Tricia Griffith

twenty countries around the world. I'm at Baxter and I'm did the Spelly Greeny on this weekend edition of Bloomberg Best. Because of the components, the safety component. In addition, think of the inflation of medical cost why auto insurance is so expensive. If you could take you know, Emma for a couple of hours while I do this presentation, I will baby see your kids and you and your husband can go out on the weekend. Progressive CEO Tricia Griffith,

I'm bartering for childcare for her six children. Do you own a home? Yes? Discount plus some insight into Progressive's best known personality. All this and more coming up in the next hour of Bloomberg Best to all right, and you know one thing most people love to have, right, but don't love to pay for is insurance right? That's right, denise auto insurance, homeowners insurance, liability insurance. But for those in the business, said, they look at it from the

other side, right, it's all about, you know, measuring your risk. Yeah, And David Rubinstein had a chance to ask the CEO of Progressive all about it. And David starts here on the David Rubinstein Show Peer to Peer Conversations by asking

Tricia Griffith about the company's business model and advertising. So for those who aren't familiar with Progressive Um and probably if you watch television, you would be familiar because you have a lot of television ads, right, And I'm just curious, Uh, why is it that automobile insurance companies seem to advertise a lot. I see your competitors advertising. You advertise a lot. Is that because people really will be guided in their

insurance decision by the advertisement. It's just a really competitive industry, which is always odd because it's something you're required to have. So it's not like, you know, do you pick a different soft drink or a beverage, but it is required. But it is so competitive that to be out there and be top of mind and be in the shortlist. You really have to be advertising. So you have a famous character in your insurance uh one of your some of your ads called flow, a woman that plays UH,

I guess an insurance person. Um. Does she get a certain percentage of all the all the new business she brings in because she's so so good or she doesn't have that deal. She does not have that deal? She um, she is paid for her contract and she's doing fine. Let's talk about this year now. A lot of the auto insurers are up this UH this year in part because people aren't driving as much. And the theory is, if you don't drive as much, it's hard to have

an accident. So if I presume there are fewer people claiming UH, you know that they've had an accent and therefore you don't have to pay out as much. Is that why your stock is up? You think? I think that might be one piece, But I think we've also continued to grow not only market share based on units, based on policies and force and really, um, if you think about it, yes, immediately in March, vehicle miles traveled have been reduced and losses went for that. But as

states have reopened, it continues to go up. And right now we're still not pre COVID level of driving. We're about eight to ten per cent down, but those lost costs, that gap is closing in because we're seeing more and more people driving more often. And so that that lasted a couple of months, and then remember many companies gave back credits or have reduced rates. Now let me ask you about that. If you get a rebate, that was because you voluntarily thought it was a good idea, or

the regulators said you have to give back money. Why did the automob I'm sure started giving back money to their policy holders. We did it because it was the right thing to do. I mean, we immediately saw driving vehicle miles traveled go down. It went back up pretty quickly to twenty, etcetera. But we sat down and said, okay, this we don't want margins that big. It's not the

right thing to do. We want to be competitively priced, and so we gave credits for UM both April and May, and then subsequently we're very analytically driven, so we went sort of state by states, channel by channel, product by product, and so far we've given We've had rate decreases in about thirty five states, and those those are baked in permanently. So today when people have an accident, Today, when they do have accidents, the accidents are more expensive than they

used to be. Is that because the cars and more complicated, more expensive to repair? Yeah, they absolutely are a couple of reasons. One is the components of the car. So I started as a claim drop and the cars in the bumper repair or replacement would be a couple hundred dollars, and now they could be upwards of a thousand, two thousand dollars because of the components, the safety components. In addition,

think of the inflation of medical costs. So if you're injured in an accident, that's another component of the increased severity. So let's suppose i want to get some automobile insurance. Um, I'm now seventy one years old. Am I a good risk as a seventy one year old? Or you'd rather have somebody who's twenty five and more alert. That is one variable, So we we look at hundreds of variable. So depends on where you live. Do you live in a congested area, do you live in the rural area.

What is your driving history? Uh? Do you have our usage based insurance? That way we know what time of day you drive, how many miles you drive, have you had any violations. There's so many things that go into it, so age is only one component. When I was a teenager, you know, I was told that teenagers are not good drivers and insurance is expensive. Is that true today? Insurance? Is it more expensive? Or teenagers are not good drivers?

