This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
Operator
Welcome to the Progressive Corporation's first quarter investor event. The company will not make detailed comments related to quarterly results in addition to those provided in its quarterly report on form 10Q and the letter to shareholders which have been posted to the company's website. Although CEO Tricia Griffith will make a brief statement. The company will then use the remainder of the event to respond to questions. Acting as moderator for the event will be progressive to the vector of investor relations, Constantine. At this time, I'll return the event over to Mr. Constantine.
Constantine
Thank you, Tamara, and good morning. Although our quarterly investor relations events typically include the presentation on a specific portion of our business, we will instead use the 60-minute schedule for today's event for introductory comments by our CEO and a question and answer session with members of our leadership team. Questions can only be asked by telephone dial-in participants. Dial-in instructions can maybe be found at .progressive.com forward slash events. As always, discussions in this event may include forward-looking statements. These statements are based on management's current expectations and are subject to many risks and uncertainties that could cause actual events and results to differ materially from those discussed during today's event. Additional information concerning those risks and uncertainties is available in our annual report on Form 10-K for the year ended December 31, 2020, as supplemented by our 10-Q report for the first quarter of 2021, where you'll find discussions of the risk factors affecting our business, safe harbor statements related to forward-looking statements, and other discussions of the challenges we face. Before going to our first question from the conference call line, our CEO, Tricia Griffiths, will make some introductory comments. Tricia?
Operator
Thanks, Doug. Good morning and welcome to Progressive's first quarter conference call. We appreciate you joining us. During our fourth quarter call, we took the opportunity to reflect on 2020 and the emotional toll of the pandemic and social unrest. Now, with the first quarter of 2021 behind us, we look forward with the optimism that the vaccine rollouts bring and the hope of a return to normalcy. Our people are showing tremendous resilience in the face of hardships and a willingness to react to whatever comes next with a positive attitude, which allow us to continue to deliver fantastic results. This quarter, our net premiums written growth was 19 percent, and we reported a healthy combined ratio of 89.3. All lines were profitable, with the exception of property, where catastrophic weather losses added 30.6 points to the combined ratio. Policies and forced growth continue to be strong at 12 percent, and I'm most excited to report that we passed the milestones of 17 million personal auto piffs, 5 million special line piffs, and 25 million company wide piffs during the first quarter. I also want to point out that this is the first time since the second quarter of 2004 that we reported double digit growth in personal auto, special lines, and commercial lines policies and force. We couldn't be prouder that so many people trust Progressive to protect some of their most important assets. I'd like to take some time to address the effect the pandemic will have on our year over year comparative results for the next several months. March was the first month where we saw the effect of the pandemic in our previous year's results. So it feels like a good time to give some further insight into our March 2021 results, and to remind everyone of the actions that we took in 2020 that could affect our year over year comparisons. This quarter, we reported 14 percent new app growth in personal lines, and 29 percent new app growth in commercial lines. The year over year growth reflects two items, the effect of the stimulus package, and the denominator that includes the onset of the pandemic in which shopping virtually stalled. Even considering the effects of the pandemic, growth is robust. We've often said that piff growth is our preferred measure of growth. This is a great example why since the denominator was only nominally affected by the pandemic. Last year's new business metrics continued to be affected by the pandemic well into the summer of 2020, so not always negatively. In mid-April 2020, the first wave of stimulus checks were released, which restarted new business shopping. We expect the uptick in shopping last year will affect our second quarter 2021 year over year new business growth. Also, starting in April of last year, we took actions to support our customers, including our April in Relief program, which we believe will have an impact on many key metrics, including our expense ratio. At the end of April and May of 2020, our personal auto customers received monthly premium credits of 20 percent, which provided substantial financial assistance to our customers, but also increased our expense ratio. In addition, as part of the April in Relief program, we initiated payment and billing leniency, which temporarily increased our bad debt expense, but also increased our policy retention. Both policy and force counts and retention metrics were affected by billing leniency. In commercial lines, our TNC business saw a sudden and dramatic decrease in miles driven and estimated future miles to be driven in March of 2020, which contributed to the significant commercial lines net premiums written increase in March of 2021, as noted in our March release. Miles driven and those premiums slowly recovered over the course of 2020, so we anticipate the effect on the denominator will decrease over the remainder of 2021. Our property results continue to be rocked by catastrophic losses. In the first quarter, which is normally a relatively quiet quarter for cow losses, property business suffered significant losses. Further, the hail storms in Texas and Oklahoma that occurred in late April appear to be another large event. While it's too early to assess our ultimate exposure, I'll take this opportunity to remind everyone that we have an $80 million retention threshold from a single storm under our occurrence excessive loss reinsurance program. We'll have more details on the late April events and our April release, which is currently scheduled for May 19th. I'd also like to take a moment to thank everyone who participated in the perception of study we commissioned at the beginning of the year. It was encouraging to see all the positive comments we received and it's helpful to receive feedback on ways it can improve. One opportunity we heard loud and clear