The long-time head of Progressive took over the small company that his father helped to found in 1937 and grew it into a powerhouse, becoming a billionaire in the process. Lewis accomplished this growth by developing accurate rates for each individual policyholder so that those with low risk did not have to subsidize those with high risk. The company has recently characterized these high risk benefactors in TV commercials as “ratesuckers.”
Under Lewis, traditional methods of determining rates, including the use of judgment and subjective factors, were eschewed, and accurate data-driven decisions were championed.
Perhaps most significantly, Progressive embraced the use of credit scores in rating automobile insurance policies. Although controversial, the use of credit was critical in propelling Progressive to the top of the automobile insurance world both in terms of premium volume and profitability.
More recently, and also under his leadership, Progressive has been actively developing telematics rating systems, also known as “black boxes.” Sometimes refered to as usage-based automobile insurance, these systems compute insurance rates based upon data taken directly from your automobile. Variables such as how you drive, what time you are on the road and the number of miles that you drive are all extremely powerful predictors of your risk of accidents and claims.
Under Lewis, Progressive also pioneered advances in claims handling methods and the online marketing of insurance.
Although Lewis is also known for having championed the legalization of marijuana. He was probably the country’s most high-profile billionaire backer of drug law reform. During the November 2012 election, he spent almost $3 million helping secure the passage of marijuana legalization bills in both Washington state and Massachusetts. The National Organization for the Reform of Marijuana Laws estimated that Lewis had spent well over $40 million funding the cause since the 1980s.
Nonetheless, his legacy in the insurance world is of far greater importance. Under Peter Lewis’ leadership, Progressive helped to transform the world of automobile insurance, improving the accuracy of rates and utilizing the still controversial use of credit scoring throughout the industry.
Chief Executive Officer Glenn Renwick is taking the additional role of chairman. Renwick, 58, will also retain the title of president, the Mayfield Village, Ohio-based insurer said today in a statement.
Lewis was CEO from 1965 to 2000 when he turned over the job to Renwick. The company’s largest shareholder, he remained non-executive chairman until his death on Nov. 23.
Progressive joins the two largest U.S. providers of car coverage in turning to a single person to handle the roles of chairman and CEO. Ed Rust leads State Farm Mutual Automobile Insurance Co., and Tom Wilson runs Allstate Corp.