion to auto policyholders in the state due to improved market conditions. He said at the time that the refunds reflect the reduced losses and strong savings tied directly to the state’s tort and insurance reform efforts.

A month earlier, Progressive received approval from the Nevada Department of Insurance to increase rates by 6.8% effective Oct. 3, possibly impacting more than 200,000 residents. The insurance company originally requested an 8.41% increase.

Griffith noted that through Progressive’s Customer Preservation Team, 4 million customers saw an average premium decrease of 21% last year.

“Customers can call in, and we can talk about maybe changing coverage,” she said. “We’ll do a whole policy review, so maybe it could be changing coverages, lower deductibles, and we can kind of work our way around different types. Sometimes when people call in, they will have a different product model. We rewrite that… We also do proactively call out to customers that we think might defect to kind of help them work through the policy review.”

The company’s loyalty rewards, such as tenure, minor child, good driver, and accident forgiveness, equated to about $1.5 billion in savings for policyholders in 2025, Griffith added.

Andrew Quigg, who will take over as Progressive’s chief strategy officer in July, said the company expects safety technologies like autonomous driving to continue to be added to vehicles and lower accident rates. He did note, however, that introducing the technologies on more expensive models first and the average vehicle age of 13 years, causes slow fleet penetration.

“When we model on the frequency side, we consistently see that vehicle technology can lower the rate of accidents,” Quigg said. “It’s worth noting that sometimes safety statistics don’t provide incremental improvement above what is already present in the fleet. Double-counting is a persistent challenge that we and others have to navigate through.

“On modeling severity, we also see that these technologies can increase the cost of claims. An example here is Tesla vehicles. I recently saw a model for the size of the auto insurance industry that assumed Teslas were already fully autonomous vehicles, providing much lower frequency with similar severity. In Progressive loss experience, we see that Tesla Model 3s have higher loss costs than similar EVs. This is due both to higher frequency and higher severity.”

He added that a modeling aspect not often called out is that drivers aren’t required to monitor vehicles all the time in Level 3 to Level 5 AVs.

“We may see consumers increase the amount of vehicle miles traveled as they substitute personal auto transportation for other forms of transportation, so accidents per mile may be reduced, but the VMTs [vehicle miles traveled] might go up,” Quigg said.

Images

Featured image: Progressive’s Cleveland, Ohio, campus. (Provided by Progressive)