In November 1988 California voters passed Proposition 103 which mandated sweeping reforms within the insurance industry. In effect, it meant 20% reductions in rates and significant refunds were in store for policy-holders. The Proposition’s passage was California’s voters way of punishing an industry they were fed up with.
Progressive Insurance, which at the time ranked #13 in the American private-passenger auto-insurance market, had a quarter of its business in California. The Proposition’s passage took a big hit on Progressive.
After the initial shock, CEO Peter Lewis called his staff together and challenged them to built a better company. What resulted was nothing short of remarkable. Progressive instituted new innovative claims service with roving claims adjusters that work from a fleet of vans and SUV’s which could be immediately dispatched to policy-holders homes or even the scene of an accident. By 1995 80 % of the time Progressive adjusters were issuing claim checks within 24 hours of an accident. This improvement was one of many.
By 2002 Progressive’s industry ranking had risen to #4. Lewis later called Proposition 103 “the best thing that ever happened to this company”.
It would have been easy for Lewis and his people to whine about life not being fair. They didn’t. Instead they saw it as an opportunity. It proved to be just that. They were committed to results (MS #1) and knew things would only get better when they did (MS#3). It’s a remarkable story that Jim Collins memorializes in Great By Choice (page 168).
It’s a life’s lesson for all of us.
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