Progressive Corporation (NYSE:PGR)
2013 Investor Relations Meeting
May 16, 2013 1:00 pm ET
Glenn M. Renwick - Chief Executive Officer, President, Director and Member of Executive Committee
Brian C. Domeck - Chief Financial Officer and Vice President
John P. Sauerland - President of Personal Lines Group
Susan Patricia Griffith - President of Claims Group
M. Jeffrey Charney - Chief Marketing Officer
Glenn M. Renwick
[Indiscernible] recognize [indiscernible] in the last 14 years or so. So I didn't have an office. Thank you.
Here's what I'm trying to do today. [Indiscernible] we put out in a monthly report or in other documents that I thought better suited to you, and you won't [indiscernible]. But I hope these will give you more insights into the company through our major initiatives and, most importantly, in how we [indiscernible]. And that's why I feel very [indiscernible] 21 [indiscernible]. A little bit more [indiscernible] to describe just what we're doing every day and not making just the numbers.
So recognize that we will operate under the Safe Harbor all afternoon. So let's all take that seriously.
Now with that, let me give you an idea of what I'd like to achieve. I'm going to start out with a few slides that I'll call my headlines. Since we last met, a few things that are on my agenda. Some of those will be incomplete, and they will be completed later by other speakers. Then, I'd like to try to do something entirely different and paint you a picture, paint you a picture of what I'll call our market, our opportunities and how some of our major initiatives fit in with that. It will be a simplistic model, but it also should provide a context for a lot of what you'll hear the rest of the afternoon.
So let's talk about what you'll hear the rest of the afternoon. We've got 3 major operational segments. John Sauerland, who you've met, and Dan Witalec will us through some product and distribution. Some good things in there, some updates from prior years, but I think you'll get a good feel there.
Then as I have always said, what's important in insurance. And if you were shopping, price would be one of the things that's clearly most important. But clearly, once we've got the customer, that retention aspect that we've been talking about for so long is becoming so critical to our destination insurance theme. And Tricia Griffith, and Jonathan Beamer are actually going to take us through some of the work they've been doing to try and create some level of confidence we want to have in our -- the consumers they have in Progressive.
Clearly, one of the more visible signs of Progressive, at least to consumers, is our outgoing [ph] advertising. One can talk a lot about advertising per se today, but we are going to talk about marketing and how we try to sort of think about the campaign we're doing, why it's got a fair level of science behind it, why we think it has some legs to it and how we can extend it.
We're also going to talk about how we spend our dollars, not necessarily in graphs and charts because most of that's available to you, but a little bit of the science that we can bring to try make sure we spend what is now an incredible amount of money. If someone had told me when I joined Progressive 28 years ago that we would have been spending this kind of money in advertising, it would have been just unbelievable. So make sure we spend it well. We're going to apply the same science that be brought to underwriting into our spend in media. So Jeff Charney, our CMO, who you've met before, and Andrew Quigg are going to take us through a series on that.
Now one of the things I like to achieve in these sessions is also to get you introduced to some new players in Progressive. And that, for me, is a very important objective, and I like doing that. Over the years, we've been able to do that in large numbers. Some of the names I just mentioned you've already met. John Sauerland, you've already met. Dan Witalec, someone who's joined us and done some product management roles, done some acquisition roles, he's now the controller in Personal Lines. I think you'll really enjoy hearing from Dan. Andrew Quigg, I mentioned. Andrew, also a similar background, product management, someone who hopefully will restore Massachusetts to a level of profitability that we really like, so nice job, Andrew, and very much accomplished in acquisition as well. And Jonathan Beamer, I like to think of Jonathan as sort of our resident consumer. He does a lot of research, a lot of insight to make sure that we're sort of responding to the consumer. So those are sort of 3 new faces you will see today.
I'd like to bookend those 3 operational areas with Brian Domeck just refreshing us all on the business model. What is the heart and soul of our business model? What's important to us, what we don't deviate from. And specifically, why we think that's a very durable business model.
Now on the other end, another new face for this day, John Curtis, Research Director in our Personal Lines. There's a lot of things -- he's going to take us through what I think will be an interesting session on how we think about all the emerging data in the macro economy that'll affect insurance. Specifically, we all hear a great deal about safety features, what technology is going to mean in automobiles. We'll give you some idea of how we think about that in a structured way.
So that's the agenda for the afternoon. Let me get started with a few of the highlights.
This slide doesn't mean a whole lot. You don't need to take a lot of notes on this. The fact is last year at this meeting, bad [ph] form [ph] on [ph] our [ph] part [ph], we had just gone above 96 for the first time in an awfully long time and on our way to a quarter above 96. The news here is we're back in the zone, and that one time that we jumped out of the zone for a quarter, it was 44 consecutive quarters before that, that we had reported a 96. So all I want to tell you is 96 is serious to us, we're in the zone. Many of you know the actions we took. John Sauerland told you at that meeting, yes, we know what we've got to do, we'll get it done and, frankly, we think we've got it done. Now we want to start growing our units. We recognize there's always a balance. And I'll take you through some of the thoughts that will lead us to that. But back in the zone feels good. And what you see on there is Personal Lines, that we're just a little out of the zone there. But in aggregate for the year, we were certainly in good shape. And the first quarter this year, equally and a recently nice month yesterday.
So one place to start, always a good place to start from my perspective is, do people actually want our product? That's always important. We clearly took some REIT [ph] actions about mid last year through the year, so I can explain a lot of this decline. But the real issue here and the main point I want to make is of a recent vintage, right, 3 months, 4 months, we started to see real increase in demand for our product. Always important both in the agency channel, we're starting to see it. Exclude California there for a reason just because the comparative rates [ph] [10:09] would made this look better than it really is. But for right now, we're starting to see it. We're getting, at best, at a better -- or equivalent or better rate than we had earlier in the year.
And on the Direct side, where we obviously reduced our advertising, pretty clearly why we would actually be down a little bit. First of all, we're starting to see the demand for the product up. And as you'll hear later from John Sauerland, that's converting into some new business growth as well. So demand is up, good thing.
Let me, at some risk here, do a little math lesson [indiscernible] [10:41] in the afternoon. Well, I'd like to take you through a little bit of a simplified, and I cannot stress how simplified this model is, of a rate revision. So very seldom do we get a model this simple to explain something. But last year, when we took rates in a relatively large number of states at a relatively consistent amount of money or, excuse me, percentage on top of what we had in market, it was a reasonable assumption to say it acted like a single rate revision.
So I'm going to take us through this left-hand part of the graph right now. And let's just assume, assume for right now, that the solid white line is the actual right price that we would like to charge in the marketplace that covers our expenses, our losses and, of course, our profit margin. Unfortunately, we'll never know exactly what that is. We only know in retrospect. We'll never know exactly what it will be.
All right, let's just assume for right now we're operating at rate level R1. All Right, so where R1 intersects the solid white line is a great place to be. That's where profit, our losses and everything matches with our pricing. So we're in great shape. Now, unfortunately, and I say unfortunately just because the nature of our industry, we tend to take rates in quantums. We have different regulatory situations, file in use, user [ph] file, prior approval, it forces rates change to be other than during the course of the day. And these are filed rates that are a little bit more of a step function. So let's assume that last year, about this time, we were at R1, and we might take our rate to R2.
Let me tell you a little bit of what I think happens in a rate revision. And again, please give this in mind to be illustrative, not specific to any state or any specific rate revision. Let's assume right now, looking at the hash line area, that if I was operating at rate level 1, R1, that at some point, the true costs have gotten above our rates. I'll call that the company subsidy zone, not a good place to be. Selling $1 for $0.95 has never been a winning strategy. But sometimes, that happens.
The orange zone. When you take rates specifically in a quantum, you may go above the absolute perfect clearing price at the time. I'll call that the consumer subsidy area. So the consumer might be paying a little more than they absolutely need to, if we knew that perfect cost. Now the consumer has one thing going for them. They can shop. They can actually try to find carriers who're in the company subsidy part of the rate revision. So rate revisions get quite complicated, especially if you put multiple companies into a model like this.
So here's where I think we are. We took R1 to R2. For those [indiscernible] [13:39] in the group, I threw in R3 rate level. I'll call that the 2003 to 2006 era, where ultimately we took rate and the white line never actually materialized going up. It was a period of time that margins were actually very wide.
But I think we're approaching my red circle here. I believe that because we're starting to see, from the far right side, a policy life expectancy, and I've only given you a very small part of the graph. Clearly, the graph had been going up in policy life expectancy. After we took rate, we started to see people renewing at lower rates, coming down, now starting to stabilize.
I think our rate revision and the timing into the marketplace as people are renewing now with 6-month policies into the last same rate that they last purchased at, we're going to start to see us approaching this area of R2 equaling the solid white line. I can't prove that, but I think time and market is starting to get us to a point where not only can we can benefit from the rate we took in terms of average premiums but we'll start to see, I hope, unit growth.
Let me make one other point before I leave this slide and say if I blew up the red circle -- I've often said one of the strengths of Progressive is to be nimble. I would never want to see gross rate revisions like this. And we have lots of ways to approximate the more continuous curve of 2 prices, one of which is a little bit of the inset in the second -- in the middle, and that is to take very small changes. So last year, while we did take, and very rare, a reasonably large change at a reasonably consistent level through multiple jurisdictions, I'd much rather be taking small plus 1, minus 1, plus 2, minus 2, which is what I mean by the very small changes in this -- in the middle. So hopefully now, and you'll hear from John a little later, we're able to start fine-tuning some of the rate revisions that we've taken and, in some cases, a little up and a little down.
But the big -- the news here is, I believe the time and market, we've got what we needed, we're take rate level 2, R2, and we're probably approximating a level that will feel good for the rest of the year. That's my belief, not necessarily a guidance.
What have we got out of this? Clearly, average rate level has gone up. So average written premium, after a long period of relatively low average written premium, almost deflation at times, we're starting to see the -- to the left on our auto average premium 6-month policies, and the right is our commercial lines business starting to take rate a little earlier. We're just getting some very healthy rate.
So quick summary. Demand for the product is up. We're starting to get to higher average premiums. And as our rate revisions sort earns its way through, we may be approximating a point where, certainly from a renewal perspective, we shouldn't see the fall-off. And hopefully, as you'll hear a little later, we're starting to see that translate into new applications.
I can never go far without talking about $0.75 on the dollar because that's what the y axis here represents. It's a loss and loss adjustment expense. Clearly important. I've showing this graph numerous times, so I'm not going to spend a lot time with it. But it's a map [ph]. Lots and lots of adjustment expense on the y axis. We have lots of adjustment expense on the x axis. Very simple for those who haven't seen it before. If we don't spend the right amount of time determining how much to pay, we can get into a lot of trouble. If we don't do enough liability investigation, we can clearly end up paying too much in decline [ph]. If we do an excellent reconstruction for every parking lot accident, we'll spend too much in the loss adjustment expense and not have the optimal outcome. So what is optimal outcome? And that's what's defined by that blue line. It's a parabola, not necessarily defined by a specific data, but it's a model of how we act. We have spent a lot of time driving down that curve to get to the optimal spot by leveraging our real estate, our staffing, our training, our quality improvement processes.
Consistent with that, we're also trying to shape -- change the shape of the curve. That's the orange line. And that's continuously moving. But we've really pushed the orange line to the point, and a lot of that is service center and the adaptations that we've made around the service center.
I suspect this is a lot more interesting to me Tricia and others on the staff than it is to you. Let me tell you, it is incredibly important for us to be able to produce the results we produce to make sure that we've got this model working exactly the way we want it to work.
Quick reflection of that. In the last 5 years, we've taken lots of adjustment expense, down 1.4 points. That's about 35% of our target margin, really important as we translate that into cost for the consumer. And along with that, as you heard last year, all 4 of our guiding principles, employee -- organizational effectiveness and our NPS for customers, all 4 measures are operating as well as we could possibly expect. So almost a textbook kind of situation. And for me, this is just -- this year has really increased my confidence that this is the right way to go, and you'll hear a little more about that later.
Next topic that clearly is on my mind and yours is PHA, Progressive Home Advantage. Here, the orange line is our Agency as a fraction of our Direct business. We'll want to talk about that a little bit in a minute.
The white line. Clearly, don't worry about this and where it's going. It's going northeast. What it's saying, more than anything else, is that consumers are willing to package their ongoing insurance needs with Progressive. I say ongoing insurance needs, and I'll come back to this point, I want to reference my red highlight there, is about 50% of the customers who buy a renter's or a homeowner's product from us are actually our customers from automobile first. So this is a huge positioning for us to make sure that we don't have to have our own customers go somewhere else at any point in their life cycle because that sometimes results in us losing the order. So the biggest gain for us here is making sure that we product available for people as they migrate through different stages of life.
Quickly over to the right, I love these businesses in the agency channel. Last year, I mentioned the -- right at the end that we would enter into a non-control arrangement with ASI, an equity ownership in ASI. We've done that. That relationship is working very well for us. We expect over time that to be a very significant part of where that orange line will go. So we're very vested in having a strong solution for our agents and a solution that hopefully, as consumers have said, Progressive with another homeowners. Makes sense, I'm okay with that. Hopefully, we can get a lot of agents to believe that Progressive with another fine carrier that does a good job in the agency channel will be equally a stronger proposition.
So we've got plenty of headroom to exploit this, but there's very, very little that would suggest we're not on the right track. When tension is there, consumer attitudes are there, and I think we've got the right cadre of carriers.
Mobile. You'll hear a little bit more about mobile later in the day. The real issue here is mobile is just on fire. About 1 in 5 of our customers who are now coming to us from a Direct basis are first showing interest in us through a mobile device. Whether that mobile device is a smartphone or an iPad doesn't really matter. In this case, mobile is a primary front door for us, and that number is going up on a pretty mach basis. So we've got to be in a leadership position. We feel very good about our quoting. Our servicing, we've got some things we want to do in servicing to make sure we're equally as good in both quoting and servicing as we have been on the Internet. But our interest in mobile and what we see in the marketplace in terms of consumers is this is going faster than even the Internet went many years ago.
Last point I'll make before I start thinking about trying to paint that picture for you is Snapshot. Yes, we'll hear a little bit more about Snapshot today and a few comments on sort of what the numbers might look like. And John Sauerland specifically is going to talk about some of the strategic challenges that we're already thinking about with Snapshot well into the future. We may not necessarily in this forum decide to answer those but give you an idea of what we're thinking about.
You'll also hear from Andrew some of the insights that we have developed from a marketing perspective. So I don't want to get too far into that, but let me just suggest to you that the idea of Snapshot, which I suspect there are a few that don't know my personal feelings about Snapshot -- I think everybody should be trying Snapshot. Unfortunately, a message that we often use is you can save. Well, there's a few other people out there saying you can save money as well. So in and of itself, saving money is not a distinctive message. We think Snapshot is very distinctive.
So in some sense, we've created these rate suckers [ph] as a metaphor for people who are mispriced. And we hope that there's some insight that we can bring about through those mispriced individuals that might suggest to you, as it actually does from research, which you will see, that people get very angry when they feel that they are paying for somebody else's bad driving. They don't think they're paying for someone else's bad driving. They are. So this concept of subsidization or Snapshot being the solution to anti-subsidization is an insight that we're exploiting, and we'll tell you a little bit more about that as a day goes on.
Now I'll see if I can paint that picture that I was talking about. This is with some degree of risk, but, hopefully, if I do it well, it'll set up a lot of the conversation for the rest of the afternoon. I think, as Einstein once said, "Make things as simple as possible but no simpler." He didn't believe -- he didn't leave much guidance as to exactly what that meant, so here's my crack at it.