was the desire to return to the quarterly call format we had before the pandemic, one in which senior managers from around the organization would present on various aspects of the business. We intend to return to this format during at least two of the calls each year, starting with the August call where we will highlight commercial lines. Looking forward into the rest of 2021, I'm filled with a sense of optimism. While the pandemic is far from over and we still have many challenges ahead of us, I think pride in the strength of our business, the resilience of our people, and have confidence that the plans we have in place will likely continue to deliver great results in the coming quarters. Thank you. And I'm ready to take the first question, Deep Samara. Thank you. To be added to the question queue, press star 1 on your telephone. In order to get as many questions as possible, please limit yourself to one question and one follow-up. Your first response is from Elise Dreamspan with Wells Fargo. Please go ahead. Hi, thanks. Good morning. My first question was on the frequency disclosure in the 10 queue. Your frequency was down for all coverages except collision in the first quarter. I was just interested, you know, knowing why, is it getting more color on what was going on? Yeah, we are actually assessing that right now. When we look at the gap in PD and collision, at least one other competitor had similar results. We believe in part it is due to our CWP rates being different in PD and collision. So right now, Elise, we're having Gary Traycross Group and our claims control group dig in a little bit deeper. The reporting is similar, CDP rate is different, so we're trying to discern exactly what that is. Okay, that's helpful. And then in terms of direct, you saw some pretty strong new app growth on there. And you also saw, you know, strong renewal growth as well. So I guess my question is, is the new business penalty significant? And is it being masked by the increase that you're also seeing within your renewal business as well? You know, I think, you know, whenever we acquire new business, we're obviously going to spend more for it in terms of both advertising, which you saw increased 25% on the direct sliding commission. So I don't know that the penalty is extraordinary, John. You can weigh in a little bit on that. The renewal, you know, one, we're proud of our service and our rates. So we know that some of the retention gains are likely due to the renewal. To what has happened during the pandemic in terms of non-cancellation, etc. But I wouldn't say that there's a big penalty.
John
I would agree. You know, the new business growth is certainly a function of denominator. We all recognize that, but it's also a function of 25% more advertising spend. And we always like to reiterate that we are only spending when we believe it to be efficient. But in terms of a penalty, you know, the mix in terms of policies and premium new to renewal is fairly stable, even when you're growing your business a lot. And the business is mature as our businesses are.
Operator
And then just one quick follow up on my first question. When you said EWP, I just want to make sure that is that claims with payments when you were discussing on the collision question I had to start? I'm sorry about that, Elise. We have a lot of acronym here. It's claims without payment. So claims that come in and then we close them because we no longer see an exposure. Okay, thank you. So the trend...
John
I was just going to clarify the trend for close without payments for collision has been going down. It's actually predates the pandemic and for property damage has been going up. So that obviously affects the total frequency now. So our next question.
Operator
Your next response is from Greg Peters with Rainland and James. Please go ahead.
Greg Peters
Good morning. My first question will be on commission rates. You know, I know some of your competitors have, you know, lightened up on the commissions that pay their agents. This has happened in the auto business, but we're also in the property business. You know, a lot of the regional carriers have been slammed with, you know, high combined ratios and underwriting losses. And we're also hearing them apply pressure on commission rates. Can you talk to us about your view on commission rates? You know, give us a synopsis of the history and then what do you think is going to happen to 21?
Operator
I mean, the history of our commission rates, we try to look at an aggregate right around 10, 10 and a half. And then it's different depending on the type of customer that comes in. If things are bundled, we obviously have several thousand platinum agents to get a higher commission because they are bundling the auto and home, those Robinson's customers. And, you know, if you bring in a some a group of customers that we believe are going to be there short term, the commission might be less. Again, the aggregate is we try to keep around 10, 10 and a half percent. And we also do have some preferred programs and bonuses for agents depending on their loss performance. It's not across the board. It's with specific agents. Do you want to add anything, John?
John
And the 10 and a half that Tricia is citing is generally where we run in our auto business. On the property side, we have a higher commission rate. But, you know, the overarching objective here is to ensure we have competitive prices. That means we have to have competitive commissions as well as competitive other costs, what we call non acquisition expense ratio or cost. And so really, it's the combination of go to market in terms of having a competitive aggregate expense ratio, both those come into play and obviously a condition that which we think our agents will thrive. So there has been downward movement from competitors. You're right. I think we have seen some positives to that to some degree, because we are commissions are more like competitors these days than perhaps they were previously. But we couldn't really tease out any specific impact of that. But that's where you're going.
Greg Peters
Thank you for that answer. My next question will, you know, focus on the property business because, you know, it does stand out for its underwriting result, which is very unprogressive like. I'm wondering if the view on the property business at this point in time is more of a loss leader to drive retention in the Robinsons. And so you're willing to sacrifice your margins in order to drive up retention or alternatively, you know, do you also have this overarching objective to eventually get that business down to I think your corporate target is 96 combined ratio. Maybe it's lower because it's property, but some color there would be helpful.
