Progressive Makes Big Claims

Today, in Houston, Kristen Botello is on the case long before her nine hours are up. When she reaches the accident scene, southeast of downtown, she finds a routine fender bender. The driver of an Acura Integra, who is insured with Progressive, was leaving a beauty salon when she backed into a Mitsubishi Eclipse parked across the street. There's no mystery here, just everyday drama -- and no injuries, other than a bruised ego.

"I thought I had it under control when I came down the driveway," says Mary, the Acura owner, standing with her hands on her hips. "I didn't hit her hard at all." Mary isn't happy about the wreck, but she's impressed by the efficiency of the representative from her insurance company. Botello, a former social worker, is a team leader on the weekend unit. She arrived a half hour after the accident happened. Twenty minutes later, she's worked up a $201 estimate on the Integra and a $540 estimate on the Eclipse. Mary pokes her head into the back of Botello's Explorer. "How about that," Mary jokes. "Have printer, will travel."

The other driver, a young woman named Clarisse, is worried about how the news will go over when she gets home. "Give this to your father," Botello says, handing her a check for $540. "He probably won't be so mad after he sees that."

Birth, Crisis, Reinvention

When Progressive employees describe how their company approaches the auto-insurance business -- and business in general -- they use words like "intense," "aggressive," and "unconventional." Those words also describe Peter Lewis, the company's resident trailblazer and firestarter -- and its CEO for the past 33 years. Lewis is 64 going on 24, with longish white hair and a smile that suggests irreverence, mischief, and candor. He has the rakish charm of Peter O'Toole and the zaniness of Christopher Lee. He will say anything. About his wealth: "I'm as rich as Croesus." (Which is true: His shares in Progressive -- nearly 10 % of the total -- are valued at about $650 million.) About how "stupid" his competition is: "All these other companies are trying to follow us. Meanwhile, we're getting better." About how reckless he was behind the wheel before he hired a driver: "I was a serious accident waiting to happen." About how 20 years of therapy helped him accept that other people tend to consider him eccentric. When Lewis tells you he's "done it all," you can't be certain what he is referring to -- but you don't doubt for a second that it's interesting.

Lewis's office overlooks the Progressive campus and several large sculptures, which are part of the company's renowned collection of modern art. Directly across from his metal-and-glass desk are 10 Andy Warhol prints of Mao Tse-tung. His trademark black Stetson hat rests on a nearby table, as if it were another work of art. Last year, because of severe circulatory problems, Lewis underwent a below-the-knee amputation on his left leg. So, until he gets a prosthesis later this fall, he must maneuver around the office in a wheelchair. He does so nimbly, like a crafty wizard tinkering in his workshop.

Peter Lewis gets deeply emotional about insurance, in part because running Progressive is all that he's ever wanted to do. His father cofounded the company in 1937, when Peter was 3 years old. As a young boy, he accompanied his father to work and played on the office furniture. At age 12, he stuffed envelopes to earn his first paycheck. As a thirtysomething CEO, he worked 90 hours a week. Decades later, he's still behind the wheel.

Joe Lewis started Progressive with a buddy, Jack Green. They were young lawyers trying to make it in Cleveland during the Depression. The state of Ohio hired them to investigate salesmen who were pitching a dubious auto-service contract. After busting up the scam, the two lawyers started an auto-insurance business of their own. They charged $25 a policy and offered such innovations as drive-in claims service. (The company was headquartered in a garage.) But for the coming of World War II, Progressive might have gone out of business. People on the home front had money to buy policies, but gas rationing severely limited their driving -- which meant that there were few accidents. During the war years, Progressive received so few claims that it emerged from the period with about $400,000 in capital.

By the time Peter Lewis graduated from Princeton University, in 1955, his father had died and Green was in charge. Peter took a job at Progressive, and although his duties were limited to sales, he attended the company's daily management meetings, where the head underwriter complained about independent agents who tried to persuade him to cover "nonstandard" customers -- high-risk drivers who had been turned down by other insurers. One day, Lewis spoke up: "They're bringing us potential business. Can't we find a way to write these people?"