I will say that having six people that drive in my family that we've added over the years, we can call them youthful drivers. Uh. The issue is that many many are good, but they just don't have that maturity. They haven't had the experience. And I remember saying, because you know a lot of times you'll get rate increases if you add on a youthful driver. And I challenged that when I first got this job, and then I realized, having six youthful drivers, that there is a reason you

paid a little bit more. You were in home insurance now and you bought a company that helps you get into that. Why do you want to be in a home insurance business? For us, it was really access to more of the preferred customer, especially on the independent agent sides. We had a relationship with a SI American Strategic Insurance for years. We had we had a small ownership in them, and their values were very much aligned with us, and

so we decided to go ahead and purchase them. And it's been a really nice transition, a really great acquisition. And so now you know, having sort of the whole picture for whatever you want, auto home, your boat's, motorcycle, commercial. And that's why we're continuing to expand because I think it's really important to diversify. Is the home insurance business very profitable now? The home insurance business, it depends on

what company you're talking about. We have struggled a little bit because of wind hail catastrophes, and we also have been obviously growing our mom all across the country. We were in about five states for many years, and so we're learning a lot about the product model. So have you looked at our results. We will be profitable, but we're doing the same thing we did on the otto side. We're getting very surgical in our segmentation to understand, um

the right rate for each home. Are you thinking of getting into the life insurance business and you're in the other insurance businesses, why not get into life insurance? Well, right now, we have a great relationship with an unaffiliated partner that we get a commission when we send them to the company, and that's been working really well, and we actually are considering that we have a life insurance company filed in Ohio. UM More to come on that.

People say that there's eventually going to be driver lers or autonomous cars, and of course the theory is they will never have an accident because they're perfectly programmed. Is that something you worry about as cars that don't have accidents? Or you're not gonna worry about that right now? I don't worry about I mean from a society perspective, you want to have less accidents. It's good for society. Everyone

has been affected by someone who's been in an auto accident. UH. What I think about, I don't put my head instand But what I think about is timing, realistic timing. That's also one of the reasons why I think about I'm not just executing on our current plan, but expanding and exploring other other uh possibilities adjacencies to to grow our business. I will tell you that when you look back at some of the headlines in two thousand twelve that say this type of car is going to be fully autonomous

by tift. Uh, it'll take longer, and I know that that's said. Again we're preparing for a possible smaller auto insurance industry, but again we have so many opportunities with other adjacent models, including home and then some of the other things we've talked about, whether it's tnc or commercial or small business, all the things that we've expanded to

in the last couple of years. Now. Elon Musk has said he's going to have an autonomous car out there at some point and not to distant future, and he's also said, anybody that's an insurance agent, why don't you call me up, because we want to hire insurance agents. We're going to be in the automobile insurance business. Is that something you're worried about a lot? Not really, because I think people I love our culture and I think they love we're working here, and I think that we

have a huge future. I think that they're The technology is absolutely there, and I can see a car going from point eight to be in a geo fenced area, but there's a lot to be done. I think it will be a little bit longer than most people had predicted even years ago. Let's talk about progressives background. Progressive. It's a great name, Progressive, that's a very positive word. Um. Was that the original name of the company? When was

the company started? Yes, it was the original name. The company was founded in nineteen thirty seven by Joe Lewis and Jack Green. And they were two attorneys in Cleveland, and they didn't know what they wanted to do, but they wanted to be able to serve the non standard customers in Cleveland that I needed insurance, and so they borrowed ten thousand from Joe Louis's mother in law, and uh, that's how Progressive was born. And you might know Peter

Lewis who ran the company for a long long time. Uh, he was the second CEO, and then Glenn Renwick and then myself. How did you get started at Progressive and at the bottom? Pretty much? Is that right? Yeah? I went to Illinoi State University at marketing degree. I wanted to go into something something in marketing, but all through high school and college I worked in retail. So and oddly where I went to school is the home office of State Farm and everybody was doing internships there, and

I'm like, who wants to work in insurance? So I went to a retail company for about six months. It was it was called Furrow Building Materials. It was like a think of like a Lows or a home depot. I was like, what am I doing? I'm mixing paints. I'm actually forklift certified. And I was driving home one day with my hard hat and I said, I gotta

I gotta look for something different. And what I wanted to do is work somewhere for a couple of years, pay off my school loans, and then go to get my m b A. So I went home and opened the classified ads. I'd never heard of Progressive. At that time, we were less than a billion, and I thought, clean drop trainy, this sounds interesting, nineteen thousand, that will help me pay off my debt and made the call. So

the job is will be a claim adjuster. Correct. So what I would do if if I've had your claim and you were injured, I would go out and talk to you about your injury and and guide you through that. I would crawl under your car and let you know how much it took to get it repaired. I would kind of manage your whole file. I did. I also did special line, so I was a motorcycle wrap UH, and I basically handled the entire file. So I was in body shops, crawling under cars, and in your house