We do business in 51 jurisdictions. California is not the same as Tennessee in any way, shape or form in terms of auto insurance. We have different negligence laws, we have different filing laws, we have different coverage, we have first filing, we have [indiscernible] in all of these issues. So any simplifications. So my first simplification is I'm going to go with one market.
My second simplification is we have 117 million households in the United States. I'm going with 4. So whether Einstein approves or not, I wouldn't know, but that'll work for at least what I want to try to get through today.
So here we go. This is United States coming down now to a market of 4. And clearly, my points here are more serious sometimes than the commentary. I call this my blob. You can refer to it in however you wish. And inside the blob, we'll make it the market. So each of the geographies inside the blob represent market shares.
And let's just remind you of what they -- these are the same characters we've used in other discussions with you. So Sam [ph], some of you might remember Sam, [ph]. Sam [ph] is classically inconsistently insured, a little bit more of I need insurance yesterday, I need to be able to drive my car, I'm not really sort of thinking about insurance in a very profound way, it's just a means to an ends for me. And there's a fair amount of agency bias there. Sam is typically a renter. I think when we've tried this with a couple of groups, people -- most people can say, "I think I want Sam [ph] at one point in my life." So you probably get the identification there. Sam [ph] is about 6% of the total market. So we'll leave him as the smaller segment down there.
Diane [ph], think of Diane [ph] as now someone who's taking her career quite seriously. She's starting to save. She's starting to think about her future. She's got a job. She's certainly into it. This is -- this isn't really a different stage of life. And she's very savvy. She's a savvy buyer. She wants the right amount of insurance. She wants to buy it in a way that makes sense to her. So Diane [ph], and hopefully you can extend the metaphor to lots of people that you know and market segment. Diane [ph] is a big part of the market. 39% the market, Diane [ph].
Let's quickly go to the the really big centerpiece, the Robinsons [ph]. We used the same term with you. The Robinsons, typically late 40s. They may have a son graduating from high school. They may have a -- they certainly have a home. They may have a toy, lives in a boat, often an Agency customer.
Back to that paragraph, agents have a lot of this business. That's why it's important for us to have a product in the agency distribution channel.
And not too much different than the Wrights [ph], perhaps skewing a little younger and typically someone who's a little bit more savvy who's saying, I can be my own bundle. I'll put a home together with an auto and any other toys. So we'll call them the Wrights [ph]. They're kind of self-motivated bundlers, and, by definition, a little bit more direct. They're about 12% of the marketplace.
So 1 market, 4 groups. And it's important here you just sort of use those groups as a guide to the marketplace.
Our market share. We happen to be very high with Sam [ph]. No question about that. Proud of it. We love Sam [ph]. We love Sam [ph]. We'll take Sams [ph] all day long. But we also know that Sam [ph] is not necessarily going to have the longest life expectancy in any one policy. He may have multiple policies that we love. As long as we price Sam [ph] correctly, we're happy to have him.
Dianes [ph]. We've got about an average market share. We have about 8% to 9%. We'd love to have lots more Dianes [ph]. We'd love her have lots more everythings.
The Wrights [ph]. You recently expect, since these are self-bundlers, a little bit more direct, that we would have a high market share of the Wrights [ph], and we do.
The Robinsons [ph]. I think John Sauerland has reported to you on occasions that we've sort of rounded 0 to 1/2 and 1/2 to 1. So it's a pretty low market share, we know that. It's a very low market share but growing for us. And I want you to think a little about the boundaries here because in many cases, the boundaries here are really the boundaries they get across. These are not absorbing [ph] States where people stay forever. They actually move from one state to another. And we'll talk a little bit of that as we go through.
Brand switching. There are lots of studies to come out on brand switching. It's very hard in this business to get a perfect study of same-store sales and to know exactly how many people are shopping. In fact, most of the studies that we see and most of our own work at least lets us triangulate to something like about 9% to 12% of the population, switches insureds every year. So just go with that as a general, and you can derive that from these switching Wrights [ph]. But it's not uniformly distributed across my model of 4 demographic segments. Sam [ph] clearly is switching a lot higher. Shopping and switching a lot higher. Diane [ph] and the Wrights [ph], possibly in the same general 10% to 14%, 11% to 15%. The Robinsons [ph], considerably lower. All right?
So now, we should have at least a mindset of a market, 4 demographic segments, Progressive's relative share and what the activity that there is on each of those. All right? That's fine.
So what are you doing about it? What are your strategies? Now let's just take some of our highlight strategies, some of which will be filled in a little bit more in the future speakers. And I'd I like to say know your target and act with purpose. So have a reason for doing what you're doing and be very clear about that reason.
So let's just start with Progressive Home Advantage. Who are we trying to address with Progressive Home Advantage? Well, if you'll give me the liberty of just using a shading system here and a numbering system from 1 to 4, I'll go through this example in a little bit more detail.
Sam [ph]. Are we really trying to reach Sam [ph] with having PHA? The answer is no. Sams [ph] needs auto insurance yesterday, and we've always been there for Sam when he needs it. PHA was not designed to do very much for Sam, whether it was increased retention or actually attract them.
Diane [ph]. Absolutely. Big difference. Remember, Diane [ph] is really someone who now is starting to think through all of her financial peers [ph] in life. She may be starting to be rent. She might change in life.
The Robinsons [ph]. Yes, it matters. But no, they're not shopping necessarily directly. We make 63% of our own Robinsons [ph]. All right? So those boundaries are the boundaries we crossed, and we will manufacture as likely as we will bring in from the outside our future generation of Robinsons [ph]. Does that matter? Of course it matters to us because we generate more new business than any other company. In fact, Progressive plus GEICO, at least in our estimates, will be more than 50% of all the new business sold in America. So we have -- we may not have the entrenched book of 25-year other carriers' Robinsons [ph], but we certainly have access to the ones that will be the Robinsons [ph] of the future. We will take both in any quantities that comes to us, but a lot of this is making sure that we're positioned, that no one needs to leave. Diane [ph] never leaves -- needs to leave us when her life situation changes.
Snapshot. Who is Snapshot trying to get at? Well, I'd love to say that Snapshot would be a perfect solution for the Robinsons [ph]. Not going to happen. Robinsons [ph] are not shopping. That's a problem. So while Snapshot might be a very appealing proposition, they're not really in-market shoppers. So it's really not the Robinsons [ph] in this case. In fact, I would say it skews very heavily to that savvy nature of Diane [ph], and she'll take the opportunity to buy a policy that probably is priced well for her at the time, and a future opportunity, almost like buying an option, to see if I can actually do a lot better.
Sam [ph]? Maybe Sam [ph] should. But again, Sam [ph] needs it yesterday. So you should really not sort of engage as much, sort of plugging something in and waiting for the results.
The Wrights [ph]? Absolutely. This can work for the Wrights [ph]. They're very savvy as well. But I think the real skew here is more to the Dianes [ph].
The close cousin, the derivative of Snapshot is Test Drive. This is where we can say you don't have to think about necessarily changing your insurance right away. So here where we see a shift to the Wrights [ph] and Robinsons [ph]. This is a proposition that we can say, try it out. Try and ask. You don't have to do anything differently. And that certainly is one that we've already said very publicly. We haven't got as much traction on as we want to get -- as we had hoped to get, but we're going to keep trying with different insights. And so the Wrights [ph] and the Robinsons [ph], very much in our sight for Test Drive. And of course, it's approximately 90% of Dianes [ph] that we don't have access to, and we're definitely trying to say try something out.
What's really important here is for the first time, we have the opportunity to have a conversation with people who aren't necessarily thinking of buying our products. It gives us the right to have a conversation with them, which just doesn't necessarily happen when all you have is come try my insurance.
A couple of others. Mobile. This one -- frankly, if anybody wanted to take exception with the numbers, I'd be fine with it. It used to be that this was a little bit more younger skewed. That skew has largely gone away. The mobile is just across-the-board. It is not necessarily one that fits perfectly into a demographic model, which is why you see that acceleration curve being so high. It's really significant. I've skewed it a little bit to the right here, but I wouldn't take a lot of exceptions. On an acquisition basis, probably a little skewed to the right. On a servicing basis, needs to be for everybody.
And name your price. One of our initiatives, we won't hit on that too hard today. Very much a right skew to that because, again, the Robinsons aren't shopping. So this one's not necessarily designed for the Robinsons, but certainly the Wrights, to a degree. And then Sam. Now, Sam kind of likes the idea of name your price. He's more interested in sort of paying whatever he needs to pay to get going and Diane, very savvy she'll use it for all the right reasons.
The last one in this series is really of service and the strategy and I probably should've done this overnight. I've changed them all to a 5s because frankly, everybody, everybody, regardless of who you are, wants to have a hassle-free claim, and that's what the service center provides. So this is designed as a service initiative across all of our customer sets. So if any of that has achieved the objective of going from a blob to our market and back again, it gives you an idea just a context, just a context of why we're doing what we're doing. And as we start to get through the rest of the afternoon, hopefully, we'll fill in a few of those pieces. Brian and I will be back for Q&A at the end of the session. We'll keep all of our key speakers. Mike and Bill Cody will be here if you have questions on investments. So if we don't hit it in the presentation, time limitations will never allow us to hit everything. Hopefully, we can get to your questions a little later
I'd like to pass it up to Brian now, so that he can come and talk a little bit about our business model and reinforce the key elements.
Brian C. Domeck
Good afternoon. Today I'd like to spend a few minutes talking about several important and enduring tenants of our business model. Now much of this won't be new news to you, but I think it's important for us to remind ourselves of these from time to time and certainly renew our commitment to them.
First, it's important to have clear financial objectives. And for us, our primary financial objective is to grow as fast as possible at 96 or less. In Glenn's most recent shareholders' letter, he referred to the 96 not as a software variable but rather as a constant.
It's important for us to adhere to what say. The second quarter of last year, about this time, we were crossing that 96 combined ratio of threshold. And in New York, we said we would react quickly and increase the throughput of our rate revision factory. And in fact, we did that. In the second half of last year, we completed over 100 rate revisions in both personalized and commercial lines combined, and last year, we raised our rates about 6.5% in Personal Auto and nearly 10% in Commercial Auto. The effect of those rate revisions is being shown up in many different measures, including improved combined ratios. And today, I can say I feel good about our current rate adequacy. Glenn and I often get asked the question, "Would you consider changing your 96 combined ratio target?" Certainly, in the most recent environment with lower interest rates, would we consider changing the combined ratio target? The simple answer is to that is, no. We feel that it served us well in a number of cycles, with economic cycles, underwriting cycles. And for us, it creates a good balance between attractive margins and competitive rates for consumers.
It's important that we meet those profitability targets because we are more leveraged to underwriting results. This speaks to another tenet where will write an efficient premium to surplus ratios. At the end of last year, our premium's equity was close to 2.7:1. A peer set of other stack companies including Travelers, Allstate and Chubb, their premiums to equities were closer to 1:1. We are much more leveraged to underwriting results. And we feel good about that. We feel good about that. And in fact, in lower rate and changes in investment returns, it requires less improvement at combined ratios to maintain high returns on equity. This combination of disciplined underwriting, ensuring we meet our profit targets and leverage the underwriting results is how we create good returns for our shareholders.
Another key tenet. Have an efficient cost structure. Low-cost facilitates enabling competitive prices. And I feel good about the progress we've made on several different fronts. Glenn earlier referred to the progress we've made on loss adjustment expenses having come down 1.4 points in the last 5 years. Tricia last year, talked about productivity gains we've made in claims and including getting the right claims into the right people's hands. We've also made progress in customer service, our policy servicing, where, there, again, productivity gains we've reached while increasing our policies in force. A couple of main drivers of some of the expense reductions are in the information technology space and the real estate space. In information technology, we've been very disciplined in sticking to an annual budget and we've also made great progress in reducing what I would call infrastructure charges, things like software and hardware and telephony expenses. On the real estate front, we've made gains by decreasing our footprint and increasing the occupancy rate within that footprint. This reduction in what we call non-acquisition type expenses has enabled us to spend lots more dollars in the advertising space and still have competitive prices for consumers. But it's not just enough to have cost lower. We also want to improve quality. And I'm pleased to say we have many measures, both internal and external, suggesting that our quality is improving. Over the last couple of years, we've made progress in the J.D. Power's Customer Satisfaction Index. Still not exactly where we'd like to be, but we're making progress. In claims quality, I can say we are operating currently at all-time high quality levels. This is based on internal studies where you actually take random samples and target samples from claims files, give them a score and the claims quality Index is a summarization of those scores. We are currently at all-time highs. And why is a low-cost structure important? I'll go back to Glenn's first slide. If you look at the company's for a significant size and growing, they are those with low-cost structures; USAA, GEICO, Progressive Agency and Progressive Direct another tenant efficient capital management.
Another tenant, efficient capital management. Over the last 40 months, we've generated nearly $4 billion of comprehensive income and returned nearly $3.6 billion via share repurchases and dividends. The form and fashion may change from year to year. 2010 and 2012, we used special dividends as a major portion of the return. In 2011, we repurchased close to $1 billion of share. What remains consistent is our commitment to return capital that we do not need. We'll always keep capital for growth. We will return capital for contingencies. But if we feel we have more capital than we need, we'll return it. I should mention, during the same time period, we have modestly reduced our debt and certainly reduced the average cost of debt.
Our final tenant will be to know your risk profile. And for us, we've articulated that as being short-tailed, high-frequency, low-severity products. We think that fits well with our core competencies, including claims handling, pricing skills, segmentation skills. But we know that some of our customers need products outside of this risk profile. And for those situations, we feel very comfortable working with other insurance partners, insurance company's, to provide those products. We have met those partners both from a financial perspective, service-level perspective and feel good about offering those products to our consumers. Progressive Home Advantage being one of those examples and Dan Witalec is going share that -- share more of that story a little bit later.
So in summary, I think we've built a very durable business model based upon a few key tenants. Clear financial objectives, an efficient cost structure, efficient management of capital and knowing and sticking to our risk profile. I'll be back later for Q&A with Glenn. But for now, I'll turn it over to John Sauerland.
John P. Sauerland
Good afternoon. Dan Witalec and I have a number of topics for you within the distribution and product space. And I'll jump right in and say the first is growth. Glenn shared with you some growth perspectives predominantly from a premium perspective relative to the industry. 2012 premium growth, I would call it respectable. We, however, are very focused on unit growth. We believe unit growth creates long-term value. And we employ unit growth within our gain share formula, which as you -- I think you know, determines internal bonuses as well as the variable dividend.
Glenn shared with you retention has gone down. Our policy life expectancy, the graphs on the left there, as a result of taking rates up mid-last year. We think we are through that predominantly. As he said, consumers are now seeing rates similar to the same rate they saw the last time they renewed with Progressive.
The new information on this slide is new business. We obviously shared that with you in the Q quarterly and we showed Agency down, I believe, 15% for Auto in the first quarter, and direct down 4%. Here, you can see that broken down by month. You can see March and April, we're actually up for direct. You can see in both channels the direction is going to right way, in my opinion.
A lot of things we can do to get more competitive on new business. We've taken a lot of steps, including improving our down pay, getting more competitive and it helps improve conversion. Introducing more competitive coverage packages so the rate that the customer sees relative to the coverages they are requesting, always as importantly, making sure that's appropriate for a specific customer. Well, we've gotten more competitive there as well. We have also taken rates down in some states. Most notably our 2 largest states, Florida and Texas. We've also taken rates up in some other states. It's always a balance at the state-level. The product managers are always making sure the rates are tuned to the 96 or lower line, so we've taken the rates up in some states. But in aggregate, year-to-date, we've taken rates down in our auto programs a little less than 0.5.
