New Drive Insurance chief eyes growth strategy

A new captain has taken the wheel at Drive Insurance, the independent agency division of the Ohio-based Progressive Corporation, with the recent appointment of John A. Barbagallo as the president. Barbagallo is no stranger to how Progressive runs its operations. He most recently held the position of general manager for Drive’s Northeast and Mid-Atlantic regions. He is a 20-year veteran to the industry who joined the company as a claims representative. Barbagallo will face challenges in the coming months as he will be tasked with vamping up profits for Drive. A recent financial report shows that Drive’s growth was a mere 0.2 percent, which doesn’t stack up well when compared to Progressive Direct’s 9 percent increase for first quarter of 2006.

In this exclusive interview with Insurance Journal’s Sue McKenna, Barbagallo discusses his vision for the future of Drive. He stresses the importance of strengthened relationships between Progressive and its 30,000 independent agencies since Drive’s inception in 2003. He describes the types of technology he wants to implement that he believes will enhance the potential for growth of Drive, as well as build on the trust relationship between Progressive and its independent agency force.

To listen to the complete audio interview, visit: www.insurancejournal.com/broadcasts.

How will Drive be different or the same under your leadership?
Barbagallo: Overall, we are going to work at becoming a better marketing organization. Having said that, Drive is going to remain committed to the same basic principles that we have for the independent agent channel. We’re committed to delivering competitive products. Drive is going to maintain its low cost discipline, so that our products will be competitively priced across the broad spectrum. We’re also going to remain committed to investing heavily in technology that will make it easy for our agents to do business with us and with their customers.

Another focus will be to deliver superior and differentiating claims service. We’re going to continue our investment with the company at our concierge-level claims service, and we’re going to continue to work very hard to build a respected national brand that articulates the benefit and value of independent insurance agents.

Expand on how you plan to become a better marketing organization.
Barbagallo: I think we’re good underwriters, we’re very good at price-segmentation, but I want to see us get better at understanding our markets. Some goals include better identifying the flow of prospects that exist, and what the real opportunities might be, and then matching our product price and service offerings to take better advantage of the available opportunities. Again, we’re very committed to the channel. We see lots of opportunity to grow within the channel as it exists today.

Do you believe agents are more confident now in Progressive’s commitment to the independent agency system than when the initial rollout of Drive began?
Barbagallo: Yes. In fact, we know that agents are more confident because that’s something they tell us. We survey our agents periodically, and since the launch of the Drive brand, we have definitely seen improvement in their ratings of us in terms of commitment to the channel. They also tell us they see themselves doing business with Progressive in the long-term. And I think what we really need to do now is take the Drive brand to the point where they see the real benefits of it bringing additional prospects to their agency, and helping them close sales and keep customers longer.

Has the performance of Drive met expectations? The growth of Drive was at 0.2 percent for the 1st quarter of 2006. Will that percentage increase?
Barbagallo: Overall, I think we have some of the right strategies in place to grow. And we are eager to embark on a new set of strategies that will get us back to being the growth company we have been historically. I don’t see a problem with us returning to that. I would be uncomfortable commenting in terms giving a time frame in which I expect that to happen, but I’m very confident it will happen.

Is Drive feeling increased competition in its personal lines niche as more carriers are starting to adopt Internet tools?
Barbagallo: I think it’s always been a competitive market. Internet advertising is certainly up for the major companies.
I think you have hit on some observations that are certainly accurate in that more insurance companies are moving to a higher level of sophistication in pricing. This is an area where we feel we’ve enjoyed a competitive advantage, and we’ll continue to invest in that, and improve our skills. I think other carriers are getting better at that particular skill as well.

How will you enhance the Drive brand?
Barbagallo: Progressive is just going to continue to work on the things that we think will make a difference. We’re going to work very hard developing a trusted brand for independent agents. We’re going to increasingly invest in good technology that makes it easier for them to work with us, as well as continuing to have a competitively priced product.

In terms of the Drive brand, I think we’ve had good success in terms of creating a brand that our agents appreciate. I also think that Drive has been successful in starting to define the value of the agent for those consumers that are oriented that way, or may have that preference.

In terms of the future investment, I think we just need to get more scientific and smarter about our communications to those people that are going to respond to messages about the value of the agent. I think that’s just more about improving the science around it, because that’s what’s really going to create value and benefit for the agents.

What final message would you like to deliver as the new Drive president?
Barbagallo: I just really want to get across that Drive Insurance is committed to independent agents. That’s really our vision. We want to continue to help independent agents grow their business. We’re going to do that by providing the things I’ve already mentioned such as a respected national brand, competitive products, superior claims service, and technology that makes it easy for them to do business. We are putting a lot of energy into providing agents with the tools that make it very easy to acquire and retain business, and that includes improving our process around generating Internet leads and getting them into the hands of our independent agents so they can make sales.