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Progressive Testing New Product in Texas

28 October 1999

Progressive Testing New Product in Texas That Features Revolutionary Auto Insurance Rating Method

  Product Bases Auto Insurance Premium Not on Historical Data, But on When,
                        Where and How Much One Drives

    AUSTIN, Texas, Oct. 27 -- In August 1998, Progressive
, one of the largest auto insurers in the U.S., began a limited
marketing test in Houston of a new product that bases auto insurance premium
in part on when, where and how much a vehicle is driven.  The product is
called Autograph(SM).  In August of 1999, the company expanded the test
throughout the state of Texas.
    Auto insurance rates are traditionally rated on variables including
vehicle age, manufacturer and value, driver's age, sex, marital status, place
of residence and driving record and types of coverages and deductibles
selected.  Auto insurers use this information, along with the company's loss
experience on that "class" of driver and vehicle, to determine a consumer's
auto insurance rate.  In other words, current rating systems are primarily
based on a company's past realized losses, or historical data.
    Progressive's new auto insurance product, Autograph, determines a
consumer's auto insurance rate based on actual vehicle usage, including when
and how much the vehicle is driven.  When a consumer decides that Autograph is
right for him or her, the consumer and Progressive enter into an agreement
that gives the company access to the data and affords the consumer protection
as to uses of the data-only the company or the consumer have access to it.
    A device the size of a videocassette is then installed in each vehicle.
Data regarding when, where and how much the vehicle is driven is collected
periodically and reported automatically using cellular communication
technology.  Progressive sought and has been awarded a patent by the Patent
and Trademark Office of the United States Department of Commerce for the
method of determining a cost for auto insurance with vehicle usage data.
    "Up until now, no one has come up with a more accurate way of determining
one's auto insurance premium," said Willy Graves, President of Progressive
County Mutual of Texas.  "Autograph works more like a monthly utility or
telephone bill, with the consumer paying by the month based on actual usage
rather than on historical data derived from groups of similar people and
vehicles. It's simple, really. If you drive less, you pay less."
    Graves said:  "In Houston, for example, consumers using Autograph are
paying an average of 25 percent less using Autograph than they paid using a
'traditional' auto insurance product.  Houston consumers tell us three things-
-they're paying less, they're in control and the system makes sense to them."
    The company continues to offer its traditional auto insurance product
everywhere it writes auto insurance.  In Texas, however, some consumers who
call Progressive will have a choice of auto insurance product that best fits
their needs.  Autograph may be the best choice for consumers who have more
vehicles than drivers in the household, maintain low mileage on their
vehicles, or use public transportation or use car pools.
    Autograph may also be a good choice for consumers with security concerns.
In addition to the auto insurance applications, consumers also enjoy the
safety features that the technology provides for a small additional monthly
fee including theft recovery, remote door unlocking, roadside assistance,
directional assistance, and low battery detection.  In addition, the system
features a 'panic button' the consumer can use to be put in instant contact
with a manned, 24 hour response center.
    Graves said:  "Our strategy is one of offering consumers choices about
their auto insurance.  We offer them choices in how, when and where to buy and
service their policy.  With Autograph, we're expanding Texas consumers'
choices to include which auto insurance rating method makes the most sense for
them."
    Progressive will continue the market test in Texas and will discuss the
products' introduction with state insurance regulators in the year 2000.
    Progressive provides consumers throughout the U.S. with competitively
priced automobile insurance and in-person, 24-hour services and is the
nation's largest writer of automobile insurance through Independent Agents.
Progressive companies that write auto insurance receive the highest ratings
available from A.M. Best, the independent company that rates the financial
condition of insurance companies.  The Progressive Corporation's stock is
traded on the New York Stock Exchange.
    More information about the company can be found on the World Wide Web at:
http://www.progressive.com.