talking to you about your injury. You've obviously risen up from the lowest position to the highest position, and you had many different positions in between. One of them, which is very unusual to have for a CEO, maybe sadly, is to be the head of human resources. So how did you go from being the head of human resources

to being the CEO? Well that you to me to actually take get the HR or old job from having mostly claims experience during the fifth first fifteen years, I had a little bit of sales and a little bit of claims. And Glenn Renwick, at the time, my predecessor UH, interviewed me it was it was actually an odd circumstance. I went for it. I wasn't going to because I don't I don't have any HR experience. I have some

maternity leaves, but that's about it. And people kept calling me from around the company saying, you have to go for this. You love diversity, you love metrics, we need this. So finally I had a pre interview lunch with Glenn to see if I could even go for it. Uh, he put my name in the hat and gave me the opportunity, and I will always say it was a risk for him. He does not say that, but that

was really the turning point in my career. And then you know he was He watched me and I did that for six years and made a lot of big changes that we still have now. And the president of Claims came up, and that's my dream job because I love claims, I love helping customers. I was able to do that. That's seventy cents of every dollar premium comes in your paying on claims, so that's the big business piece.

And then he gave me all things customer facing, so I had our call centers and claims and then I was CEO before the CEO role. So I really credit Glenn for guiding me, giving me opportunities, coaching me, and sponsoring me. So as kind of human resources, you must have instituted some policies that changed the company's face. Because your company has been voted the number one most diverse company in the United States and some surveys. Is that's

something that you implemented and put into into practice. Yes. We started our diversity inclusion initiatives really in earnest when I was there. We started our first employee resource groups, which was Progressive African American Network and our LGBT plus now we have nine. We really set forth the strategy of how we're going to make sure everyone can bring their whole self to work. It was a big piece of our culture and we started looking at the data.

We continue to work on it, though it's not something that you can ever get a check mark. And if you look at at senior leadership, we have opportunities there and in fact we're working on some really aggressive objectives for the next five years with my team to continue to change that. Your chairman of your board is a woman, and obviously you're a woman. Is there any other Fortune five Hunter company where the chairman is a woman and the CEO as a woman. There must be none. I

don't think so. And we actually have twelve twelve members of our board and six or women and one of the female as a person of color. So when you were for the CEO and guess in line to be the CEO, did you think that they were going to give the job to a woman, or you thought this will revert to the normal forum and we'll find a nice white male that we can give it to. I was hoping to give it to the person that thought was the best fit for Progressive at the best time.

And I remember interviewing with the board for several years during the process, and one of the board members said to me, so you want to be a CEO, And I said, no, I want to be the CEO Progressive And that was what really was meaningful to me. So had I not found the role, I'd still be here. And um, and there were lots of other opportunities to have a great CEO other than myself. So UM, when you were able to go into your office, you were well known for walking into the cafeteria and sitting down

with the average person. Why did you do that? Why didn't you just eat in your office with other executives? Because that is my way of getting to know people and and really feeling what's going on with the company. And when you break bread with people, they open up to you, not just about great things, but about things you they want to change. And for me, I think because of my roots as a claimed rep trainee. I was wondered what the executed and we don't have an

executive cafeteria. All of his eat in the regular cafeteria. It's a very different type of company from that perspective. But literally it motivated me to be a better leader. Every time I walked up to a table of you know, five people and said may I join you? And they gave that horrible look like please, no, please no, and I sat down. I had five new friends, and I just to me, it's it's an important part to be approachable. If you feel connected and you trust your leader, you're

going to run through the wall for them. So when you sit down with people at the employee cafeteria, did they ever say, by the way, i'm underpaid? There's that, never a thing, never say that. They'll sometimes talk about how they wish they could make more, what can they do, how can they get there? People are pretty pretty open and honest with me. So as I talked to you, you're not in your office, I assume you're at your home. That's correct, him in my little library off of our bedroom.

And have you been running progressive from your little office there for a couple of months now. Yes, Ever since mid March, I go in sometimes once a week just to get my mail and to check things out, but I don't see anyone. And in fact, where I'm sitting here, my son who's in film school, filmed me weekly for several months so I could send a video out to all of the progressive people. Has it been difficult to run the company remotely this way? It hasn't been difficult

for me. It's been unusual well, and I don't love it because I love the interaction. I think the biggest part is the claims organization, because that is face to face, especially when you're looking at vehicles. Um. But we immediately were able to use videos and pictures to do the best job we could to estimate vehicles, and we're doing pretty well, and I'm I'm very proud of the organization.