At the same time, we think the marketplace has been slowly rising in terms of rate bump. Well, you see, on this chart here is a display of information we gather from what we call our comparison rating group. So we have a group that programs the rates that you can see when you go online to progressive.com to compare them to the quote you're getting. So this is just what I'll call primary competitors and it's not premium-weighted anyway, it is simply a data on the chart at the month in which a competitor change rates. So that above that 0 orange line is a rate increase and below it, obviously, is a decrease. In the latter part of 2012, we are almost exclusively seeing competitors take rates up. I call that in the 4% to 5% range. More recently, we've seen some small number of rate decreases in the marketplace but again, predominance of rate increases call it 3% to 4% range. As Brian mentioned, we feel our rate level today is very adequate. We've actually taken it down slightly year-to-date. As the market continues, we think, to take rates up some. We think we're going to get competitive in the marketplace and those new business trends will continue.
Take a little higher perspective now around opportunity for growth for Progressive. What you're looking at here is the combined share of independent agents and direct carriers, this is our estimates, over the past 16 years. Two things, I think, you first note, actually, those 2 channels combined have more than half of the auto marketplace, and in aggregate, that share has grown. Naturally, the biggest growth has been in direct, but over this time period, independent agents have actually held their own. So a lot of opportunity for growth within the markets we currently sell through, or channels we currently sell through.
Other important consideration here is that within each of these channels, we have around 15% market share. Give or take 1 point by channel, but think of it as 15% market share within each channel. So growing cumulative channels in total. Reasonable share within each, so a lot of room to grow within each channel. And I'd also reiterate Glenn's point, which is really important, where a lot of our strategy is focused, is that we've got very high share in a very small segment of the marketplace and very low share in the biggest segment of the marketplace. So we think our growth opportunity is considerable.
Now I'm going to hand the floor over to Dan Witalec and he's going you through a few topics in the distribution space.
Good afternoon. John talked a little bit about our agent and direct channel. So I want to take you through one specific example in each of those channels. So I'll talk about comparative raters in our agency space, mobile quoting in direct and then I'll hit on our multiproduct agenda, which really get us across both channels.
So let me start with comparative raters in our agency channel. This chart shows the percentage of our Progressive agents who use a comparative rater. So you can see that it's increased pretty significantly over time. This is not a new trend. We've talked about this in the past, but certainly one that continues and one that we watch closely. As we think about comparative raters, they can be a challenge for us. It's an auction environment and that means that the conversion that we see for agents who use a comparative rater is much lower than the conversion we see for agents who use our Progressive quote system. Now while that conversion's a challenge, the upside that we see to comparative raters is that we get more shots at preferred customers. So this chart shows the percentage of our quotes who are preferred customers for comparative raters, in the orange line, and our Progressive quote system, the blue line. So you can see we get more shots at these preferred customers -- and by the way, preferred here, I just mean the Robinsons and the Wrights that Glenn referenced earlier. We get more shots at those customers. Both Glenn and John referenced that our roots and our market share in agencies skew towards the Sams of the world, but our growth opportunity isn't preferred, and we actually think that comparative raters help us there.
So I've talked a little bit about the growing importance of comparative raters. How do we win in this space? We think there are 4 keys. The first is to have a low expense ratio, to have competitive prices. The second is to have a great segmentation, to have the right prices for the right customers. The third is retailing. And the fourth is retention. Retention's obviously a huge topic, I'll just hit on one piece of it here around cross-sell. John is actually going to talk more about segmentation, but let me hit on the other 3.
So let's start with the expense ratio. We -- this chart shows our Progressive agency expense ratio relative to our major independent agent competitors. So you can see that we have the lowest expense ratio on here. Why is that important? If we're able to lower our expense ratio, we generally pass those savings on to our consumers in the form of lower prices, and we know these comparative raters space, it's very price sensitive. So in fact, we have seen that when we lower rates 1% on comparative raters, we're able to increase conversion and sales about 2% to 5%. So every point matters here. Brian showed some nice -- some charts on the success we've had in lowering our expenses over time, and I can tell you that's a continuing focus for us.
Let me next talk about retailing. So what I mean by retailing is just making sure that we put our best foot forward in the presentation that we have to our agents. So this is akin to say that the Dorito's product manager making sure that they have the right shelf space for their products in retail outlets. So let me show you 2 examples on 1 specific comparative rater called, IBQ. The first thing I want to show you is we actually show 2 different rates to agents on IBQ. So we have a Progressive choice rate that defaults some of our discounts to on. So for example, if an agent is going through a quote and those doesn't apply the paperless discount to one of their customers, we will apply that discount in the Progressive choice rate and show that to them as well. So it's just a way for us to put our best rate forward to our agents on comparative raters. I told you before how price-sensitive this channel is. We've seen a really nice lift in conversions since we've added this Progressive choice rate to our comparative raters.
The second thing I want to show is simply how we highlight the fact that we can -- we offer a multi- policy discount, which can be pretty significant. So we know that a lot of our customers bundle their auto and their home together when they get a quote and we offer a significant discount on auto, and so we want to make sure that, that is highlighted and readily apparent to our agents.
The last point on agency that I want to hit on is retention, and specifically one piece of it, cross-sell. So we've talked a lot about comparative raters but our own Progressive quote system, which we call ForAgentsOnly, is also very important. For one thing, even if an agent is using a comparative rater, they have to bridge over to ForAgentsOnly to finalize the sale and to service the policy. So we want to make sure when they come into ForAgentsOnly, it's as easy as possible for them to cross-sell product. So you can see here an example of our homeowners' quote and our other products. And the way that we make it easy is we prefill the other products' quote with all of the auto quote information, and again, that multiproduct discount is very important, so we highlight that as they're going through the quote. These are very simple changes but I can tell you, they made a big impact in our multiproduct business in agency.
So that's agency. Let me now turn to our Direct business, and specifically dig in on mobile quoting. So Glenn referenced earlier, we've seen a steep increase in the number of customers who are beginning their quote on a mobile device. In fact, as he said, about 1 in 5 of our quotes in direct now are coming in on a mobile device. We started mobile quoting a few years ago simply because we saw the clear consumer trend towards smartphone usage and other mobile device usage. What we didn't know when we launched mobile quoting was whether or not we would actually get incremental quotes or if mobile quoting would simply cannibalize our existing Direct channels, namely the desktop, Internet and phone. So we now have some data on that. And what we have seen is that on average, when we launched mobile quoting in a state, we see about an 8% increase in quotes overall. We have seen some deterioration in our phone and desktop quotes, those are the orange bars on the chart, but that's been more than offset by the increase in mobile quotes. So this has been a nice, pleasant surprise for us on mobile quoting.
I next want to talk about the mix of customers we're seeing in mobile. Glenn referenced this earlier. This chart simply shows the percentage of preferred customers in mobile relative to the percentage of preferred customers in desktop Internet. You can see over time -- well, I should say, early on, we did see that mobile had a little bit less preferred customers than desktop Internet. So they tended to be younger and have less complex needs. But we've seen that percentage of preferred customers in mobile increase nicely over time. And we believe as mobile becomes more mainstream, the mix of customers will be just like what we see in the rest of our business. In fact, we actually think there's an interesting subsegment in here that we like to call the preferred of tomorrow that, really, they put mobile first, and we believe our mobile offering is a nice way to attract that valuable segment.
So that's the mix of mobile. Let me now talk about conversion on mobile. So this chart, similar to the last one, shows our mobile conversion relative to our desktop Internet conversion. Again, early on, we saw that mobile conversion was a little bit lower than desktop Internet conversion. It's not surprising. It was a new technology and in all honesty, it's somewhat hard to type in insurance information onto a small smartphone, but we've seen really nice increases in mobile conversion over time as we have iterated our mobile quote and launch new versions of it. There's several new versions of the quote that we referenced here. I'm not going to talk about each of these, but I do want to talk about our philosophy as we improve our mobile quoting -- our mobile quote system. We really think about leveraging our desktop Internet capabilities but also recognizing the unique capabilities of mobile. So we like to say, mobilize not miniaturize. So one example of that, that we actually shared at last year's meeting. You can now take a picture of your drivers license and have that information from your driver's license automatically pre-filled into a mobile quote. So it's just a nice example of making mobile quoting easier and leveraging the simple fact that smart phones have cameras on them.
The last thing I want to talk about in mobile is one of our more recent innovations around responsive design. So I've talked about mobile as one big bucket today. We all know -- the reality is it's actually much more complex than that. There are a myriad of different operating systems and browsers and screen sizes. The reality is, we can't build a unique quoting system for all of those different iterations. So the approach that we've taken is leveraging a concept called responsive design. So what we're able to do is with a single underlying source code, and that's an important part of it, as a single underlying source code, we're able to customize what a customer sees based on the screen size of the device that they're using. So for example, on a wide tablet screen, we're able to show our brand icon, Flo, but we streamline the quote for the smaller smartphone screen.
The last point on mobile that I want to make is we're actually seeing a lot of crossover experiences. So a customer may start the quote on their smartphone but finish it and maybe buy on their tablet later. And we think that responsive design allows for a continuity of experience within quoting and buying that has already increased conversion and we think really increased conversion on mobile even more.
So that's mobile and direct. The last topic I wanted to hit on is our multiproduct agenda. So these 2 charts show our percentage of auto customers with more than 1 product for direct on the left and agency on the right. The first thing I want to point out is the blue portion of each of these charts. That's our special lines business, so think boat, motorcycle, RV. This is actually -- it's a great business for us. We haven't talked about it a lot today, but we're actually #1 in motorcycle. And we think special lines is a great entry point to the preferred households that we want to get. So think about us getting that boat policy for a customer and then later getting the auto and maybe the home policy.
The next thing I want to talk about on this chart is the orange portion of the chart. That's our Progressive Home Advantage business that Glenn referenced earlier. You could see that we've grown that business in both direct and agency, and even certainly more in the Direct business. The 2 things I want to point out there for direct, one is we've been able to generate a lot of demand for our product by advertising it. So were excited about that demand generation. And secondly, we're expanding the list of PHA underwriters that we work with. So in 2011, we had 4 PHA underwriters, we added 4 more in 2012, and then this year, we're adding 2 more PHA underwriters. So unlike many of our competitors, we have many options to meet our customers' homeowner needs. If a particular company doesn't work for one of our customers, we have alternatives.
So that's Direct. I want to finish up by talking about PHA in agency. We saw on the chart, a couple of slides ago, we have grown our PHA agency business over time, but it has been slower than what we've done in Direct. And part of the story there is not every homeowner carrier is designed for the independent agent channel. And in all honesty, it's taken us some time to find that right partner. Glenn referenced them earlier, we feel like we do have that right partner now with ASI and we're really excited about the growth that we've seen with them. We're expanding quickly with PHA and ASI. We added 7 states in 2012. We're actually entering Florida on a limited basis next month, in June. And then we have several other large states that are in our plans as we move into 2013 and into 2014. So we're really excited. We think that we can grow our multiproduct business in the agency with ASI.
With that, I'll turn it over to John, to talk about product.
John P. Sauerland
Three topics for you in the product space. You've probably already seen them in your book. Underwriting, renewal pricing, and last but not the least, snapshot. Underwriting is not something we have talked a lot about in this kind of forum previously. We've always done some underwriting as a company. More recently, we've gotten a little more robust, a little more aggressive in our underwriting, and done so in the manner in which we do all the things very Progressive in a very analytical and systematic approach. Couple of points I want to make overarching our underwriting efforts.
First and foremost, we still fully believe there's the right price for virtually every risk in the marketplace. Very small subset of prospective customers and current customers who we think we need to underwrite out. Secondly, the intent here is growth. So we want underwrite in order to get the better rate level for by far the predominance of customers and prospective customers, so that's what we're doing here.
What kind of risk do we underwrite? Well, suspected fraud is one. Policies with -- that are underpriced due to regulatory constraints. In some markets, there are regulatory constraints that don't allow us to get the price high enough to assure we're going a 96 for a segment. And finally, policies with high claiming behavior. These are current customers, we see very high claiming behavior. We don't suspect it's fraudulent, but we're confident in saying we will not make that money prospectively on that customer going forward so we will non-renew that customer.
We will underwrite consistent with our brand, our consumers in mind, ease of use in mind for our agents as well, but this is becoming a little bigger portion of our product agenda.
Florida provides a few examples recently around underwriting efforts. A couple of years ago, or so, we were challenged in terms of profitability in Florida. And amongst a number of things that changed that scenario for us was more aggressive underwriting.
3 examples there for you. The first is pre-binding risk validation. So this is simply making sure we're about to write as a customer is indeed -- reflective in the questions they've answered with us is indeed who they are. So historically, we've written the risk and then asked for validation around different rating attributes. And here, we're actually doing that upfront before we buy him coverage.
Florida, as you probably know, is a fairly intricate Personal Injury Protection or PIP market. We've found that, historically, if there's a lot of PIP claims in a household, we will not be able to make money on that risk going forward so we have underwritten those risks out. And the last one is a little local nuance in that a number of carriers in Florida that do not submit information to CLUE, the Claims Loss Underwriting Exchange, so we can't get an accurate picture as to their driving history or claims history. It relates back to the first point but when we are not confident that we can price the risk accurately into a 96, we will underwrite them out.
Each of these points in Florida, we think, was worth about 0.3 to 0.4 of a point. So in aggregate, more than a point. And again, we put that back into rate level for the larger marketplace. And Florida, over the past couple of years, has done very nicely, growing at a very nice margin.
Second topic I mentioned was renewal pricing. Those of you who have followed Progressive for a while know that we introduced a new auto product model sort of every other year. We will start introducing our next model next month in the first state. And this model will focus more on segmentation within our current customer set. So we look at a lot of the behaviors we have seen over time with our customers and seen behaviors that are indicative or predictive of future higher indemnity costs. We will increase those customers' rates with this program again with the overarching goal of a more competitive rate level for the predominance of customers and prospective customers but with increased certain segments' rates.
Offering a few examples to give you a flavor here. Very frequent policy changes is the first. Easy example there is a 1-driver 2-vehicle household who endorses the Jeep on for the weekend and the Sedan on for the week. We can write that customer profitably, but we have to raise their rate.
Next is poor payment behavior. Similar sort of thing there. I can't explain exactly what is going on, but we absolutely know we should raise that customer's rates prospectively to ensure a 96 combined ratio. And the last example there is something we've been a little out of the line with some players in the marketplace, which is permissive user claims. So if I lend my car to another individual and they have an accident, we pay the claim, Progressive does. Not all companies do, by the way. Most companies do, but there are companies in the marketplace that will deny that claim. We pay that claim, but today, we don't surcharge MyPolicy because there was a claim. And that actual claim is predictive of future higher loss cost, and we have some competitors who actually do charge -- surcharge, excuse me, in that situation, so we're going to that going forward.
Interesting to note, when you look at these segments we're going to be raising rates for, today these segments actually renew at a higher rate than a similar cohort of customers in our book. So we think we will get renewal rates slightly lower with these customers. Again, afford a very competitive rate for the rest of the book.
Okay. Last topic in product is Snapshot. First, let me say, don't try to read those graphs. You have those graphs in the back of your book in full 8.5x11 size. I'm not going to talk through these slides, but I wanted to give you updated information around a number of facets of the Snapshot program that we share with you historically and offer some insights into things like Test Drive. So peruse those at your leisure. I'd summarize where we're at with Snapshot today by updating you with a couple of facts relative to what we told you last year.
Last year, we told you we were at about $1 billion in trailing 12-month written premium. We are well above $1.5 billion now. Last year, we told you we had about 4.5 billion miles of driving data in our systems. We are around 7 billion now. So in aggregate, is it working perfectly? No. Is it working well? Yes. So peruse those at your leisure if you have questions, Q&A or thereafter.
