Progressive Insurance has announced that it will discontinue offering dwelling fire insurance, commonly known as “landlord insurance,” for non-primary residences and rental properties. Nonrenewal notices for existing policies will start being sent out as early as November 19.
Reasons for the Decision
Based in Mayfield, Ohio, Progressive stated that this decision is part of a strategic shift to focus more on owner-occupied homes and to enhance its bundling of home and auto insurance. By exiting the dwelling fire insurance market, Progressive aims to create more capacity for these initiatives while reaffirming its commitment to the homeowners insurance sector. The company will continue to provide homeowners, renters, condo, flood, and umbrella policies.
Impact on Business
As of September 30, dwelling fire insurance represented only 3.6% of Progressive’s property policies. During a recent earnings call, CEO Tricia Griffith noted that the company had already been gradually exiting the dwelling fire market in many states, having received regulatory approval to do so in 22 states.
Efforts to Improve Profitability
Progressive has been implementing various strategies to enhance profitability in its property insurance segment. These include:
Increasing Minimum Wind/Hail Deductibles: This change aims to mitigate losses from severe weather events.
Mandating Roofing Materials Payment Schedule Endorsements: This ensures that policies align with the quality of roofing materials, potentially reducing claims.
Aligning Agents with Underwriting Standards: This initiative focuses on ensuring that agents adhere to Progressive’s underwriting quality expectations.
Griffith has emphasized the importance of the insurer’s segmentation product models, which help match rates to risk. She mentioned ongoing improvements in their property business through enhanced segmentation in their 5.0 product model and adjustments to underwriting appetite.
Previous Actions
The company has also taken significant steps to reduce risk exposure, such as stopping the renewal of over 110,000 homeowners policies in Florida last year. This move is part of a broader derisking strategy aimed at stabilizing and improving the overall profitability of Progressive’s property insurance offerings.
Conclusion
Progressive’s decision to exit the dwelling fire insurance market reflects a strategic focus on core products and risk management. By reallocating resources towards owner-occupied homes and bundling policies, the insurer aims to strengthen its position in the homeowners insurance market while enhancing profitability and risk management practices.
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