Charging for Car Insurance by the Mile: Good Business and Good for Energy and the Environment?
Richard Hutchinson, General Manager for the "My Rate" program, Progressive Insurance.
Friday January 23, 2008
Crawford Hall - Room 9
Case Western Reserve University
For our discussion on this Friday we will look at a very creative idea from one of our major local corporations. It’s an idea that could help Progressive Insurance company do well by doing good. But how is it working?
Concerns about energy and the environment frequently involve issues of how to share collective goods that are in limited supply: such as clean water or fisheries or grazing land. A closely related idea involves imposing charges for contributing to collective evils, such as selling the rights to emit air pollution. The basic idea is that the market creates externalities – costs or benefits that are not part of the exchange between buyer and seller – and that the government must find a way to impose charges on behalf of society.
Driving automobiles creates all sorts of externalities that are not of interest to, say, the company that sells automobiles and the person who buys one. These externalities include pollution, congestion, and consumption of scarce energy resources. The more people drive, the more they contribute to these problems. In some cases, driving more aggressively or faster contributes to problems such as energy use and accidents.
We have various government programs to try to control those consequences. Yet in the case of driving, there is a private actor that has some interest in some of the externalities: namely, insurance companies. Less driving and less aggressive driving, for example, can lead to fewer accidents and lower claim payments.
Therefore, Progressive Insurance has created a new program to charge for car insurance by the mile. Like any government regulator, however, it needs some way to observe the behavior for which it wants to charge. And, working in a market, Progressive also has to satisfy customers.
So how is it working? Is it attracting customers, are they satisfied, and might it be affecting their behavior? To consider these questions, we will be very pleased to host Richard Hutchinson, general manager of the program.
As usual, we will gather in Room 9 of the Inamori International Center for Ethics and Excellence, on the lower level of Crawford Hall, for free cookies, beverages, and brown bag lunch.
About Our Guest
Richard Hutchinson is currently the TripSense Business Leader for Progressive Insurance. Richard has worked at Progressive since 1987 in numerous marketing and general management roles. He started as a Product Manager insuring commercial fleets. Subsequently, he has over 15 years of field management experience managing states and region profit centers; and 6 years of experience building next generation products and services. He has helped build Progressive's Agency, Direct and Internet distribution channels. His current role is managing the development and launch of Progressive's usage based insurance product. Usage based insurance is priced on when and how an insured drives their vehicle.
He has a BA from Yale University and an MBA from the University of Chicago.
Friday Lunch Upcoming Topics and Speakers:
January 30: "Election Recap: What Happened and Why?" With Karen Beckwith, Flora Stone Mather Professor of Political Science, Ph.D., Justin Buchler, Ph.D., Assistant Professor of Political Science, and Andrew Lucker, Ph.D., Associate Director of the Center for Policy Studies.
The Friday Lunch discussions are held on the lower (ground) level of
Crawford Hall. Visitors with mobility issues may find it easiest to take advantage of special arrangements we have made. On most Fridays, a few parking spaces in the V.I.P. lot in between Crawford Hall and Amasa Stone Chapel are held for participants in the lunch discussion.
Visitors then can avoid walking up the hill to the first floor of Crawford by entering the building on the ground level, through the garage area under the building. The further door on the left in that garage will be left unlocked during the period before the Friday lunch. On occasion, parking will be unavailable because of other university events.
For more information about these and other Center for Policy Studies programs, please see http://policy.case.edu.