Operator
Yeah, I know we do not want to be a loss leader. We profit is one of our core values. We have a very specific target margin for our property business that, as you stated, rolls up to our 96. We've just been riddled with a lot of catastrophes. It's also a fairly newer business for us in terms of segmentation. So if you look at over the years, how much we've improved and continued to improve at a really quick rate or segmentation in auto, you know, we anticipate we'll do that in So we have new product models. We have our R&D group working on the right product models, which could be, you know, year of roof. And we've also had some restrictions for customers in the hail prone states to have them buy relatively higher deductibles for wind and hail because we've seen that that really causes a lot. In addition, you know, we have done a lot of rate increases. So in 2020, we took about 11 and a half points, another close to one and a half in Q1. And we have another 4.2 expected in quarter two. So we continue to raise rates to ultimately get to that goal. Now, what we're happy with, and I wrote it in my letter, is the fact that we are getting a high percentage of bundled customer on both the direct and agency side. And what we know on the agency side is without having a property product, we would not have likely have not gotten most of those autos. So we want those, but we want to make our target margins across the board period. So that's what we're working towards. We really have, along with industry, been rocked with catastrophes. And of course, we also have reinsurance, heavily reinsurance on the property side to protect the downside. But no, we're not thrilled with those results and we're going to continue to chip away to get to our ultimate goal.
Greg Peters
Thank you for the answer.
Operator
Thank you, Greg. Thank you. Your next response is from Michael Phillips with Morgan Stanley. Please go ahead.
Michael Phillips
Thanks. Thank you. Good morning, everybody. First question on on telematics and outside of pricing, we've seen some competitors talk about increasing telematics and claims. And I guess I'm curious if you could talk about any, excuse me, any value that you're currently getting from snapshotting claims and then related. Is there any opportunities maybe outside of pricing segmentation for snapshot to, I guess, extend the period of time you collect data from snapshot to help in other areas besides price segmentation?
Operator
Thanks, Michael. We've been testing and looking into claims and snapshot, understanding the facts of loss, fraud, other things for quite some time. I think we've had one hundred and fifty thousand customers that are currently that we currently have access to claims information should they have a loss. And we'll have more to come on that. We've been working on that for a while, but we think it is an important next step for the use in our telematics. And we've talked often on to about do we have continuous monitoring? Would that help not only with understanding the likelihood of changing driving behavior, but also could help with other necessary things that customers have grown accustomed to in terms of added added services like tows and gas stations and things like that. So that is on our list as well. Currently, obviously during the pandemic, our big effort was to try to understand vehicle miles driven and how that relates to work from home versus not work from home, etc., as well as some of the other items we've talked about the apron release that I've talked about in terms of actually a shorter monitoring period to give people who believe that they're driving less the ability to prove that through data and give them a lesser rate. But, you know, we've been we've been on the UBI bandwagon for a couple of decades. We'll continue to do so. We do so on both the personal auto and the commercial auto side. Really happy with our smart hall results. Very successful and in the program is very profitable on the commercial auto side because that's a big expense for truckers. But I mean, all those things are on our agenda and we continue to invest a lot in this area.
John
The other thing I don't know if we call it telematics or not that is evolving is dash cam video. So especially in the commercial space, those devices are frequently one in the same. And, you know, the higher limits in the commercial space, if you have video, it can be extremely helpful in resolving claims because some of those vehicles are targeted because of the limits. And if you have video that clearly shows it was staged, it resolves the claims very quickly. So, you know, telematics is certainly a benefit of the profitability and rating side, as Trisha mentioned, evolving for claims for personal and evolving for commercial as well, including dash cam video.
Michael Phillips
OK, great. Thank you, guys. Second question. You got some kudos this weekend from the friends in Omaha on, you know, your lead you have in telematics in this space. But I guess if we look at, you know, and they said they're going to start to do more. So I would think that that gap could could narrow possibly if we combine that with if we look at some states where the use of credit score and use of telematics has been limited, if not all about bands. And these are small states, Mass, New York, as examples. They're the lead from from that competitor is pretty significant over you in terms of market share gains. So I guess if we combine those two things in credit score may start to fade away in other states and then their use of telematics may start to pick up. How do you think about that competitive dynamic between you and them in states as the overall market shifts away from credit and they start to shift more towards telematics?
Operator
Yeah, great question. I'll just I'll use the G word. So, yeah, Geico did Berkshire talk a lot about it. And they're a formidable competitor. And and we like the competition because it makes us better and better for customers. Here's here's how we think about segmentation. You know, we have we've had an edge on a lot of our competitors for many, many years now. And we're not going to stop. And we believe rate to risk has a lot to do with many different variables. Insurance credit scores being one of them, usage based insurance being one of them. But there are a lot of other variables. We will comply with the regulators. We believe they help to match rates of risk and they're correlated to ultimate losses, which is really important for all consumers to keep the reddit the the rates competitive. So I'm not surprised that they're going to spend more money on that. We also will be spending more money on continuation of our many, many billion miles of snapshot data on both the auto side and the commercial auto side. So we like the competition. We think it was great. And now it's 10 years ago, I might not have said this, but now we have head to head brands. So you may like her or you may not. But you know who Flo is. And we're very proud of Flo, the network and all the different characters. So I think going head to head on all those things is a good thing. I've always been competitive and we like that. I think it makes us better. It makes sure that you don't just rest on your laurels. So we will react to whatever we need to react and continue to invest in segmentation, especially in usage based insurance, but other segmentation variables as well as our brand, our broad coverage and and the people and culture at Progressive. And we think all those together are really winning formula.
