Progressive Insurance War Game

Abstract

This case invites teams to prepare for a business war game to explore aspects of the competitive dynamics in the auto insurance market. In particular, the case offers opportunities to discuss segmentation strategies, data analysis, and the phenomena of adverse selection and the winner's curse. The simulation is conducted as a tournament between four insurance providers, each represented by one competing team of students. In each round of the tournament, competitors simultaneously submit a tagline summarizing the insurers' positioning statements and a price per exposure-unit for each of 4,000 customer groups. The case is accompanied by an Excel spreadsheet that provides historical information about the insurance risks of each customer group.

Excerpt

UVA-QA-0680

PROGRESSIVE INSURANCE WAR GAME

The business war game is a natural device to test out scenarios. As we enter the globalized information economy where many of the key problems are ones of alignment of technology with strategy, high-level coordination, and strategic alliances, the war game—itself a very old technique—is one of the best ways to pull all of the pieces together. Games are natural complements to scenarios.

—Paul Bracken, Scenario and Strategic Planning magazine, Summer 2001

Your team is invited to prepare for a simulation of an auto insurance market composed of four insurance providers. The simulation will be conducted as a tournament in which each insurance provider will be represented by one competing team. Because you will have to respond quickly and strategically to changes in the competitive landscape, we encourage you to explore different scenarios in your preparation.

Background

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Keywords: pricing, segmentation