There's 3 topics I want to go a little further into depth with Snapshot. First, is our intellectual property. We have 6 patents in the UBI space today. We received 3 of those last year, and we intend to defend our intellectual property here vigorously. We told you at this meeting last year, we would offer up terms for other carriers to license this intellectual property. We did so last December, and then the ensuing 4 to 5 months, we've had conversations with many carriers. I'd characterize it today as probably around 25 carriers. Very recently, we signed an agreement with one carrier consistent with the terms that we laid out in our December release. And we very recently agreed with the provider of our devices for Snapshot who has historically been our exclusive provider that they may sell their product to carriers who have taken a license from Progressive for our UBI patent. So we think we're going to have a lot more discussions with these 25 carriers, and I expect other carriers assume, as I remind you that we laid out in that release in December, that June 30 of this year is the day on which the terms we're offering up expire.
Next topic to Snapshot is Test Drive. Glenn has updated you on Test Drive to some degree over the past several months, I believe. Short story is we're not getting the number of takers that we are looking to get. Andrew Quigg and Jeff Charney will give you a little more perspective around what we're doing to change that. I would tell you the customers who are test driving are exactly who we're going after: very preferred customers and customers whose average Snapshot Discount is higher than the average regular Snapshot program. I'll remind you that in our current Snapshot program, a higher discount actually means a lower loss ratio. I've updated that or provided that chart for you in the back of the book to remind you on how this works: the higher discounts actually produce lower loss ratio. So we're getting preferred customers, very preferred customers who will stay with us a very long time, a great loss ratio. We just got to figure out how to get more.
Last thing I want to do at Snapshot is offer up to you some strategic questions, if you will. Snapshot and usage-based rating has been an evolution for us. It will continue to be an evolution. I would tell you, we have what we think of UBI 3.0, currently cooking in the lab. I thought talking through some of the things that we think about when we think about the future for usage-based rating, would be interesting. So first and foremost, how will the market address the worst drivers? I remind you, I think I already did, that our current model is a discount-only model. We have had models previously where we surcharge customers, but the current model is a discount-only model. That model works when you have a leadership position and not a lot of other players in the marketplace. Is it the right model on term as ultimately other carriers come in, in the marketplace? Perhaps not. To what extent can we modify driving behavior by providing feedback to drivers? We know we can. We do today in our current program. Could we do that more so with certain segments, more so with certain segments at certain life events? Most likely. What are the economics of long-term monitoring? Does an individual's driving behavior change over time or do they have driving DNA? Here, I remind you that our original MyRate, is what we called it back then, programs actually were continuous monitoring models. So we give the device to the customer, they kept it in their car for the duration of the relationship with Progressive. So we have a lot of experience here. I will say there is some DNA component. I will say there are things that can change DNA.
We'll also remind you that there are incremental technology costs here with Snapshot. I share with you last year that for our current program where we return devices after 6 months, on a cohort basis, a lifetime basis, that has about 1 point to our program. And that curve is as you would expect. It's an experienced or scaled curve, but we're down to 1 point and continuing to go down, although leveling out. What data will auto manufacturers make available on driving behavior? There are actually vehicles coming off the line today that can store the data that we store in our Snapshot device and send it to us via cellular. We expect to have a pilot with a manufacturer employing that technology soon. That said, as John Curtis will show with you later, technology adoption in vehicles is relatively slow. And ultimately, manufacturers are looking to sell cars or any other concerns around privacy or what have you there will be a challenge for that model. Will third-party data aggregators emerge? We told you, this is the most powerful rating variable we employ. And if you think of the other powerful variables, many of them require or actually we pursue third-party validation. MVRs, credit, vehicle information, CLUE, right? In aggregate, I'm guessing that's a multibillion industry, so I'm sure third-party data aggregators are looking at this. I will offer one complication there, and that today, we tell our customers that we will not share with their parties their personally identifiable driving behavior. Are there additional value-added services that a UBI device can provide? Absolutely are. We've debated those over many years and have not added one to our program. Will handheld devices replace on-board monitoring devices? We've done a ton of testing in the mobile space, for with monitoring driving behavior. You can monitor driving behavior. You all know you can look in your handheld and see how fast you're going, where you're going. Dan told you there are lots of different devices out there, different operating systems, different capabilities, GPS systems, different transmission power. It can work. There are definitely complications today. I think the broader question over the long term is how does data transmission evolve. So we have the vehicle, we have the device and we have handhelds. And my guess is there'll be some evolution across those 3 over time.
So I obviously don't have all the answers for you around these strategic questions, but I hope I've shared enough with you to let you know we've thought a lot about this. We've done a lot of testing in these. We have a very significant first mover advantage with usage-based rating, and we absolutely intend to maintain the distance between us and the competition.
I'm going to now turn the floor over to Tricia Griffith and Jonathan Beamer to talk about customer-centric.
Susan Patricia Griffith
Glenn talked about how important that preferred segment is to our growth, and then John and Dan talked about our continuing sophistication around pricing, segmentation, underwriting, and how that will fuel that growth. I talked about this last year, but expanding -- extending policy lives is critical to both unit growth and premium growth. So in order to operationalize that, we need to continue to create products and services that give our customers a reason to stay.
Glenn talked about confidence. We want every Progressive customer to be confident that when they chose Progressive, they made the right choice.
What you're looking at here is a longitudinal perception map. This particular data is from 2005, and I will update it in a couple of slides. If you look at the X axis, think of value brands. And this is from a consumer's perception. So how they relate to us relative to our peer group. So obviously, the further on the right, the more you're considered a value brand. When you think of value, think of great coverage for the price you pay. And we're very happy to be one of the leaders in the value brand. It was very intentional. We do our advertising around that, we create products around that. So think of Name Your Price and comparison rates.
That said, we also want to be that quality brand. We want to have the optimal balance of it -- of being both value and quality. So in order to understand what customers feel and what they think about when they think of quality, we would now then ask them. And they told us a couple of different things, but what they said was we want customers to care for us. So when you think of care, think of be open and honest with me, care for my needs, help me out in an accident. And they also want to be with a leadership brand, so think of brands that have a great reputation in the community and brands that would be in business for a long time. So we fit those things. So we feel really positive and understanding when we did this factor analysis with our consumers and what they said, they rank these the highest, that we can absolutely be that value and quality brand.
So from 2005 to 2012, as you can see, we made progress and we're happy with that progress. We've been talking about quality for a while, but we know we can do better than that. And that's really what Jonathan and I are going to share with you today. Some things -- some very specific things on how we continue to move up on that graph. Ultimately, we want to be somewhere where that blue dot is. We see that as the optimal place of value and quality.
In 2007, Glenn talked to all of you and he said that our substance was better than our representation. And I would say at this juncture, our representation is nearing our substance, and actually both are improving. So we're pretty excited about being able to become that quality brand with that value leadership. Part of it is to convince consumers that they don't need to make a choice. You can have a value brand and be a quality brand. It's not sort of you get what you pay for. So as we continue to create products and services and reengineer the ones we know are working, we believe we can get to this optimal point of that balance of value and quality. I'm going to ask Jonathan to come up and talk to you a little bit in detail about some of the things he's worked on from his analysis, and then I'll wrap up and give you an update on claims.
Thanks. You see from this chart the word value perception parity with GEICO now. We're really proud of that accomplishment. The question is can we build products and services that enable us to go north on this chart, to enable us to build that quality perception, to deliver a fabulous product in a category where price and quality are not at odds? The more efficient that we are, the better quality product we can deliver at the best price in the industry.
First thing I'm going to do is zoom in on that Y axis and show you the gains that we've made over the 7-year period. Each of the competitors that I plotted here, northern movement, movement above the axis is us gaining on that competitor. Over the last 7 years, we've gained 10 points in quality perception against State Farm. And you see, most of our other competitors, we've made significant gains on as well. We know we can do this. We can continue to chip away at that gap that the leaders in the industry have.
Brian showed you J.D. Power. We're moving in the right direction in J.D. Power. I get a kick out of this one. This is the American Customer Satisfaction Index, out of the Ross School at University of Michigan. They actually have us in customer service at parity with State Farm in their December 2012 publication of the insurance industry satisfaction index. I'm not sure that's exactly where we are. And, again, in J.D. Power, we have to continue moving north and we'll continue challenging it. But it is really fun to see external data sources show our progress.
Let me talk a little bit about how we plan on doing this. We have lots of different groups who either design products for our customers or interact with them on a daily basis. And we've challenged each of those groups to be very, very clear in what part of the customer satisfaction and customer presentation they're responsible for. But first, I'm going to talk about is product and pricing. John and Dan have gone into detail. We challenge our pricing group with accuracy. Accuracy is a really hard thing to talk to customers about. Where that's fun is that most accurate prices are usually lower prices, and so we can do a lot to make sure that as we run our business to a 96, every time we are making an efficient -- efficiency placed somewhere in the organization, we can pass that on in a more accurate, lower price to our customer. We also do a lot to gather preferences from those customers. Name your Price is a fabulous example, that in the quote flow, a customer simply by sliding a slider can tell us how price-sensitive they are, so we can design a product for them. Not relative to attributes about that customer but about feelings that they have about how much they want to pay for insurance. Coverage checker is a very similar, a little bit more preferred tool that we rolled out this year to make sure that the coverage that they get is comparable to what other customers might be choosing. Again, to build that confidence that they're getting the right product for their needs.
In customer service, customers call with questions, problems, concerns everyday. Largely, we task our customer service personnel with ensuring that we resolve that as easily and quickly as possible. I mean -- but going to go in an example in a few slides, where we can pivot those conversations, not just have a conversation about what the customer has called about but to make sure that we're reinforcing the value proposition that brought them to Progressive in the first place. When we do that properly, the customer walks away, first feeling, "I don't know why I put that off. That was really easy." Second, knowing and being confident that Progressive is providing a valuable product to them and looking out for what they need in that household.
Tricia is then going to go in an example of claims, and claims is an area where we've been very focused. Of course, that's where carriers for customers is. We exist to reduce the trauma of an auto accident. Question is how well we do that and does a customer have that sense where we are also doing it as easy as possible? These are anxiety-producing events, and if a customer can feel that, "Wow, that was easy," I didn't know that this disruption could be resolved as easy as possible. We know that again, we are in a place where we have a confident customer that Progressive is the right choice for their insurance needs.
Before I go into my example, I want to assure you that the 2 examples we're going in is one of very, very many that we could have chosen. As a matter of fact, last year, we talked about the loyalty program. Loyalty program is a great example of just some reframing with the customer to make sure that we're recognizing a customer who has more and more tenure with us and can, through that messaging, make sure that we're providing benefits that don't cost us a whole lot to operate or pass on to the customer but the customer comes away feeling rewarded for their time spent and, of course, our policy life expectancies increase.
Dan mentioned the preferred of tomorrow segment that we focus on. This group is very prone to life events. These are the folks who are buying houses for the first time, folks who are getting married. Can we get folks over hurdles? So a marriage, you wouldn't think of a marriage as a hurdle. My fiancée might be in with State Farm, and I'm with Progressive. Do I feel proud to have Progressive? Do I feel confident that it's the right insurance for us together or am I a little bit embarrassed and would go with a more premium insurer? We need to make sure that we're messaging in such a way where increasingly we win that marriage showdown and the customer is very, very confident that we -- I have a better insurance policy than my fiancée, so when we consolidate, Progressive wins.
Coverage checker. I mentioned briefly. Deductible Savings Bank is an example from our product group that has tested very well. An accident-free term is something a customer could be rewarded for. And by rewarding them in the terms of, in this case, a lower deductible in the future claim, we know that we can increase stickiness of that customer. Nobody wants to walk away from something they've earned over a period of time.
And Dan went into mobile. Mobile is more pervasive than just the quoting flow that Dan was showing you. We have to make sure that no matter how our customer chooses to reach out to us, we are ready to respond in that channel that they have chosen, and mobile is increasingly becoming a place where customers are coming to us.
With that, I want to go into my example. Our offers tool is based on some technology that we've been working on for years. And I'm going to show you some screenshots of exactly what the tool looks like. But the screenshots aren't nearly as important as the feeling that we create with our customers. So my last slide is how we capture that feeling and how we know that we're building value and value perception with the customer.
In 2011, we moved from policy to household view. We now -- of course, we sell policies. We need to be very, very clear that we treat households, not policies. So when this customer, in this case, this is what a call center representative would see when somebody calls about their auto policy, that call center rep knows immediately that there's also a special line of policy in that household. That makes the conversation much, much easier, and this is also what a customer who's using our self-help on online servicing would see. So this goes across the channel in which they choose to communicate with us. By having that information, we can make relevant and respectful offers to the customer. When I say relevant, these are the offers that are going to maximize value not just for us but for the customer. And when I say respectful, if we've offered it before, if it's been turned down in the past, we won't offer in the very next month when they call back. In this case, this is a PHA example. You saw the adoption rate in PHA. Much of that adoption in the direct is because we are pivoting this conversation. In the conversation where maybe there's a question about building on an auto policy, we resolve that. Before we hang up the phone, though, you say, "I see you're a homeowner. Did you know you could be saving this amount of money on your auto policy if you also bundled PHA?" In fact, we're not making that pivot on 40% of calls. So that line on the left is, when an operator is available, how often the customer service representative is deciding to make that offer and it's having that pivot of the conversation. On the right, you see that the take rates of PHA, the PHA-specific offer, mimicked the curve that you saw earlier of penetration into our customer base. But what I get excited as a marketer about is how customers feel. So of the base here, where an offer is available but we didn't make it, we measure Net Promoter Score. That's our internal metric of customer satisfaction, we use Net Promoter Score. When an offer is made but not accepted by the customer, so in my PHA example, customer says, "No, that's okay. I'm an unbundled customer. I'm going to stay that way," they still appreciate the fact that we're proactively looking out for them to save more money. And they've reward us with a 13% lift in Net Promoter Score. And then, of course, when they take us up on the offer, we all value -- we all get the value exchange. We get the PHA policy. The customer has just learned that they can take money off of their auto policy, another 20% increase on Net Promoter Score. We end up with more satisfied customers by selling them more.
With that, I'd like to invite Tricia back up to talk about claims.
Susan Patricia Griffith
Last year, Glenn talked about claims, I talked about claims, Mike Sieger talked about claims. We all tried to give our perspective of what that meant to retention, specifically around service center. As a reminder, here are some of the things we talked about.
We talked about how it was the best on all 4 of our guiding principles. As a reminder, and I've talked about those in the past: accuracy, efficiency, customer service and work environment. We talked about we're frustrated that we had -- didn't have more customers using the service centers. And we talked about how we can get something that's working well to something that's working extremely well. And in the end, we made a commitment that at this time next year, today, that we'd have a significant amount of customers choosing the service center as their preferred option.
So when we left, Mike Sieger and I got right to work and we decided that we needed somebody kind of a powerhouse person to lead this initiative. Some of you may have met him today, if you went on the tour. We asked John Murphy, who head, prior to that then, the State Claims Manager for California, we asked him to lead what we call the Relaunch. And it has gone successful, successfully well. What he did right away was he formed a team around the country and got to the things that are really important. So he formulated a mission, vision, tactics, all the things that are crucial to getting things going. But honestly, what he really did was he set very clear objectives and very clear success criteria and went to work to figure out why this wasn't what we wanted to be, even though he had already -- always been working really well. And we got the whole company involved. So I think before, it was more of a claim service center. We got everybody rallied around the excitement of this because everybody wants our customers to stay longer. So we did some educational tools for agents to be able to talk about the service center prior to an accident ever happening. That was a big part of that. We kind of always had that first conversation on when the accident happened, so we have materials for agents, materials for our inside direct sales reps. We work with our marketing department. Really a lot of excitement around this. And we also did a video, so for those of you who did not go in the tour, I'll show you a quick 1.5-or-so minutes video of what happens in our service centers, so you can get a feel for it.