Michael Phillips
OK, thank you, George. Appreciate it.
Operator
Thank you. Your next response is from David Smote-Matton with Evercore ISI.
David Smote - Matton
Hi, good morning. I had a question, Tricia, in your letter. You know, you spoke about Robinson PIF growth up 20 percent in the direct channel and up 16 percent in the agency channel. I guess I'm wondering if you could just sort of level set us here and just think about what percent of the book now is bundled customers and also maybe just talk a bit about margin differential and policy life expectancy differential where that stands today.
Operator
Yes, we're very happy about the increase in Robinson. And that's really what our goal has been to have those bundled customers. We've added some platinum agents on the agency side. I would say our total book of Robinsons right now is right around 10 percent, which is much higher than it was many years ago. So we continue to kind of gain that momentum in Robinsons. And what was the other part of your question?
Michael Phillips
Profitability.
Operator
Profitability. Yeah, we you know, they are preferred customers. So we believe they're more profitable. And on the retention side, the retention is dramatically different, not just on the Robinson side, but as you have more and more more and more policies with us. So that's why it's so important for us to continue to give people a reason to stay for decades and decades to be able to have products that can all come from the same carrier, whether or not we write it on our paper or not. So, yes, so that's a preferred customer and we want wider margins there and the retention is longer.
John
So our target, just for clarification, across the customer segments for auto is pretty on a lifetime basis is consistent. So obviously, our loss costs vary at times. And frankly, during the pandemic, more preferred customers have the ability to work from home have been driving less than other customers whose professions require them to drive to the office. So while we might have different margins by segment in the near term due to extenuating circumstances, our target margin across those customer segments is consistent. Just the 96.
David Smote - Matton
Got it. Thank you. And then, you know, maybe just switching gears a little bit just over to the severity side of the equation. We're just thinking about loss costs. You know, it didn't look like you saw a big increase in severity this quarter. You know, property damage severity is flattish collision up a little bit. But, you know, obviously hearing a lot about supply shortages, chip shortages, just wondering how you're thinking about severity as we go forward, you know, combined with the mix of, you know, maybe claims coming back a little bit. So, you know, the mix of claims might be somewhat of a of a tailwind for severity where you have a bit more fender benders and that could potentially bring it down. But sort of just just maybe at a high level, just want to get your take in terms of where you expect severity to go, just given everything that we're seeing in the macro environment right now.
Operator
I wish I knew the answer to that question. That is such a tough one. You know, we are seeing some losses come back, especially now. It makes sense on the special line side. We'll watch that closely. We haven't been affected yet from the semiconductor shortage. We watch those things closely. You know, some of the severity, you know, we'll look at in terms of our average premium is down a little bit. And we've had a lot of cat losses. So all those things play into it. And then, of course, it really does, like you said, it plays into it in terms of what do people do as different states open. So will there be more highway travel because you're packing up the kids to go see grandma and grandpa and that cause, you know, less volatile accidents. We've been saying obviously the congestion is less in the pandemic than it will be. So we're watching all of those things closely and we're going to we're going to be able to react to those. And we're you know, we've never been in this situation. So we're watched closely with not just our UBI data, but some other data that we're starting to gleam in terms of understanding when more people are starting to work from the office. And so we have some occupations and some data that shows some people are already there. Some people are there a little bit more often. We're going to continue to watch that because we think that that could creep up pretty quickly and we want to be on top of that.
David Smote - Matton
Thank you. That makes sense. And maybe just following up on that point, did was any of that just sort of, I guess, caution and uncertainty? Did that come through because it looks like you guys, you know, after decreasing rates last year, it looks like you increased rates in auto, you know, obviously not a little bit by a little bit under a percent. But did that have any influence on on that rate change?
Operator
Well, we look at all the trends in terms of what we do. So after we took the credits, then we looked across the board and we looked state by state, product by product, channel by channel. And our goal was always to take small bites of the apple because our customers, we know they want rate stability. And so we felt great at the end of this year. And now we're doing the same thing. We're taking a look and different states have very different attributes in terms of increases in frequency and severity and driving behavior. So that less than one percent is just based on us looking at the data and making tweaks. And we'll do that the rest of this year as we see things unfold. So it's really using the data and then saying, OK, we need a little bit more on in this product, in this state, in this channel. And that's that's why I think the way we're set up is so good, because we're a machine that can react pretty quickly to those trends as they unfold.
David Smote - Matton
Got it. Thank you.
Operator
Thanks. Your next responses from Josh Schenker with Bank of America. Please go ahead.
