Progressive ready to put brakes on growth in auto if regulators stick to slow lane on tariff

US retail property insurer  Progressive is ready to halt new business growth in automotive in US states where slow-go regulators can’t secure rate adequacy on time, top company officials have indicated.

“We have some levers we can use to slow growth,” president and CEO Tricia Griffith (pictured) told her company’s Q4 earnings call for analysts and investors.

Ad spend is the likely first lever Progressive would pull ahead of any potential adjustments in underwriting policy or outright restrictions, officials suggested.

“We have some great plans around marketing, but that will depend on each jurisdiction and how we feel about rate adequacy,” Griffith said. “We will plan to spend as much as we can on marketing as long as we feel that the rates we have out there are appropriate” and also provided acquisition costs remain within target.

In states requiring regulatory approval ahead of tariff implementation, Progressive has seen “a mixed bag depending on each state” in terms of regulatory responsiveness.

Progressive's margins got pinched in 2021 on a sudden rise in both frequency and severity. The group claims to have been an early mover, taking 8% rate increases throughout 2021 and another 3% in January 2022 alone, chiefly in states with file and use procedures for new tariffs.

“We are usually first to market in order to get ahead of trend,” Griffith said. “We knew that taking action aggressively early …. would affect our new business. But we feel good about getting those rates on the street.”

Volatile frequency and severity trends, the latter driven by a broad swath of inflationary elements across claims costs, will force constant surveillance of trends for new tariff needs, officials warned.

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