Susan Patricia Griffith
One of the other things that John did was he, and along with our Marketing Group, asked customers, "What do you want? What feelings do you want when you have a claim? What do we need to do for you?" And they told us very clearly, "Make it easy. This doesn't happen a lot. I'm not sure where I'm supposed to go, what I'm supposed to do? Communicate to me." And they said, "Care for me. I want to be taken care of." And what we noticed is that almost every claim has some nuance. If we can connect with the customers and have them feel cared for, that relates to that confidence. And that's what they said. After the claim, because all -- we sell this promise. We don't have anything tangible. So we sell a promise that will take care of you if you get involved in accidents. They want to feel confident that they made the right choice. So John also asked them, "What would preclude you from going to a service center?" And they said, "If it's not convenient for me. I've got a busy life, kids, work, school, things are going on." So you've got to make it convenient.
So John and his group stepped back and formulated what they called a service center optimization test. And we took 4 states in our central claims unit and basically blew open the doors on our scheduling. So we were pretty flexible before, but we said, "You know what, let's open up way before people go to work, a lot during the day. Let's allow same-day appointments, late at nights, so people can come after work, and let's see what happens." And here were the results.
As you can see, we have a 25% improvement throughput of people coming to the service center since the optimization test. So we really exacting results. The people responded and said, "If you're making it convenient, yes, we absolutely want to do this." And as you can see, in the December 2011 chart, the very beginning of that data point, we feel pretty good then. Our metrics were pretty good. Once we were able to be flexible and nimble with our labor and our resources, the customers flocked. And you can tell from this 25% increase. So we're really happy about that.
One of the things that we learned that I guess sort of anecdotally make sense was that people love to come in on the same day. So whether it's the date of loss, the date of report or the date they decide to handle something that's inherently stressful, they love to be able to come in on that day. I think of it in terms of the -- did you ever have a Sunday where you're going, "Now my tooth hurts. So it will go away. I'll take some aspirin." Monday comes around, you can't ignore it, it's not getting better. Tuesday morning, you need to get into the dentist. So you're in pain, you called. If they can't get you in, you feel frustrated. You're in pain, it's not a good thing. Well, I hate to compare the dentist to claims. I've got to be realistic. Claims are not a convenient thing. We don't have time for it. So when someone calls in at 7 in the morning, let's get them in at 7:30. They're back at work at 8, and they're on their way. We need to remove the burden and give them that confidence to stay. What this tells us was there was some demand for same-day appointments because a couple of the sites actually had much more than 30% increase.
What we were really delighted to see were the NPS results of the same customers that dropped off their car in the same day. Those results, that 80 -- that north of 80 NPS, they're not just industry-leading. Those results are world-class NPS results. So that was very exciting, exciting because we know NPS correlates to retention. So this was a huge finding for us. We are so excited about the results from the test that we're going to go ahead and roll out service center optimization countrywide. Normally, we're very diligent about test, proof-of-concept, pilots, we roll out everything. The data, every single piece of our success criteria was just unbelievably phenomenal as we're rolling this out everywhere.
Last year at this time, as you can see by the orange dots, we had 54 service centers around the country. We are so excited and thrilled with where we're going with service centers that we're going to continue to invest in service centers. We will open up 9 additional server centers. And during 2013, actually, 3 have already been opened. The grand opening of our New Jersey service center happened yesterday. Glenn and I have been privileged to go to 2 of them. We couldn't come yesterday because we're preparing for you to come in. But I've got to tell you, the excitement around what's happening and the feelings we're getting from seeing the customers in these service centers are just truly unbelievable. It's different. We've always had a culture of customer care. This is taking it to the next level. It is really, really exciting. Glenn can concur with this.
I've been getting so many letters, not just like a paragraph but 1- or 2-page letters saying, "I came in. I was so anxious. And then when I came to the service center, John greeted me. Suzy gave me the rental." All these things that personify, that personalization that our customers long for when they get into an accident. So it's really been a change.
In fact, in one of our server centers in Florida, a couple of months ago, a woman walked in. She wasn't scheduled, but we're okay with that. We're trying to be flexible. She walked in and said, "I'm so frustrated. No one called me back on my claim. Can somebody help me with this claim?" And Erin Gibson [ph], our customer service rep said, "Absolutely." So she looked it up, and we didn't find if she had a claim. She had a claim 2 years ago with us. She's not Progressive insured, or wasn't [ph], but was involved with Progressive insured. And Erin said, "Is there a claim that hasn't been reported? I want to help you out." And she said, "Oh, I'm not insured with Progressive. And I'm not involved in an accident with Progressive. But the last time I got really good customer service was here. I didn't know where to go. So can you help me?" So literally, she had nothing to do with Progressive. So she got up that morning and drove to our service center and said, "Help me." And we said, "Absolutely." So Erin [ph] took her back, and we called the other company and gave a few guidelines on how to do customer service right, but helped her out and she is phenomenal.
And so that's really a great thing to do. Not a great revenue play, I get that. But that's what these buildings are about. It's not about -- these beautiful buildings that people would come in and you just sell their claims. It's about doing something different, making something special. It's about the Erin Gibsons [ph] that are in those places that transform those places to a place where there's customer care, where you took care of me, where now I'm confident.
So I'll end with where I started. We really believe that with the Offers tool, with service center optimization and with many of the other things that we have in our playbook, that we are absolutely going to get to that optimal spot of value balanced with quality. We've got a solid playbook and a lot more ideas coming in, so I'm anxious to continue to share those with you. And we're going to be that brand that is absolutely value and quality.
So speaking of brand, I'd like to turn it over to Jeff Charney and Andrew Quigg to fill us in on that.
M. Jeffrey Charney
Good afternoon. Last time I spoke with you, I spoke with you about change, change in the marketing landscape. And that change was rapid. That change was constant, and I'm here today to tell you that the treadmill now is even more intense than it was then. And to put all of this change in the marketplace in context, I'm going to show you some stats.
Take a look at this. What is the commonality in all of these stats? The commonality is that everything on this slide, everything, took place in the last 60 seconds in today's marketplace. 1,300 new mobile users in the last minute. 47,000 apps that were downloaded in 60 seconds and 6 million Facebook views in the last minute. Amidst all of this clutter, amidst all of this noise, I mean, the challenge for me, the challenge for Andrew, the challenge for that matter for any marketer, for any marketer, is to try to find that right blend, that right blend of art and science just to crack through that clutter, to crack through the clutter and make sure your brand is recognized.
And to that end, Andrew and I are going to focus on 3 questions. The first question Andrew is going to take on is with all this change in the market, with all the noise in the market, how are we ensuring that we are really getting the most bang for our buck. The second question which I know is on your mind is what the future Superstore and how long can Flo can go? How long can she go? And last, I'll take that question on. The last question both of us will come back and take this question on is where do you see the next marketing opportunities?
So with that, I'm going to turn over to Andrew Quigg, who's going to talk to you about what's going on in the market and what efficiencies were seeing.
So I'll handle the first question here, which is really trying to tell you how do we get the most bang for our buck. And really, we want to give you some perspective on how we ensure that we're getting the proper returns for our marketing dollars. And I actually want to start at a high level. I want to start in the industry level.
As an industry, we continue to accelerate how much we spend on advertising. Advertising is up 15% per year for the past 15 years. Now on the other side of the equation, we don't exactly know what's going on when shopping. There are a lot of shopping studies out there. And it seems unlikely seeing all those shipping studies that shopping increased at the same rate. So we put those 2 data points together, we can probably say that the returns to advertising for the industry are down. So within this, Progressive carefully manages our advertising budget. And we do that in many ways to make sure we get the proper returns. One thing we do, one major thing we do, is we buy most of our ads in-house. We go straight to networks, straight to publishers, to make sure we get the best deal for Progressive. We also look at the entire purchase funnel all the way down to a sale to make sure we're not misled by any intermediary metrics.
But today, Jeff and I are going to talk to you about 3 things. One is attribution. Attribution is incredibly important in measuring marketing effectiveness. Another thing we're going to talk about is segmentation. Segmentation is incredibly important in our pricing, but we also use it in our marketing. And then Jeff will come back up and talk to you about our creative assets, in particular what's going on with Flo and the Superstore.
So we'll hit attribution first. Attribution is the credit we give to a marketing touch point for resulting sale. A touch point is a marketing interaction or impression. You can think of it like playing an online game, doing an online search or seeing an online display ad. Progressive has historically used last touch attribution. On the screen is an example of last touch attribution. Here we have 3 touch points, A, B and C, that result in sale. Under last touch attribution, all the credit for the sale goes to touch point C. It was the last touch. Even though the consumer experienced touch point A, none of the credit goes to touch point A. Now this is the classic methodology for advertisers. Many advertisers use it. We can quickly see the shortcomings from it.
So Progressive is turned to multi-touch attribution. In multi-touch attribution, we try to assign the lift associated with each touch point. So here again, we have touch points A, B and C that result in a sale. But for touch point A this time, we look at the conditional probability of the sale given touch points A, B and C relative to the conditional probability of sale given touch points B and C. This relativity of the lift is associated with touch point A.
Now the math here is actually relatively straightforward. The issue is the volume and velocity of the data that Progressive seats. This year, we'll probably serve more than 45 billion impressions. That's quite a few. And under traditional data warehousing solutions, you can't do this analysis. So Progressive is turned to a big data solution. This big data solution fits naturally with what we do here at Progressive.
So what does this all mean? Well, let me give you an example. Up on the screen is a small sample of digital publishers that Progressive has worked with. This is a small sample that we work with many, many publishers. And here, we have the effectiveness as measured by last touch attribution. They are ordered from less effective to more effective. And this is how we spent millions of dollars in advertising for years and years and years. So how does this look under multi-touch attribution? We have a very different view of the effectiveness of these publishers. That means that we can better place our money in advertising to get better returns for Progressive. So that was attribution.
The next area I'd like to talk about is segmentation. Now Progressive has always been known for our segmentation in pricing. We try to look at the losses, expenses and profits associated with the customer and match that with the indemnity premiums we charge. And we try to look at many consumer attributes to make sure we're analyzing this on the most granular level possible. We do the same thing in marketing. We try to look at the acquisition yield, how many sales we're getting, and we try to match this with the payments we put out there or the bids we do, we give the various vendors.
So let me give you 2 real life examples of how we use a segmentation marketing. The first example comes from remnant digital display ads. Remnant display ads are unsold display at inventory that's available. So as a consumer pulls up a web page, there are sold ad placements, but there are also unsold ad placements. And unsold placements go through real-time option. There's an ad exchange behind it. Progressive bids in real time for these unsold ads. Now many advertisers do this, but we think many advertisers look at it from an unsegmented point of view.
So on the screen, I have an example of an unsegmented point of view. Here, we have a certain number of attributed sales per 1,000 impressions. I have administered [ph] 1.0 relativity. And in Progressive, if we were going it in an unsegmented way, might pay $0.47 per 1,000 impressions under the scenario.
Now this is a real life example. And Progressive looks at it in a segmented way. We segment off A, B and C here. A are in-market customers or consumers. B are other noncustomers and C are our current customers. So as you can see, segment A is very responsive. They're in market, they're ready to buy. And we can identify them in real time, which is very difficult. Segment C, those are our current customers. They've already become our customers. So showing them acquisition messages is not very effective. So we don't bid on our current customers. Segment B, again, we look at the yield and we try to match that with the bids we have. So what does this all mean? Well, it means we can identify customers who are much more responsive, and we can shift our spend to those customers. So for the same amount of spend, we can get more sales. That was one example of segmentation.
Another example of segmentation comes from paid search advertising. So consumers do online searches. They enter a query and out pops organic results. Around those organic results are paid listings. So you go to Bing, you do the search. Progressive participates in those paid listings, as do many, many advertisers. Within that, there's readily available segmentation. You can bid by day of week. You can bid by time of day. You can bid by territory. But there's also segmentation that's much more difficult to find.
So I'm going to show you an unsegmented example. And this unsegmented example is using the readily available segmentation. So here, we have a certain query. And again, I have the acquisition yield, the attributed sales per click, which I made a 1.0 relativity. Progressive would bid $47 per click for this query. And this would place us in third position. There's companies A and B that are ahead of us in first and second position, and there's company C that's below us in fourth position. Now let me say third position is a great spot to be. There's a lot of volume that comes in third position, and we're getting it at the right price. But we think we can dig more deeply here. And we found a segmentation that's not as readily available, and this segmentation reduces the yield by 30%. We also reduce our bid per click by 30%. What happens when we do that? Well, we slide into the fourth position. Company A is still ahead of us, companies C and D, they pass us. Company B doesn't bid. So what's going on here? Well, it's hard to say. We can't look exactly at what the other companies are doing, but we look at a lot of information. We don't think companies A, C and D can see the segmentation. They seem to bid the same way they do, whether the segmentation is on or off. Company B seems to see the segmentation, but they don't bid at all. Why this has happened? It's actually mechanically difficult to bid for this. We think Progressive is one of the only companies that both sees the segmentation and is mechanically able to bid for it. At the end of the day, this means we still get volume where we get it at the right price. We don't go over bid. And we save that money and reapply it at other areas of our marketing.
So again, 2 quick examples of segmentation. And now Jeff will talk about our creative assets.
M. Jeffrey Charney
Similar to broadcasters, we operate with a network philosophy. We program our marketing, content and our distribution in the same way that the network would. We also have a tagline, and the tagline is outcreate, not outspend. And it's more than a tagline. It's our philosophy. It's our mantra. It's our DNA. It's difficult to do. And also, similar to broadcasters, we operate a sitcom. And its sitcom takes place on a set, and it is a cool, white, timeless Superstore set where the intangible, the intangible becomes tangible. It's easy and it's fun.
And if you look at the full canvas, the full canvas of the Superstore, of our sitcom, you see the plotline, you see the story arcs, you see the character options, any network executive, any network executive would love to have it. And as a CMO, I'm so fortunate to have this kind of canvas to work with. And it all starts, first and foremost, with Flo. She's the reason they come in. She's the centerpiece. She is who she appears to be, and people love her. People love her. She's the protagonist. The antagonist is the foil or our competition. And these are very interesting guys that you can have fun with. These are competition you have fun. You don't have to hit below the belt, but it's a very elegant solution to have your protagonist and your antagonist go against each other with not having to fight dirty.
Going deeper, a lot of sitcoms today, be it Modern Family, be it old ones like Seinfeld and Cheers, had an ensemble cast. We have an ensemble cast with Flobot and Jamie the clerk, Pickles the dog. We have that ensemble cast, and it gives Flo someone to lean on, someone to play off of. It's just nice, you don't have to put all the emphasis on Flo. A lot of sitcoms go on location. We can go on location, too. We have set changes. Here, Flo is in a boat. She can go to a convenience store. She can go to Venice Beach. She can go different places. She can go to a food truck. And it really gives you a little bit of a variation of the theme. It takes you a little bit away from the white Superstore, which is disruptive. But you do go back and forth between the white Superstore and the set changes.
Again, going back to the network analogy. You have spin-offs. We have a spin-off character, too, and that is The Box. And The Box is a very interesting person, character, whatever you want to call it, but it's a very interesting situation actor that can really sell a little more directly, a little more directly than even Flo can. Flo can maybe get a couple of sales messages in. The Box, in its own disarming way, can get 5 or 6 sales matches and sell directly in a very compellingly way. And The Box is a breakout hit, and you'll see more of The Box.