Josh Schenker
Yeah, good morning. Thank you for taking my questions. Just a clarification, please. On the Mark 17th shopping day, the biggest shopping day you've seen when people got their stimulus checks, are these SAMs with discontinuous coverage who've come back into the insured population? Along those lines. I mean, I know you are certainly right that business, but it doesn't have a lot of persistence. I'm just trying to understand the surge related to the stimulus and what that means maybe for April, May.
Operator
Thanks, Josh. And actually, for years, if you go back, we presented this in a meeting probably maybe seven or eight years ago. We we we saw that shopping when people get their earned income tax stimulus from from the government. And it is it is largely SAMs. It is other people that I think other constituents that have lost their insurance or couldn't afford to it. But in the large part, SAMs and, you know, our theory and SAMs, we grew up with them. We love them as long as they can make our target margin. So the stimulus just exacerbated that. These are people that are trying to do the right thing and maybe lost coverage and want to get back in the game and be legal and do the right thing. So we we see this and and other stimulus that that started and will continue to be something where we'll increase shopping behavior for the industry as a whole. But yeah, in large part is it is predominantly SAMs.
Josh Schenker
OK, and then it's fine. When David severity question, we've obviously heard a lot about lumber prices going up and we we've heard about rental car issues and whatnot. Those issues seem very, very close to what might be a severity inflation related issue for progressive in your current pricing. Are the inflation issues that are sort of kitchen table issues that everybody knows about that captured in how you're pricing right now or is that is that going to contribute to future rates?
Operator
You know, we look at all the macroeconomics that are going on and react to that on a severity basis. I would say on the on the rental coverage, especially for our first party, we have contracts in place to minimize the amount that you pay per day on a rental. So if we feel good about that, we also believe. On the rental side that, you know, if you get out there and see the car, you know, customers want their car back in their driveway. So we really do try to compress the time with which to get the car back into that or better shape than before the accident. So we've always tried ourselves on on on the actual time that that takes, which, of course, affects rental lumber. We will start to see that unfold. And if we believe that it is a piece of the severity, we will price that in in future rate increases.
John
Yeah, Josh, as you know, insurance is an interesting product because you truly don't know the cost of goods sold until a year from now in case of home. But the rate indications is what we call them forward looking process to say what should our price level be over the coming 12, 18, whatever months. We are selecting trends for frequency and severity, and they are informed, as Trisha said, by macro and economical views, but also a little more specific views such as the cost of lumber. But obviously, you know, that that is a near term spike over the long term. We're not sure where that goes. And we would have taken a little more holistic approach to selecting in that case, the severity trend for the price level going forward.
Josh Schenker
All right. Well, there's lots to digest in there, and I appreciate the answers.
Operator
Thanks, Josh. Thank you. Your next response is from Gary Ransom with Dowling and Partners. Please go ahead.
Gary Ransom
Good morning. I wanted to ask about quoting and conversion. I think I see your conversion is up a lot. That probably is explained by accurate matching of price and risk. But on the on the quote side, you're doing something powerful that gets people in the funnel in the first place and you have a big flow of customers. So if I'm I'm sitting at home, whether I have a stimulus check or not, maybe I'm a maybe I'm a Robinson. And at some point I decide I'm going to go go shopping. Just wondering what what is what's sort of the key ingredients of being successful at getting that customer in to get a progressive quote?
Operator
Yeah, Gary, I think a lot of it is our brand. So we started out I started out one of the one of the answers with 10 years ago, 11 years ago. Our brand would be different. It's about awareness. And people know who progressive is. They know our brand is a solid brand. It's a reputable brand. So that's kind of awareness gets you on the short list. And then when you're on the short list and you shop our competitive prices and our broad coverage gets you in the door. So we believe that we've obviously spent a lot more on brand, another 25 percent increase in this quarter. And and again, we were spending a lot in expanding our broad coverage. So if you're sitting on the couch and you're a Robinson and you want to buy an auto and home on your phone or your iPad or you want to call in or you want to go to your agent, we try to be where, when and how you want to shop just to make it easy for all customers. And and and then you have competitive prices. So I think that is really important. And that goes, of course, into our segmentation and understanding rate to risk.
John
Gary, to that, I would add, you know, much of our advertising is mass media, but a massive portion of our advertising spend is in digital media. And that can be sort of displaced up. But it is increasingly what we call digital auctions. And there are multiple digital auction marketplaces on the web these days. And I would give huge kudos to our digital media group because they use the analytical powers that are inherent in progressive people and make great real time decisions. Meaning, where should we spend more? Where should we spend less? They also do it recognizing the lifetime value of the prospects that are looking to quote. So you can imagine if we have a longer retaining customer and direct, we can spend more. If it's shorter, you get the whole concept there. So I think we are pretty good in that space. And that has been a space that has been growing for us a lot for a number of years now. The other important thing to do is once you get the person in the front door, you got to get them to the price. And that is not as simple as you might assume. There are multiple avenues where customers can decide to quit the quoting process. And we optimize continuously to make that funnel that starts at the top of the flow, as you said, get as efficient as possible to get them a quote. And then obviously to translate that quote to abide. So I think a lot of this is our great people, great analytical skills, massive data sets. And I think we're doing some impressive things there.