When the world comes back, which hopefully it will be in some point in time, when we have a vaccine, do you expect that all your employees will come back and work in the offices or now do you think you could have people working remotely and maybe save money by not have as much office space. How do you think about this in the future? Prior to COVID, we already had about of our call center people in some claims, people that work from home just because it works better

for them. Um. I imagine we're doing some surveying as we think about returning of what percentage will that still work for. I think in person, in the office hallway conversations are so important. So although I think it might increase from that, if you fast forward and there's a vaccine and people feel comfortable, I think a lot of people will come into the office. I think that that

is something that we worked through. We've done a really great job, especially with technology, but I know many people really miss it. You and your husband have six children, right, is that right? Six children? Yes, hers and ours all right, So when you have six children and you're running a company, isn't that kind of complicated? I mean, how do you

have time in the day to do anything else? It was very complicated as I was as I was growing in going up through the ranks, and my husband worked as well when I was in HR for a couple of years. UM. He also we met it progressive, so he worked there and we both had travel jobs. And at one point he said, when our oldest was going into high school. He said, you know, one of us probably needs to stay home. I think you have a longer runway. And uh so he decided to stay home.

But I think I treat it like everything else, assume something might go wrong. And so when we were both traveling and I knew I had a big presentation, I knew that morning I would go into somebody's room and someone would have an ear infection. And so I created a network of friends that stayed home, and I did an old fashioned bartering system. So if you could take you know, Emma for a couple of hours while I do this presentation, I will babysit your kids, and you

and your husband can go out on the weekend. I treated it. I always had planned beast indeed, just like you do in business. What would you say the leadership qualities that you brought to the table or that you most admire. I mean, I think the ones I brought to the table were being genuine, being authentic, communicating, uh you know, just um all the time, painting the picture of where I want the company to go. And I

think that's really important. I think people, uh, you know you only you're only a leader of people want to follow you, So do people want to follow you? Do? Do you? Do? You have? You know, a great attitude but also a certain paranoia to make sure that we're always doing well. And for me, I think what I'm most proud of and I think why I continue to get jobs after that hr job was I form really great teams. I don't always have to be the smartest

person in the room. I know collectively what a team needs, and I love having really great debates. And the only thing better than those debates are the unity, the power in the unity. When you come you know, you come out and you're you're solidified as a management team, as a leadership team. So sometimes people say it's very difficult for women to have it all, to have a family and also have a great professional career. It's obviously possible.

You would You've obviously done it. So what would you say is that the trick to having it all and and getting it all done? If you were to give advice to some younger woman, I think there's sometimes there's things you don't give up. So Jack played high school and college football. It was important for me to go to as many games as I could have his and I worked my way around that so I could do that, and sometimes that meant working, you know, at ten o'clock

at night to catch up on things. But it was worth it because my kids tell me even now, they're like, you went to more things than most stay at home moms because I was so obsessed with making sure I got to almost everything. So if you were go to a football game or something like that with your kids, do people come up to you and say you're the CEO of Progressive or you try to avoid telling people you're the CEO Progressive when you go to those kind

of family events. It's funny because my husband says all the time, why do you play twenty games with everyone? Because people will say where do you work? And I'll say for insurance company? Where in Cleveland? What do you do? I'm corporate, so I'll do all these things so fun I'm like, okay, I'm the CEO. UM. What I have found if you're on a plane when they're when you used to be on planes, or you're somewhere, a good way to not get in the conversation is they'll say

what do you do? And I say, I fell insurance, and then no one talks to you. So that's why I found the right the right thing. I've no people. I live in a smaller town and my kids went to a small Catholic school, so everybody knows me. When I got the job. The day that it was announced, I was headed to our son's school after the workday to go to his lacrosse game, and our PR department kept saying, you know, the Wall Street Journal wants to talk to you. This place wants to talk to you.

And I said, I'm headed to a lacrosse game. Let me call my mom, let me call my sisters, let me enjoy this. And um, I finally said, stop calling me because I wanted to be present in the moment. And actually I talked to my five other children and Jack was on the field, and uh, during halftime, I went up and I said hi, and I went to talent and I said, hey, I need to tell you some news. He goes, I know, Mrs Ceo, it's it's

it's your trendy on Twitter. Suppose somebody came to you from Ohio and said, you've run one of the best companies in Ohio. You should be governor of Ohio. Would you have any interest in running for office. I think government would frustrate me. I like to get things done, I like to move forward, and I'm a big believer

in compromise. So for me, I I don't think government is in the future for me, I think I loved I'd love to do some philanthropy, maybe a border to who I'm on a public board now and uh, and do some things with my husband to help the country. And the higher calling of private equity that doesn't appeal to you, I'll let you do that. And you've been listening to Tricia Griffith, CEO of Progressive on the David Rubinstein Show. Peer to Peer Conversations