And last, but not least, the flashback. Flashbacks always work well in sitcoms. Flashbacks work even better in marketing. When you have a character that's 6 years old, you can look back at this person here. Flo is 11 years old. Think of where you where when you were 11 years old. Here, she's running for Student Body President. You'll find out more about this character that you've seen for the past 5.5 years, and you have a greater affinity toward that character now that he's going in flashback.
So all of this, it's a continuous cycle. It's a continuous cycle. You can mix and match all of these things. But it does make a sitcom that is very unique in the industry. And it's -- this week is the Upfronts in New York. A lot of you -- some of the people in our group did go to the Upfronts. And I'm going to give you a little sneak peek of one of our commercials. This commercial will come out in June, and this is commercial is called I'll Stand By You, and it does exactly what it says it does. It's a song by the Pretenders, which is we're in Ohio, the Pretenders are based in Ohio. It's a song called I'll Stand By You, and it really says that our customers are loyal to us, loyal to us. We should be loyal to them and stand by them.
M. Jeffrey Charney
It's the only commercial I get to show today, guys. That's it. That's it for me. And it's hard. But it shows you the dimensions of Flo. That's her voice, and she's got a great singing voice. And she has a great interchange with customers, and as Tricia and Jonathan told us, we can own that cares for customers message.
So I talked about the network. How are we doing? How are we doing with the network? Networks base their programming success on ratings, on ratings. We base our success on consumer ratings or really customer action or consumer demand or new prospects. And to look at this chart, you have a basic ingredient that is Flo. You never lose that basic ingredient. When you add more characters, when you had sex changes, when you had spinoffs, when you add all the different things we have at our disposal, you can see that fresh content generates quotes, generates quotes. Another way to slice the data. And again, there's so many ways we can slice the data. This is a question we ask, that Millward Brown asks, and says, "Are you tired of seeing Flo? Are you tired of seeing the Superstore?" And this is the one chart as a marker that I want to go down, and it's going down. They're getting less and less tired of seeing Flo. And you see a couple of years ago, they were getting a little tired of seeing Flo. Now it's getting less and less, and again, I'm just real pleased with this kind of results because all of the different content things we're doing is starting to have even greater effect.
So the backdrop of all of this, and we looked deeper into it, was the thing called brand architecture and marketing, brand foundational elements. We have brand foundational elements, and we've had them for the past 6 years. The products, you saw them on one of the first commercial. The products were there. The apron, the "I Love Insurance" button. These are all architectural elements we've been living with for the past 6 years, the Name your Price, Name your Price, which came in later on, See a Reboard [ph]. These are shorthand elements that we don't have to keep explaining to people. They know what they are. And that's why as time goes on, it's a shorthand that makes our ads more efficient. It makes the storyline. It's easier to get into that storyline, and to go deeper into the data on this. This is what's called a mototrace [ph].
We actually watch people as we're watching our ads. And we can see where the interest is peaking. And you can walk and look at this and we look at all our ads like this, and you can see that the hero shot, the hero shot in all of this is Flo. When they see Flo, their interest peaks. And you see Flo in this ad. It's just one of the ads. She's got a Name your Price tool, which is exactly what we're trying to do in this ad, is talking about Name your Price. the interest goes up. They pay more attention to it. That's one ad. We have 90 other ads we look at, 2,730 seconds of advertising that we look at, we slice, we dice, we look at it, we know what happens when the rivals come in, when the competition is in there. We know what happens when products are introduced. We know what happens in the interactions from what we hear from [ph] the customer. We know what happens in all of this stuff.
And it's just -- it's, again, from a marketing perspective, from the CMO's perspective, I am most fortunate of all because not many CMOs have the opportunity to look at 90-plus ads with one icon, with one icon. Think of it. Think about it. There's not many, and especially in 6 years timeframe. That's just TV. That's just TV alone. Think about digital. Think about digital. Banners. Pretty easy to measure. When you have Flo in, 3x more response rate, 3x more response rate. So simple for most marketers. I mean, this is just -- it's just great for us. Great for us.
And look at -- think about gaming. Again, as I said last year, 75% of the population is playing games, different kind of games. And you can see here, these are 6 different artist representation of Flo. We don't tell them what to do with Flo. There's no paint by numbers. This is what -- this is how you'll animate Flo. This is all their view, if it's Zynga, if it's EA, whoever it is, they're telling you, this is what Flo should look like. The only thing that's interesting about it is that the brand architecture elements. She always have the headband. They have that. She always have the white apron, the red lipstick, the dark hair. It just makes her fresher and more relevant than just saying here is how you animate Flo. And again, there's just so much more I can talk about in games, and even that game had been [ph] at the bottom center. We're just sick of -- we just launch the cobranding effort with Universal, and this is a new game that we are launching -- literally be launching next month.
The network effect. We talk about networks. You talk about the network effect. That network effect really drives social. And in an era of Facebook fatigue, and we know what Facebook fatigue is, not many brands had this kind of trajectory that we do, 500,000 to 5.2 million. We're bigger than big brands out there, a lot of big brands out there. But the ones that I'm really most happy that we're bigger than, the ones I'm most excited we're bigger than are right now, we have 2 million more likes, 2 million more likes in all of our top 3 competitors combined, combined. And these are competitors that have very, very good icons and spend a lot of money to get those icons out there. They're engaged with Flo. They're engaged with Flo. This is a network they're involved in, and they're involved in a daily, daily basis.
So if you think about it, we have a network effect. We have brand architecture, we have tremendous characters. It's cool to have that. Audiences are flocking to it and the numbers, the numbers truly, truly back it up. As Glenn showed us earlier today, demand for a product, new prospects are up. And this is a great scorecard. If you look at the scorecard and scoreboard for our network, this is a great score board for us. We are proud of them and Andrew is going to give you just a little bit of a summary of what I've given you on the network. This is just a network summary. But like all network, we have a lot of things in development, a lot of new things in development, a lot of pilot programs and Andrew's going to tell you a little about that.
So what's on the horizon for Progressive? Well, one thing we're always thinking about is Snapshot. Now Snapshot, we've made a number of creatives around it. We have a chance now to combine those creatives and look at Snapshot as a message. And so we've done that. One way we look at messages is in their effectiveness in generating demand. So up on the screen, I have a handful of messages from Progressive along with Snapshot. And within this, Snapshot is a solid message. It's not our best message, it's not our worst message for generating demand, but it is a solid message. Test Drive that we talked about last year, Test Drive has been added there. It's not added as much to the message as we had hoped but it's certainly been added there. Now taking a step back, Snapshot is such an effective underwriting tool and rating tool, such a unique customer proposition. We're actually disappointed that it's not 1 of our best messages. So we've kind of gone back to the drawing board on Snapshot and tried to look at what we know so far and how we can improve it from a marketing perspective. One thing we did was take all the ad-cocky testing we had so far for Snapshot and put it together. So here on the screen, we have Snapshot as a message relative to some of our other messages and relative to messages from some of our top competitors. Here we see that Snapshot is a differentiator. It's both new and different when we ask consumers. So if it's new and different, we really thought we needed a new creative insight to help propel the marketing going forward. And so we did a number of consumer surveys. In the 1 consumer survey, we asked customers if they thought they were paying for the bad driving of other people. 63% of respondents did not think they were paying for the bad driving of the other people and 89% of them would be upset if they found out they were paying for the bad driving of other people. So let me say that again. The vast majority of consumers would be upset if they found out they were subsidizing others. Now, we all know that there's a lot of subsidization that exists within the auto insurance arena, it's just naturally there. Snapshot is a mechanism that reduces the subsidization in the market. So this was a creative insight we thought we needed. And we turn that creative insight into the rate suckers concept. Rate Suckers really personified this rate subsidization in the market. As Glenn said, it's really an anti-subsidization campaign. We launched Rate Suckers in April with the first ad and we quickly followed it up with a second ad that I have here for you today.
It's a very new message and it's a new concept. So it will take some time. What we do have so far is some consumer research. And in that consumer research, consumers said it was highly visible. It really broke through in comparison to other ads that are out there. The full evaluation's still in flight, so stay tuned for more Rate Suckers. And with that I'll turn it over to Jeff.
M. Jeffrey Charney
Okay. That's just one of the pilots, one of the pilots. And Trish and Jonathan, a lot of folks here talked about the journey toward confidence. And the journey toward confidence extends to a lot of different audiences. And what audience I really want to focus on for the next minute or so is our 35,000 Progressive agents, 35,000 strong. And as you can see in marketing, we know the power of how to drive home a message. We know it. And how do we apply from the marketing principle, the things that we have done in the consumer side to the agent side? And so we work with an outside group to ensure we had a story, a story that was clear, a story that's concise and wouldn't be relevant to consumers but would be relevant to agents, relevant to agents. And we think we have something very big that will form the basis of a B2B program, B2B marketing program. You might not ever see it here. You might not ever see, you in the audience might not see it but I'm telling you, you'll feel it. You'll feel it. More to come on our new agent messaging program in the future. The last and I'm going to pivot to the consumer one last time, and this is the last new pilots, new item in development in the network and it is a new complementary program, complementary campaign to the Superstore. And it's all about owning the name Progressive, owning the name Progressive, along with the confidence and that emotional -- that emotional power inside your heart of what it feels to be Progressive. There's 11 letters that no other brand can own except for us. And our -- just to give you something that we say internally, what we say internally is we are Progressive, we are Progressive the company, and we are Progressive as individuals. We are Progressive and we are Progressive. It's not a tag line, you're never going to see it anywhere. This is something we talk about here. I know it. I'm going to call you Progressive. Our employees, 26,000 strong know it. If you walk through the halls and I wish you had time to walk through the halls and can feel the energy in these walls, you would feel it. Our employees know it. And you as analysts, you probably know it because you've been covering us for a while. But we as marketers, we all look so forward to the day, so forward to the day that our consumer will not only know it, would not only know what it is to feel Progressive and know about Progressive but we really truly, truly feel it in our heart. And I think if we can nail that, we can nail that, that feeling of hey, I made the right decision by going with Progressive. It will help us in so many ways. So stay tuned. Thank you very much. I will turn it over to John Curtiss, who will take us through the market forecasting.
So far today, you've heard a lot about the current strategies and initiatives that are underway at Progressive. What I'd like to do is spend the next few minutes talking about the topic of long-term forecasting. How do we think about the future trends that will shape our business and our industry going forward. I want to talk about 2 aspects first. I want to give you an overview of our approach and then I want to talk about a specific example which is the emergence of these crash safety technologies and what they might mean for frequency long-term for our industry. It's important for us to think about these trends as we look for ways to continue to grow our market share and lead on really important strategies such as segmentation and innovation.
But before I talk about the future, I want to speak briefly about the past. When you look at the auto insurance market for the last 30 years, it's grown by about 90% in real terms, inflation adjusted. That growth can be explained by 3 levers: the first is growth in vehicles, which has been up by about 50% over time period; offset by a decline in frequency; and severity on an inflation-adjusted basis has grown nearly 60%.