Operator
And the only thing I say, this is a little bit off, but once they're in and you do have an incident or an accident, I believe we have industry leading claim service. We're out there. We care. We're there when you need us most. I talked about that a lot when there's caps that we can't control the weather. All we can control is how we treat you as a customer. And we've always gotten really high marks on that. Do you have another question, Gary?
Gary Ransom
Yeah, I was just going to follow up on the 25 percent ad spend, too, based on what you said. Is that is it reasonable to assume that a lot of that growth was more in the digital space?
Operator
Yes, when we look over the years and we look at, you know, take the last 10, 15 years and we look when people bought on phones. And now when they're buying digital, it is the highest rate of growth.
Gary Ransom
Yeah, just this one little more on the same topic. Just is if I look at the body of science that you're putting into this in terms of the quoting process and all of that and kind of compare it to the body of science you have for matching price and risk, are they are they both just as robust?
Operator
I think so. I mean, I think when you look at our ability to continue to have new product models coming out where we can even more accurately price, rate your risk and get to that preferred customer, we just continue to excel in that. And then on the buying analytical side, I'll concur with John. We have an incredible team. We do a lot of our buying in-house, so it's proprietary to us. We have an incredible team that understands both the art and science around branding and then getting in our customers at or below our allowable costs. So I both both are highly analytical teams of people that we continue to invest in.
Gary Ransom
I appreciate that. Thank you.
Operator
Thanks, Gary. Thank you. Your next response to the line of Adam Clouder with William Blair. Please go ahead.
Adam Clouder
Thanks. Good morning. Excuse me. Commercial the commercial auto is clearly growing. Um, hardest comparisons, but I think he called out that the for hire is growing rapidly. And again, that makes sense with the economy taking off. But I guess what are you doing different in that line of business? And in particular, is more that business being distributed through the direct and digital?
Operator
Yeah, I think we know we were we were ready, not not intentionally, but when the pandemic happened and more truck drivers decided to go from big firms to their own by their own tractor trailer because spot rate coverage went up. So we were ready and were priced well. And we look at that very closely because we've grown substantially both on both on the direct side and agency side. We, you know, for many years, we sold the majority of our all of our commercial auto on the agency side. But again, we want to be where, when and how our customers want to shop. So there was for commercial auto overall, not necessarily for hired for hire trucking, the highest growth in the direct commercial auto ever came in March of this year. And that's what we normalized for our four or five week month. It only bested by January of this year and then August of last year. So we were ready kind of make hay when the sun shines. We were ready for when this happened. We feel great about the trends and the underlying costs. We also are careful about that because it is high, high limits coverage. And so we have selected a 12 percent severity trend, making us very comfortable with our reserves. I think we're in the right place at the right time. We feel like we're more than adequately reserved or adequately reserved. And we're excited about this new business on both the direct and agency.
Adam Clouder
Great. OK. And then my follow up in your letter, you mentioned that V and T is down eight to 10 percent versus prior years through the end of March and the first week of April. You say that frequency of claims compared to last year is coming up, but the end of March, early April. But as frequency of claims, how does frequency of claims in the end of March, early April compared to say 2017 through 2019?
Operator
Well, comparing it, let's go first and compare it to what's happening now. So V and T's were down about 10 to 12 percent in March, early April. Then it went down to eight to 10. It's back up to 10 to 12 percent. Claims has not caught up yet. We are starting just in in very recent data, starting to see features grow. Hasn't caught up yet. I'm not surprising compared to 2017 through 19. What would you say, John?
John
So we don't actually provide a raw frequency number. So I'm sure you're trying to do that yourself and we don't give you the exact data for it. Recognize as well that, you know, overall frequency trends for a number of years now have been negative. Obviously, with the pandemic, it took a step function down. We look at the frequency. We look at a lot of things, not only versus 19, but sort of a range of 17 to 19. And frequency is still down from we'll call that generally that area. But recognize as well that, you know, before the pandemic, frequency was dropping. So I'm sure we're trying to do a look through to what is April, May, June, et cetera, look like. And it's even difficult for us to know. But I wouldn't forget those long term frequency trends for a lot of reasons have been negative. And of course, over the longer term offset more than offset by severity. And that's why the industry has been growing. But I would think through that when you're trying to project out what frequency is going to look like for the rest of the year. Thanks
Adam Clouder
a lot.
