John Wagner: So I’ll start it off, Ralph. So our last market that had some similarities here was back in 2016, 2017, in which there was a spike, a fairly sudden spike in claims losses for the auto carriers. And then as the carriers took rate during that period, we saw a very strong market for auto insurance demand into 2018 and 2019. I would say the differences between that experience and what we’ve seen recently are the fact that at that time, it wasn’t very well understood exactly the dynamics that were happening to cause auto insurance claims to spike. I think in retrospect, there’s a better understanding that it’s probably mostly being caused by distracted driving and some cost to repair vehicles. I’d say the other major difference between that cycle and this one was the length in the severity.
Clearly, this cycle, this imbalance has been more severe than what we saw in 2016 and ’17. So I think with this cycle, you see something where every carrier is seeing the same thing, experiencing the same thing, which is they’ve seen claims losses increase not because of frequency, but because of severity, the cost of repair and replace vehicles as well as other factors. They have all started to react to that, albeit at different speeds with different levels of rate increases but they’ve all reacted to that. You’ve seen them all take rate at this point. Some of that rate is burned into their book of business, earned in and some have not yet. But you’re seeing kind of the industry all react in a very similar way, probably with more consistency than what you saw in ’16 and ’17, and again with more severity than what we saw in ’16 and ’17.
For us, that reflected in our business in 2017 with a modest growth year. We grew 3% in 2017, but then set the stage for a healthy environment for us to execute in 2018 and 2019. That’s largely what we expect as we get through the back end of this imbalance as the carriers take that rate and also see that rate that they’ve already taken earn into their book of business and start getting reflected in their results in their combined ratios and start returning to a focus on acquiring consumers.
Jayme Mendal: And Ralph, I think the only thing I’d add is there’s two sides to the equation. There’s the rate side, which the carriers are working through. And then there’s the loss side. And I think the big question for the industry will be what that loss side looks like over the course of the year. I think there’s a scenario where things somewhat stabilize where they are, and then the rates come and meet the losses where they are. And there’s also a scenario where you could continue to see deflationary pressures in the loss environment, meaning the cost of used cars or some of the big cost drivers subsiding, in which case the carriers could enter a period of somewhat windfall profitability. Time will tell. But I think those are the things to watch, right? There’s the rate side, but then there’s also the loss side and some of the key drivers of losses as the year unfolds.
Ralph Schackart: Super helpful. Thank you. Just maybe a follow up. Carriers typically set annual budgets and I guess that’s reflected in your guidance today. But are you seeing any changes in pattern with that, just given the macro uncertainty and them taking rate? Just kind of curious just on the full year basis if you’re seeing sort of any change in behavior there from the carriers? Thank you.