So vehicle growth and pure premium growth have largely explained most of the industry growth. So when we think about long-term trends, we think about trends that are associated with these 3 levers and I do not plan to talk about all of these trends in details today. But I did want to provide some examples. So when we think about vehicle utilization and the fleet, we think about behavioral shifts in attitudes towards driving. Younger drivers are getting licensed later, older drivers are staying licensed longer. We need to consider the aging population. When you look at the Census Bureau and how they forecast out population growth for the next 25 years or so, it's predominantly driven by very mature segments. We also need to be thinking about alternatives to vehicle ownership, vehicle sharing, a small but growing industry in the United States. On the topic of frequency, some of the trends are clearly vehicle technology, safety technology, we'll talk a little bit more about that in a few moments. Macroeconomic trends, gas prices, income and driving behaviors, distracted driving, texting driving. Those are the types of trends we need to think about when we're thinking about frequency long-term. And then on the severity front, we think about medical inflation, repair inflation and we also need to think about how cars are going to be constructed in the future. They'll contain more technology and auto manufacturers are going to continue to evaluate lighter weight materials. All of these types of issues could affect long-term severity costs. So our goal with all of this is to take a structured approach in terms of understanding these trends so we can develop insights that allow us to continue to lead in segmentation, lead in innovation and continue to grow our business. For someone like myself, who is responsible for managing the research and development group, understanding the timing and effectiveness of these emerging technologies, these safety technologies, is critical, so we can maintain leadership in segmentation and offer the most competitive rates possible for our insurers. Other areas of the organization might use this information to help think about resource allocation or capacity planning. We've talked a lot about innovation at Progressive. Understanding these trends will help us identify our next new product offering, the next Snapshot. And ultimately, long-term, as we understand more how the market's going to unfold, we'll be able to identify potential new businesses or markets for Progressive. So if that is a backdrop on kind of our high-level framework, let's talk about the specific trend that we're currently researching, which is the impact of these emerging vehicle safety technologies and what that might mean for frequency long-term in our industry. Historically, auto manufacturers have spent a lot of time focusing on the concept of crash worthiness. It's been about protecting drivers and protecting passengers in the event of an accident. Think about seat belts, think about airbags, think about crumple zones, that's been the emphasis. Increasingly, as technologies evolve and become more cost effective, auto manufacturers are putting new technologies into cars that are actually geared towards preventing accidents altogether. Blind spot detection, lane keeping, crash avoidance, these are all the examples. So a small group of us within Progressive, 4, 5 of us have been networking extensively with industry experts in the auto arena to understand the timing, the effectiveness and the deployment of these technologies so we can understand maybe where frequency might be headed. So that's just to give you an example of how this works, how we're thinking about this problem, and I thought I'd start with 1 technology. So let's take forward collision avoidance. What is his technology? It's a sensor-based technology. It alerts drivers when the vehicle in front of the driver is getting too close and the driver needs to brake. Originally, this is a warning based system, it might beep at you or tug on your seatbelt. Increasingly, auto manufacturers are creating automated solutions. Volvo with City Safety, they've been the leader in this, where the car will actually brake itself at low speeds to avoid a collision. Once we understand the technology, we have to then understand the types of accidents that the technology would avoid. And to do this, we've created a taxonomy of accident types, which is up there on the left-hand side of the chart at we got to figure out how the technology -- which types of collisions are they going to avoid. So in this case, with forward collision avoidance, it's going to avoid rear-end accidents. But the question is by how much? And to be honest, we don't know. We're relying on estimates. We don't have enough data internally to credibly make an assessment at this point but we do know that reputable research organizations like Hilby [ph] and others have been analyzing these technologies and do believe that they show promise in reducing PD and collision frequency. So when we translate some of this research, let's assume for the sake of today's discussion, that they might, in their current form, reduce 1/3 of rear-end collisions. Keep in mind, before it effects frequency though, it's got to penetrate the fleet. So the second aspect to our analysis is trying to understand that timing. So the first thing we need to look at is the adoption pattern of new technologies on new model years. This graph shows historically for technologies like electronic stability control in airbags, how long that adoption has taken. And in some cases, it's been 10 to 15 years before you get meaningful adoption just on new model years. After that, you've got to think about how often vehicles turnover and we use the survival curve to estimate that. The average age of a vehicle in the fleet in United States is approaching 11 years. Cars are being built to last longer and longer. So once you understand the adoption rate and the turnover rate, you can get penetration curves. And this is again based on historical safety technologies. But what you can see is that it can take 15 to 20 years before you can even get to 50% penetration in the fleet. Nearly 30 years to get up towards 100%. So if you take our example earlier of forward collision avoidance, 1/3 reduction in rear-end collisions, if the technology is deployed similar to fire safety technologies, it will be quite some time before the full effect will be realized in frequency. Aftermarket solutions will be challenging. It will be hard to develop I think, aftermarket solutions that allow cars to brake themselves, automatically brake. So the challenge is once we understand this for one technology, we need to think about it across all the technologies. And what this chart really shows is many of the emerging technologies that are currently being deployed by auto manufacturers. And you can see that they addressed many of the potential accidents in our taxonomy. From electronic a stability control, to blind spot, to lane keeping, to adaptive cruise control, fatigue warning, there are many new technologies out there and as we talk to industry experts, we know that there are new technologies under consideration. Technologies that will not only brake a car, allow a car to brake automatically but also in certain situations, to maybe steer itself. Cars that might be able to someday, drive autonomously exit to exit on a highway. Cars that can communicate 1 day with other vehicles, which is V2V or the infrastructure around them, V2X. So as we go through this process and develop our estimates around what this could mean for frequency, we are able to run simulations. So my point here isn't to project a specific estimate around where I think frequency is going to be in 15 years. It's more to show the incremental impact of what could happen to frequency as these new technologies rollout and they live up to expectations and are rolled out similar to previous technologies. As you'll notice, frequency has been declining since 1984. The big drop between 2002 and 2006 corresponds to a time when we experienced very rapid increase in gas prices in the United States. Prior to that time, frequency was flat to slightly increasing and it's been pretty stable since then. But if these technologies do live up to expectations, we could see downward pressure on frequency over the next 10 to 15 years. And a result of this simulation here, it would suggest that, that decrease is in the single-digit range. Keep in mind, frequency is one of the 3 levers that we talk about when we talk about industry health. Severity, I think, will continue to grow and might even grow more with some of these technologies as they're put into car because they will be more expensive to repair. The population is also forecasted to continue to grow. So I think over this time period over the next 10 to 15 years, we feel really good about the health of the auto insurance market. However, long-term, as more technologies are deployed and we learn more about the effectiveness of these technologies, we'll update our analysis and the results could be different. So this is something we will continue to track on a very regular basis. I put the caution sign up here 1, because these are very much estimates but the other thing is we need to make -- we need to be really careful and maintain a lot of discipline before we react to these insights or these assumptions into our pricing. A couple of reasons, first, there is kind of a history of some of these crash avoidance technologies or these safety technologies not living up to expectations. Anti-lock brakes is an example of a technology that really hasn't shown a meaningful decrease in loss cost. Customers that are buying these new cars that have these warning safety packages, there's some research that shows that while many customers enjoy having those in their vehicle, there is a group that find them annoying or frustrating and actually turn them off or disable them. So we have to think about consumer acceptance and adoption of these technologies. And the last thing I would say is on the topic of distracted driving, there was a 2010 research report done by the IIHS that said that there really wasn't a meaningful reduction in accident frequency after laws were put into place that banned texting and driving. So my point here is before we incorporate these insights of these kind of hypothesis into our pricing, we need to have a lot of discipline because there is evidence that in the past, sometimes they haven't lived up to expectations. But what could the future hold? And so we spent a lot of time talking to industry experts and what I would say the general consensus of what we've heard is that if these sensor-based continue to improve and if vehicle to vehicle and vehicle to infrastructure type technologies are introduced, the combination of the 2 really could produce safer cars and really do show more promise in terms of reducing accidents. So the question is how might this unfold? And from the people again, we've talked to, a wide range of estimates, a wide range of points of view but maybe it will happen 4 levels. Level 1 is where we've been today and arguably, where we've been for the past decade. Technologies like electronic stability control, adaptive cruise control, our in-cars and they do help reduce accidents in very specific situations. The second level might be one where technologies like lane keeping or forward collision avoidance where the driver still has to be in control of the vehicle at all times but in certain situations, the vehicle will operate in a more automated fashion to try to avoid an accident scenario. As you move to level 3, this might be a scenario where in limited situations, the vehicle can totally drive itself fully autonomously. This might be the exit to exit example that we talked about earlier on in the presentation. The big challenge we have to overcome with this level is drivers are going to need to know when they're responsible for operating the vehicle versus when the vehicle is going to operate itself. Time frames on this vary much more widely based on the people we talked to. But for those that think it's going to happen, it's going to be over the next 15 to 25 years. And then level 4 is the fully autonomous vehicle. With simple commands like take me home, take me to work, the car picks you up and drives you completely on its own to your destination. Again, very wide range in estimates. There's some groups out there that are working really hard at this problem, that think production-ready vehicles will be available in the next decade and there's a lot of media about that. As you talk to more industry expert though, there's another group that doesn't ever think this is going to happen. And there's a wide range in between. There's issues with the technology. It's come a long way but it's got a long ways to go. There's issues around liability, regulation, data security, data privacy. And potentially if it requires vehicle to infrastructure type technology, that's a big investment both to build it and maintain it. So it's not impossible. So it's definitely a trend that we need to continue to evaluate. So clearly, we don't have all the answers but the point is that we're actively tracking this. We've developed a model and a simulation that will help us understand and continue to look out on what it will mean as we learn more about these technologies so we can incorporate it into our pricing, continue to offer greats rates to our customers but also to identify future opportunities that may present themselves as we learn more along this trend. So with that, I'm going to turn it back over to Glenn. And I think we're going to move into Q&A.
Glenn M. Renwick
Thank you. I have a personal passion around this topic. And most importantly, I love the fact that we've got a context to be able to put all this emerging information into because one thing for sure, at least I believe, is that automobiles will become moving IP addresses, generating massive amounts of data. That seems just a full blown conclusion. And I don't want to hold the future at arms length we want to embrace it and see it coming that's a reason we have a lot of this modeling. Now, we've got a context as the estimates that we see get firmer and firmer. We'll share those with you form time to time. I think we're running a little late but we'll get into the question-and-answer. For those of you in the room, you've got an orange line, if you'll hold that up, if you want to ask a question. Other than that, we'll get them on the screen here, just give us a couple of minutes and we'll get some stools, they should be magically appearing right about now.
Glenn M. Renwick
We may not be able to see you as well as you think we can but so, yes?
The question I'd ask around is on Snapshot 3.0. What can you tell us? And is the slide or 2 which was basically here's dozen different directions the world might evolve to in the future, are any of those sort of indicative of what you guys are thinking for the next release?
Glenn M. Renwick
I'm like the usual transparent self. We're probably not going to forecast exactly what 3.0 will be. But I've said and I think you got the same impression from John today, that as -- when you're in the marketplace and you're the only one offering this, there are things that you can do. And we think we've done that, we think we've been very wise to do what we've done. We also recognize that the marketplace will likely change hopefully, with licenses and that, that will be very different world. What you got from John today was the very real realization that we are planning for a world not next week but well into the future. And we'll adapt that product to that. Right now, for example, discount-only product, there's really been no good reason that we have to act differently. You heard John say that those who got the deepest discount also had the best loss ratio. Loosely interpreted, you could say there's more room there that's given us. And last year, we showed you with Tom Hollyer that, that was a way of making sure that we could keep the whole system in balance. When we're somewhat a single player in the marketplace, we can act with 1 model. When that model becomes competitive, were going to have to address some of those questions. We think we can address them based on the knowledge that we've been gaining along the way. So the real point in John going through those was to say we're already planning for a more competitive world where this is not the rating variable necessarily held by one but actually shared in the marketplace. 3.0 addresses a good number of those types of thoughts but we'll do it at a pace that we think is appropriate for the market and for the level of competition. There is absolutely no reason to put all that we know in any one version right now.
I think first question is on Snapshot. Can you provide to our more than 20 competitors, do you think the available pool of customers, of potential customers will actually reduce for you since the input of customers will be taken by other competitors too?
Glenn M. Renwick
Well, let's just quickly recap on some of issues. We haven't licensed the 20 that John referenced that we're talking to, about 20 to 25 customers. There's actually one license right now and as of a few months from now, there may be several more. Those licenses become effective for production in 2015, right? And what I've said, I'll repeat a little bit of last year, we clearly are buying ourselves. We think we understand the technology, we think we understand the power in segmentation. We're also buying ourselves a fairly long lead time relative to the rest of the market place. We do, for a lot of different reasons, believe that ultimately, the market will be better if there's more than just one doing it. And those that will gain the most from something like Snapshot, let's not worry about the name we give it, let's talk about the real purpose, is that ability to be able to discriminate between someone who otherwise looks like me but perhaps is a considerably better driver or worse driver than me. That is huge and it is huge if you generate a lot of new business. Because that's where the opportunity from market arbitrage exists. I said earlier that we actually generate the most new business. So we expect to gain disproportionately from Snapshot. You heard from Andrew that Snapshot, while it might be intellectually very interesting for all of us, you're kind of like, gee, why wouldn't the world do that? It's not necessarily that everybody's breaking down the door just for a new breakthrough in auto insurance. So we're working very hard to make it much more mainstream. We actually use the terms that we're carrying the full burden of introducing something very new to the marketplace. That burden actually might be to our advantage if it becomes more of a mainstream rating factor. The best example I can give you in recent terms, depending on your observation period for the industry, would be credit. If a credit was adopted in different paces by different companies, so then ultimately, became a standard in rating structures. Okay? Go ahead.
Brian C. Domeck
I think we'll take one more from the audience and then to try to be respectful from those looking from afar, we have a couple of questions I've screened ahead of us that we'll take.
You talked -- I think you mentioned earlier that you're still leading in terms of generating new business between you and GEICO, you're getting over half of that. But you looking at bottom line of how much [indiscernible] kind of growth is. It's still not there -- not to your satisfaction. So it seems like you're still -- there's still a challenge between when Sam grows up and he gets a grown-up insurance company. Then he moves into the Robinson family that he's giving up Progressive somehow. And I can see that you're putting a lot of effort into the homeowners and trying to attack that. But do you have any numbers around whether or not you've been successful at that? Or how do you track that, your ability to keep that?
Glenn M. Renwick
Yes -- no, it's very -- actually, your description is very fair. Progressive started -- we all know how Progressive started. Some number of years ago, I started to use the term destination insurer, which was -- it's not that we changed on that day, but it's a very different mindset of how we can bring our skills and talents just as we brought some examples today of underwriting skills into the media buying environment. So we think we can extend to the entire marketplace. PHA wasn't that many years ago. We started relatively small. We needed to see if it was an acceptable proposition to the consumer. So bottom line, I'll just answer your question with momentum. There is clear momentum there. I did use 1 stat, to say that we produced 63% of our Robinsons, that's a really good number. I also said we're very, very low in market share in the Robinsons. But it's not a bad game plan if you produce a lot of new business to have those transition states. And while we'll be very thankful for others who take our advertising or take us up on Test Drive and come in as fresh new customers to us, we want to be very clear not to lose -- not to have a leaky bucket for that new acquisition. And certainly, by design in some sense, we had a leaky bucket for many years. We're plugging those. And I think what you heard collectively today from the group and one of the reasons I like to do it this way, as opposed to a podium with lots of numbers, is to give you a sense of how we think about it. We hate losing a customer. It now bugs us. And that drives us to come up with better solutions everyday. So I think it's a very fair question, very fair characterization. I don't actually have specifics that would address your transition states.
Brian C. Domeck
The other thing I'd add to that is our retentions would hurt because we took those rate increases towards the end of last year. There's no doubt about that. When we look at retention rates, the percentage of policies that renew 6 months after they're incepted or 12 months after they're incepted, are clearly down from 1 year ago. We ended up having to take more rate in both personalized and commercialized than we would have liked to have taken. Glenn often refers to taking more smaller bites of the apple. And the fact that we had to raise rates 6.5% in Personal lines -- in Personal Auto, 10% Commercial Auto, it has affected the retention rate of our current policy base. We think our rate levels are adequate, so we don't think we'll need that type of rate level in the future. So retention in of itself, hopefully, will improve throughout the rest of this year. I mean, Dan referenced the cross-selling activities. It's not just only PHA and auto, it's our special lines products, whether they be motorcycles, boats and autos and the like. And the percentage of policyholders with Progressive that have more than 1 policy is steadily increasing. It's that where we want to be? No, we need to keep that going forward. Could I take one from here?
Sure, why don't you pick...
Brian C. Domeck
Has Snapshot policies driven some of the loss ratio improvement year-to-year -- year-to-date in 2013 versus 2012 levels. If yes, can the benefit be quantified?
I was just reading it -- i would say a little bit of -- yes, yes. Some of the snapshot has improved the loss ratio only because our Snapshot program in and of itself has gotten bigger and the performance and profitability of the Snapshot program, Snapshot Discount has improved. So that is a component piece of it. And I would say right now, we feel good about the pricing of the Snapshot Discount and its overall profitability levels. Could I quantify what effect of it has on the overall aggregate loss ratio? No. Some improvement, but I won't give you an exact percentage of the improvement.
Glenn M. Renwick
Also recognize that if we do our job perfectly the discounts we will give in Snapshot will match with our costs to produce a 96. So this is why necessarily getting Snapshot we're willing to sort of give, in most cases, the amount of discount that, that represents for the consumer. Discount is a business generating function as opposed to necessarily a reducing loss cost or improving the combined migration. We price -- we attempt to price all segments of our business with the same sort of targets in mind.
Brian C. Domeck
I'm going to read this one. But you're going to answer it, okay? Could you please explore your leading theories behind rising auto bodily injuries severities? Is it due to higher retail prices from medical services? Is the percentage of ambulance and emergency room trips rising? This is coming from Bill Wilton [ph].
Glenn M. Renwick
[indiscernible] the ambulance and emergency, but let's take bodily injury and med payers to sort of issues behind medical costs. Our trend on bodily injury, give or take, 3 to 5 nationwide. So not seeing a great deal of huge pressure on frequency, which is good, but severity is still going up about 3 to 5. Where we see most of our pressure on rising medical costs is in soft tissue injuries, both those that are attorney represented and some that are actually litigated. But in that sector, it's more a function of the general damages. So arguably at this stage, what we're very conscious, especially of some of the changes that have gone on in health care reform, we're not necessarily seeing a lot of severity increase in unit cost of medical procedures. In med pay and PIP, PIP was just so hard to sort of characterize because it's been in a different place. But for the most part, we're starting to see PIP severities come down. There are a few places were frequency is up, but nothing so much that I would say, "Wow, there must be some cost shifting going on somehow to the automobile sector from the healthcare sector." I don't see anything that would tell me that in certainty. So arguably, our theory would be, general damages on soft tissue injuries raising severity accounts to about 3 to 5 med pay and PIP actually more in control, but partly because it's been at a high level and not looking to inflate. I think it's a very good question and something that we'll be watching. I'm more than happy to give you our theories as they evolve. They are very tough to see specific states and specific circumstances.
Brian C. Domeck
Just a little bit more color on personal injury protection coverage in particular. Over the years, we've had some struggles with that in various states. We've actually seen a market improvement in our PIP loss ratios so far this year in a number of states and it's a function of, I would say, moderate pure premium trends plus this is one of the coverages that we did raise, or raised a fair amount in the last couple of years. But loss ratios and PIP, across most jurisdictions, are in pretty good shape.
You talked somewhere through your presentation about this adherence to the 96 combined ratio. As you reflect back on the last year where you're combined ratio actually went above 96, my perspective is you're very good at underwriting, why didn't you capture the trends earlier so it didn't happen? Or more importantly, as we look forward, what have you learned from that experience so that it doesn't happen again?