Operator
Thank you. Thank you. Your next response is from Tracy Bingighi of Barclays. Please go ahead. Thank you. Just a follow up on lost trends. Are you anticipating any delays in seeing claims as the economy reopens? I'm thinking about medical procedures that might have been delayed during a pandemic. Are you booking extra a IBMR for that possibility? Well, you know, when we get an injury claim or a PIP claim or a medical claim, well specifically injury, we are we have an estimate on what we believe will be the cost, depending again how long that claim is open and what actually happened. And then the adjusters can come in and see if they believe it's less or more and can be influenced by data as it unfolds. I think early on we saw sort of a stall, not necessarily in treatments, but more importantly, I think surgeries. And of course, there's not a huge amount of surgeries in BIs. A lot of our injuries are soft tissue injuries. And so a lot of those can even heal on their own. What we did see was a closure of course. And so we can see that open up as well. But I don't but that that data that we have years and years worth should already be priced in. Got it. Also, in your view, what is the quality of drivers in the floor higher space as folks are looking for employment? I think that varies. I think that really varies. We feel great about the business that we are putting on our books. We watch that very closely. I think a lot of it depends just like an auto on driver maturity. And right now with the driver shortage, you can see that changing overall in the industry. We have not seen that, but we'll watch that closely to make sure again that we price rates are at risk for that segment. Thank you. Thanks, Tracy. Thank you. Your next response is from Mayor Shields with KBW. Please go ahead. Thanks.
Michael Phillips
I know, Tracy, you talked in the past about how severity is reasonably predictable in auto and frequency less so. So you have to respond to that. I hope you can talk about how you do that in the context of the property book where policies are 12 months rather than six.
Operator
Yeah, I think we largely in property, we look at the age of the structure, the age of the roof, the location is in a hail prone state, etc. And that's right now. We're going to continue to understand deeper segmentation in the property space. And so I think that will change over time and we'll have more variables that we look at even on the property side. Really, the property, the outcome, the CR has been really solely on catastrophes and really a lot in Texas. I mean, there's been several things in Texas that have happened, but we look at that. And because of that, I talked about the rate increases we put into place last year and next year. We will also look at making sure that we have certain restrictions where we believe we may or may not want to grow. Do you want to add anything to that?
John
No, I think it's very similar. And obviously the models use what we call a trend to date with those trends that take into account durations of policies. You mentioned property as being 12 months. The commercial business is predominantly 12 months as well. And we have, I think it's close to 10% now of our agency book on 12 month policy somewhere around there. So it's the same process. It's just a further out trend too, generally.
Michael Phillips
OK, that's helpful. If we can switch quickly to the small, I guess the box size of commercial. Does the current competitive environment change the timeline for progressive wrapping up there?
Operator
Well, when the pandemic initially started, we had rolled out BOP in a few states and we kind of took a pause to reassess not whether we're going to go in, but just reassess sort of what states we want to do, audit our computer system, et cetera. And we are now rolling out very quickly many, many states. We're very excited about it. Remember, when we think about small business, we think about employees of 20 or less, almost micro businesses. That is growing very rapidly, albeit on a very small base. But we're excited about what we're learning. We feel good about where we're at from a rate perspective. So we and Kiernan can talk about this more in August. I'm going to have her come because I know there's a lot of questions on commercial and I'll have her outline where we're at on all the BMTs and especially BOP and small business and fleet. But no, we're very excited to continue to roll that out aggressively.
Michael Phillips
OK, great. Thank you very much.
Operator
Thanks, sir. Just a reminder that if you would like to ask a question, you may press star one on your telephone. Again, to ask a question, please press star one on your phone. Your next response is from Brian Meredith with UBS. Please go ahead.
Brian Meredith
Yeah, thanks. Good morning, trust. Quick question here for you. We dissect the rate or the average premium per policy decline a little bit here. How much of that is is rate driven, the minus three percent versus how much is just rising deductibles or changes in coverage is that the customers have been implementing during the economic downturn?
Operator
I would say the majority of it is our rates are reduction in rates. We had several customers call in. Sometimes they were delaying payments, but not huge changes in coverages. I would say rate would be the primary reason behind our reduction, average and premium.
Brian Meredith
Great. That's helpful. And then my second question, I'm just curious. So I know a lot of homeowners and policies have we'll call it inflation guards or inflation protections in them that are built in that kind of gradually raise your premiums over time to account for inflation. Does your auto insurance policies carry that as well as that perhaps a potential offset here if we do see some rising in severity?
Operator
We have some things that have had in place for years that actually take a factor into place every month for inflation on the auto side.
John
Yeah, it's a degree that transpires in home. Generally, the home is driven predominantly by the replacement cost inflation. So something like lumber would be factored into how we would assess your replacement costs at your renewal on the auto side. We have built in what we call monthly rating factors. So this is just an acknowledgement that generally speaking over time, trend in average losses is positive. And so we bake that in to the pricing algorithm so that every month we see modest increases in premiums in those states. We don't have those in all states. It's not a huge impact on average premium. And it does help ensure, you know, all else equal a positive trend in average premium in auto.
Brian Meredith
Great. Thank you. Appreciate it.
Operator
Thank you. Your next response is from Josh Schenker with Bank of America. Thank you
Josh Schenker
for taking more than one question from me. I appreciate it. I noticed that sequential policy count growth in property was the best in March 2021 since I guess going back to September 2018. I know there's a lot of new housing starts and people are moving houses and whatnot, but also there's the amount of appetite that progressive might have for warning those risks. It does seem that your growth in property slowed down in the last two years and maybe is accelerating right now. Can we talk a little about appetite, how it relates both to your desire to convert to Robinson's and in general, how it relates to cat aggregation and whatnot? Is the funnel opening up for property compared to where it was a year ago?
Operator
Yeah, I think it depends on the stage. So a couple of things. One, we've invested a lot on the direct side with our home, Quotexplore, HQX. So having progressive property and other third party, non-affiliated companies we work with. So we've continued to do that and continue to have more and more of those companies have a buy button, which makes it really easy to be able to combine the auto home and buy it online. On the agency side, we've increased our platinum agents, have a little bit over 4,000 platinum agents now. So again, more ability to buy those. We want to make money on the property side. And so we have been, I think we're in 47 states now, we want to go across the country. And for years we had a lot of density in Texas, Florida, that area. And we continue to, we continue to, but we also want to grow out of those and do the right thing in terms of segmentation. So our appetite is we want to grow as fast as we can. But our other part of that, of course, is we want to make our target profit margins. So we look at those states, we look at XCAT to try to understand where we believe the underlying price is accurate. And as I said, we are increasing rates and trying to understand segmentation a little bit more deeply. So we want to grow there, we want to grow Robinsons. That's one of the reasons why we've made so many big investments. But we need to make money on that product.
Josh Schenker
Can you give us any sense about how, how the percentage of auto policies you have that are bundled, whether by a progressive property policy or a home quote, explore policy?
Operator
Yeah, the home quote, explore. So I would say overall in Robinsons, take that we're about 10%.
Josh Schenker
10% of your of your of your auto market shares Robinsons at this point.
Operator
Yes.
Josh Schenker
Okay, great. Thank you.
Operator
Thank you. Your next response is from David Mote Matten with Evacor ISI.
David Smote - Matton
Hi, thanks for taking another question from me. Trisha, I just wanted to just maybe talk about the road test offering in a bit more detail. And just see where that stands if you have plans to roll it out on a broader scale and how much how traction has been there.
Operator
You know what we've been we continue to be challenged a little bit with the economics on road tests. So we're redefining some of the metrics. And I would say on that more to come. We continue to develop there, but we need to make the economics work.
David Smote - Matton
Got it. And what is it about the economics? Maybe maybe flesh that out a little bit. Like, what is the sticking point that you see that make it hard for the economics to work there?
Operator
There's several several different things. I'd rather have us outline exactly what's working when it's working. And hopefully that'll be soon.
Constantine
Okay. That's fair. Thank you.
Operator
Thank you. Thank you. Your next response is from Elise Greenspan with Bill Squarto. Please go ahead. Hi, thanks. My first question on you know, was obviously just announced the protective acquisition and I recognize, you know, you're waiting kind of so that closes to give us more details there. But just as you broadly think about additional M&A from here, I know obviously, you know, progressive as, you know, often shied away from M&A except in a couple of unique circumstances. So can you just provide us kind of your current view and anything that might cause you to pursue additional transactions down the road? You know, we have, you know, corporate development department that is under Andrew Quigg and our strategy group. They always kind of like searches the landscape to see things. You know, acquisitions are hard and it's hard for us, specifically, I think, because of our culture. And that's why the limited number that we've done, we have felt have great products, great culture fit with us and could be cumulative. So I've talked a few times about the ASI acquisition. You know, we didn't have the ability to bundle customers in the agency channel. That gives us that. We talked a little bit about the protective and thank you for allowing us to talk more about that after the transaction closes. So I will always look at what does it bring to progressive that we can't grow organically or that will help us get to market faster. And that's kind of how I see it. And, you know, we're always taking a look, but again, I want to be able to, doesn't give us access to customers, access to technology, or the ability to get to market faster is kind of how I look at acquisitions. Great. And then my second question, you had mentioned that snapshot apron release product last quarter. And then there was a little bit of color within, you know, within your own butter in the queue. But I'm just wondering, it seems like it's still early, but are there any like observations that you noticed kind of from switching right to that shorter driving period, you know, relative to other products or just in general observation? Yeah. So we, we have it in 43 states and we, again, like you said earlier, so it could unfold. We sent out communications to about 14 million customers and about 40,000 of those enrolled. So to have that 30 days so far, 9,400 have reached that 30 day point and a pretty small percentage, about 4% have called us to join the program. And, you know, we still feel very proud of the fact that we did that because it does allow people to reduce their rates if they're driving less or their behavior of driving differs. So again, you know, we still have some time before all the customers roll out, but a relatively small percentage has actually joined the snapshot program. Is the idea to keep this going, like obviously it was tied right to the pandemic and the impact that that's had on driving behavior, but the idea to keep an option of a shorter driving monitor period available indefinitely or is there, you know, kind of you only might have this for a certain time period? Yeah, we have this program in place till July this year. Okay. Thanks. I appreciate the call. Thanks, Elise.
Constantine
We've exhausted our scheduled time and so that concludes our event. Tamara, I will hand the call back over to you for closing scripts.
Operator
That concludes the Progressive Corporation first quarter investor event. Information about the replay of the event will be available on the investor relations section of Progressive's website for the next year. You may now disconnect.
Disclaimer