Brian C. Domeck
I'll start and feel free to chime in. I think the thing that changed more rapidly than we had anticipated was severity. It wasn't frequency changes and loss cost. It was more the severity changes and loss cost. And we have told you, across most coverages, there are now in the 4%, 5%or 6% increase year-over-year. That's very different from what had been in the previous couple of years, when they were in low single digits and the like. So I think it was a little bit of slow reaction to changes in severity. And I think that was a part of the driver and then for a number of years we've actually had favorable loss reserve development, so our calendar year combined ratio has looked pretty good relative to accident year and last year was a time period where we didn't have that favorable development anymore. In fact, last year, for the year, we had very small of unfavorable development. So it became much more clearer on both calendar and accident year results, that we needed to raise rates a little bit.
Glenn M. Renwick
I would be maybe even a little bit more basic. I think we missed it by a couple of months. We could and should sometimes know better. There was a confluence, and I wrote about this in the annual report, a confluence of some frequency coming down offsetting severity, wasn't quite sure which one's going to survive. By the time we were clear which one survived, we knew we had to take more rate. If you go to the slide that I was using where I was trying to say what it means to be nimble is to take smaller bites of the Apple, arguably, it's always easy in retrospect. So arguably, he could've taken smaller bites at the apple earlier. We do not like -- it is not a primary motive to sort of wait for a while and then do a whole bunch of rate revisions. That's not something that we want to do. And I will guarantee you, from me, to everyone in this room and to many other people who aren't here, we all learned from that.
Brian, I've been conditioned after 30 years of seeing when companies under reserve they underprice because they've missed something. And for the last 4 or 5 you've had very modest adverse development at the same time that the underlying results are showing improvement. I mean, why shouldn't I be a little nervous about what's traditionally been something that makes me nervous?
Brian C. Domeck
I get a little nervous too, because we do not want to have unfavorable development. Let me provide a little bit color of what has transpired so far this year. So far, through April, where we have about $80 million of unfavorable development. Call it 2/3 of it is in Personal Auto and then another $20 million or so in Commercial Auto. And there are a couple of different distinct stories. In the Commercial Auto space, it is emergence -- later emergence and higher severity losses in our truck segment, which also tend to have higher limits as well. And that is the primary driver in the truck segment. In Personal Auto, it's a little bit different story. We have actually so far this year had favorable development and case reserves. So when we know that there is a feature and we set up an actuary reserve for it, those have run off favorably. In fact, a little bit more favorably than last year. What has transpired is we've had unfavorable IBNR development. So they're incurred, but not reported, And again, that is primarily in bodily injury and property damage coverages for late reported features and a large amount of it is for the December 2012 accident month. Not from lots of accident months in 2012, but a large amount of it was from December. And then the other component piece that is showing unfavorable development, is in our loss adjustment reserves ANO adjusting another reserves and again that's really a relationship to the late reporting features from December. So we're allocating more of current period's cost to last December's accident year. Those were the major drivers. But we certainly are closely monitoring it. We believe we know what the individual causes are in some of them might be time-period specific, but it's clearly something that we do not want continued development on.
But if you're off a little bit on the IBNR, I mean you also say we're confident our pricing is right. So you just think I'm micro scoping something that's small and rates taking care of it or...
Brian C. Domeck
I think our current rate level certainly is adequate to cover all of our ultimate loss cost. And I don't want to get into lots of unnecessary detail but we often don't talk about inter-period development. So, so far in the last couple of months, we've had favorable development and what reserves we have for January and what we put up in February. So we don't talk much about the inter-period development, but those are also going to the calendar year combined ratios. So December, we probably missed. We probably missed December. But I don't think we have a significant problem in aggregate.
I was hoping you can just talk about the big picture on the agency channel, and how you feel about the profitability of that vs direct? And this is as much an industry question as Progressive question, but I'm just wondering is it, going forward, going to be harder to meet or beat at 96 in agency than direct and my premises what you discussed about the comparative raters. When I think in the past, sort of everyone maybe had a portion of their book that was 70 something combined ratio business that was sticky and never got shopped. And when I think about what credited for you in the past was finding those customers and bringing them to Progressive, does the fact that now the agents defaults to the rater make it harder for everyone in the marketplace to keep those 70, 80 combined ratio customers and therefore we're taking profits out of the IA marketplace?
Yes, a lot in there. By definition, the comparative rater in a sense poses combined ratio up. For Progressive, you've heard from Brian, we're totally committed to a 96. So to say that, and yet know there's a environment that sort of works against you in an auction, you've got to be a great segment more than ever, specifically in the agency channel with comparative raters segmentation is key. I glad you referenced the credit, because frankly, Snapshot and we've gotten more -- recent times more of our agents to try Snapshot so that they're better suited to say, "Oh, I get it now. Maybe I can present that on to my consumer." So we hope we've got another opportunity at that large group of customers who were the subsidy for the entire combined ratio for a competitive company. But for us, the agency channel, you saw at our market share, is more than twice the next leading company. We are totally, totally committed to that. We will price it to a 96 or better, so that's not an option. And frankly, as we keep bringing out more segmentation, one could argue that segmentation is more powerful in an environment where it is sort of auctioned. And to the question, I think, Josh mentioned earlier, is that to some degree one of the reasons we put on John's list of strategic issues, is does that mean at some point, the price will have to go up for others? So you start to see a significant shift. And I think you will be able to observe that is specifically in the agency channel of the next several years. Segmentation will be king.
I think there is sort of the general -- if you ask 100 people on the street who knew something about insurance, it's just based on the commercials, can I say maybe 15%, right? That direct there's a more price competitive than independent agency? Is that perception still true? Or because of this ability to auction, where direct -- if I go shop direct, I might go search you and 2 others. We're not going to search 10 or 12 or 15. Is it actually more competitive now in agency?
Are we going to say something for the last question.
Brian C. Domeck
I'll follow-up after you.
Glenn M. Renwick
We get that question a lot, which channel is more competitive? One of the things that we Progressive do and we do it very much with our agents in mind, is to try to make sure the acquisition cost in agency is very comparable to the acquisition cost in direct. So if you ask a lot of agents, I think that says some very nice things about Progressive. They'll also probably say, "Yes, we should increase the commission." And the reason we don't is directly relevant to your question, we don't want a channel that at some point has a permanent and sustainable cost disadvantage of acquisition. But as long as we can keep a parity on acquisition, the agency channel can be very competitive. And if you took a -- let's take a couple of thousand risks a day, you will find there is a fair distribution of where the direct channel is cheaper and a fair distribution where the agency channel is cheaper. Our philosophy has been for some time is we -- that both books are large enough almost that these small companies, under any other circumstances, we price them to reflect the very dynamics of those books of business. And we do not, do not, try to create price advantage 1 way or another. We reflect the true indemnity cost from both channels.
Brian C. Domeck
The only thing that I'd say on the agency channel, clearly segmentation matters. We think we're pretty good at that. We'll always get better. But that expense ratio advantage matters as well, because that's loaded into those prices. Dan showed you we have the lowest cost structure, that's why there's an emphasis on maintaining a lower cost structure, because if everybody prices the same and have perfect segmentation, the lower-cost is going to make your race more competitive. That's how we think we're going to win, the combination of those 2 things.
It's Doug [indiscernible] with KBW. Just had a quick question on the growth comment that you made about rate increases. You being happy with where your rates are today. So if I think about that going forward, that kind of lead me to believe that PIF growth should accelerate. But on the flip side, if I hear a lot of your peers say the same thing, then that would lead me to believe that the current situation is going to persist. And just coming off of Berkshire's annual meeting, the comment there was that GEICO aims to take 2/3 of the new business growth in 2013. So I'm just curious how you think your competitors will address the rate situation in 2013?
Glenn M. Renwick
I'd say, reflecting on the first quarter, combines across-the-board, we're a lot better done might've expected, probably a point or 2 better than I might have expected. I'm not going to forecast PIF growth, but I think I implied that our rate level was sort of coming to a place that feels good for us and good for the rest of the year. I don't know exactly what was said at the GEICO meeting. But the fact is GEICO's a quality company that's doing a lot of good stuff. So are we. You add Progressive in GEICO's market share and we're less than 20% of the entire U.S. [indiscernible] passenger auto marketplace. We also have already covered, on a couple of occasions, the amount of business that we produce and we've got different enough strategies that it creates a fair and I think exciting competitive and market competition. I'm really not allowed to give a lot of projections, but I'll bet you, we'd both do pretty well.
Brian C. Domeck
The other thing I'd say, and this actually relates more to the direct channel, some of the GEICO comments, another thing we did last year, in the second half of last year, is we actually lowered our advertising spend. It's the combination of rate changes and lower advertising spend. So far through the first 4 months of this year, we're actually spending a little bit less than last year on advertising, but we think our rates are adequate going forward, the remainder of the year, we think our ad spend level, at least on a relative basis to last year is going to be higher and we have seen increased demand from the ad spend that we were doing. We are getting more prospects for the dollar spent. So more ad spend, increased demand, I'm not a forecaster to project here's what's going to happen, but I believe we can get more quoters to quote with direct, our rates are going to be fairly comfortable where they've been and so we should be able to convert more.
Glenn M. Renwick
There's one on the screen here from Mike at Goldman Sachs. What is the year-over-year PIF trend and Snapshot? And what are your year-over-year PIF trends and direct and agency excluding Snapshot? We're not going to bring that out, sorry. It's just something we're not going to do. And in our monthly release, of course, we give you the year-over-year PIF trends. So it's about currently running a lite 2% in direct, 1% in agency and overall about 1% in Personal Lines.
Brian C. Domeck
The one thing I'd add to that, not specifically PIF trend, but John referenced the premium growth year-over-year, so a year ago we were seeing a little bit over 1 billion. Now it's 1.5 billion. So you can tell that there are more and more policies going into it. And certainly, we're being -- having more traction in the direct channel and the agency channel. But The agency channel is starting to grow in terms of more and more agents offering the Snapshot product to our customers. But policies enforced, that have had or are participating in the Snapshot program are clearly growing.
I'm going to try to bundle 2 quick questions about the agent channel. First, I was wondering if you could clarify why you think the PHA penetration has been flat in the agent channel for the last year? And second, a few years ago, you put up a slide showing how much of the agent business was in small specialist agencies versus large agencies. I was wondering if you could comment on how much you think your future growth will come from those smaller specialist agencies versus the large agencies?
Glenn M. Renwick
Yes, I think the first part of your question, we would be mildly unhappy with the trajectory on our PHA in the agency population. Partly, and Dan got at this, partly we came out with a solution that quality company didn't necessarily have the processes that align well with an agent. So we sort of got out of the gates with a solution, but not ultimately what was the solution that we think will really work for agents. In the last year, and even though I announced it almost a year ago now, it's taking us some time to get there. I think we've got a solution we feel much better about. I was with some agents just this last Thursday night that are actually going to be involved with the sort of ASI Progressive potential packaging and while small samples often leave you going home at night feeling great and then you realize it takes a long time for small samples to become reality, I know that we are into a much better solution for agents. So partly because we didn't actually offer a great solution to agents out of the gate. We've got a much better solution now. And just -- the second part of your question, again, was?
Small agencies versus...
Small agents, yes.
Glenn M. Renwick
Do you have a feel for that?
Brian C. Domeck
We want to grow in all the agencies. So I don't think we'd differentiate between small mom and pop agencies versus the larger agencies. I think we can compete in all of them. In terms of who's going to get more of the customers over time, I think smaller agencies have to figure out how they can attract customers into their agent base. And we're trying to encourage things that they can do. Simple things like they can get on list agent program where they can get local search participation for a very relatively cheap cost . So we're working with both small agents and large agents that help all of them sort of grow their business.
Glenn M. Renwick
To be fair also with the ASI, Progressive relationship. We're not doing mass appointments. This is something that we've got to have a very clear understanding, that this can be an important part of your agency. If you've got other alternatives that you're more inclined to use, then that's fine. We're trying to get agents that truly will understand that this is a very different level of relationship. It's 2 quality companies, both having now vested interest in the success of one another that arguably produce a monoline product that's best-of-breed. And how can we put those together in a meaningful way? I know deep down that is not going to sort of sell right out of the gate for every agent, but there are going to be agents that can sort of say, "Hey, this can make some sense." So even though I'd love to see that line take off, we're not going to take off in ways that we know we've done before by widely appointing and then trimming later. We're going to try to make that we've got agents that really buy into this. You saw from Dan's slide that Florida came -- will com online. Florida should put chills down everybody's spine, in many ways. ASI is not looking to increase their penetration in Florida, but they would like to move from the monoline to a package with agents that they already do business with. So where those become available, they won't be increasing capacity necessarily, but substituting monoline for packaged. That's the kind of positioning we want. We do not want this relationship to be I can't fit it anywhere else, so I'll make the same as bundles. That's not the objective in any way shape or form.
Brian C. Domeck
We have one on the screen. It's similar to a few other questions that we've had. Why do you believe GEICO is able to outgrow you? Are you surprised that they have been able to do this without a usage-based pricing plan?
Glenn M. Renwick
Certainly our rate changed last year, it's a good reason why GEICO's numbers right now are more attractive. I don't take the attitude that I have to knock everybody else. They've done a nice job. Good for them. With regard to usage-based or Snapshot I guess there were some comments, some people sent me comments, so I guess that's how I know that they were made at the Shareholder Meeting and if I distilled them all down, I'd think it was a classic example of I'll be the other one of 2 CEOs saying, "Hey we like our model? Let's put it in the market and see how it works." So I don't -- from what I know, I don't believe that GEICO's interested in usage-based insurance. We believe it's an incredible segmenter for a new business in the marketplace. However, few -- and am I surprised that hasn't shown up in a very short period of time? No, not at all surprised there. But let's check back on that one. I think as Mr. Buffett said, let's take a look in a couple of years. My suspicion is they'll both be good.
Brian C. Domeck
Yes, and our growth rate relative to GEICO's, Glenn mentioned, we believe we actually write more new business than they do across both our channels. But we need to keep our policies longer. I think that's pretty clear. I'm fairly confident, unfortunately, that they have a longer policy life expectancy than we do. And we need to change that. Those are things we were doing while there's a PHA program, cross-sell programs, the customer care, the touches we have with each of our consumers. But for us, to continue to grow longer-term, we need to keep more of our policies longer.
Glenn M. Renwick
I'm looking at the clock here. And this feels like it's about a close to a breaking point and since we have a webcast, we have a little bit more discipline around that.
I'd just like to end by saying, I really appreciate more than you can imagine, that people showed the interest to come to Cleveland, engage. As I said at the beginning, this isn't a sort of a diatribe of things that we've really put out there, but a little way to get inside our heads, see what interests us and I'm sure there were some pieces that sort of were interesting and others that maybe not as interesting, whatever.
But this is what we do. This is how we think. I will propose, so that you can at least express a view between now and anytime that we will implement. But at least for next year, I'm thinking of the quarterly conference call, which Brian and I hold, obviously, quarterly basis, to make it both audio and webcast but add to each one of them potentially a half hour where we actually have a little bit more of a formal subject matter, which by the way, you can have a lot to say on what we choose to cover. But we'll actually take a feature for each conference call and do it with a little bit more of a slide presentation and whoever the subject matter expert was that presented that will join us for the conference call.
So we'll try and make 4 conference calls a little bit more than the firehose that this session becomes. So we'll try it. If we -- and we'll look for feedback, as we do with everything else. And if it works, great. We'll do more of it. If it doesn't, then we maybe do alternate years or something like that. But if you want to express a view on that, you can do so to Matt and some of your contacts during the rest of the year.
Again, thank you very much for coming, really appreciate it.
Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.
THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.
If you have any additional questions about our online transcripts, please contact us at: firstname.lastname@example.org. Thank you!