Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Tony Cristello - BB&T Capital Markets.
Jack Pearlstein
Tony we are having trouble hearing you?
Tony Cristello - BB&T Capital Markets
Tony, if you could maybe talk a little about what we are seeing now in terms of the macro backdrop in the U.S. versus what the macro backdrop is doing internationally? And I say that because you have seen all state in progressive, a couple of the insurance companies here domestically talk about claims and severity actually this quarter seeming to impact their businesses to a greater extent and which I guess would have a positive benefit for you at some point, and I am just wondering what’s the lag on how that translates to what goes on internationally? And how should we be thinking about that as the recession sort of is ongoing?
Tony Aquila
Yes, I think it’s a good question Tony. The thing you got to think about, you’d actually answer the question in kind of three different categories those in mature markets, those in evolving markets and those in emerging markets. And starting with the maturing markets, I think that, while we see some low couple of percentage point tightening of claims volume in some of these markets. We have been well ahead of that with the fact that the insurance carriers are sensitive to what’s happening to progressive in all state right now. Where we saw in prior downturns, where you get a good quarter of low claims volume and then all the certain claims volume and/or severity starts spiking because, people are very focused on getting the most for the repair bill or negotiating more aggressively occurs, because of optimizing profitability.
So, in the mature markets in Western Europe while we have seen a little bit tightening in a few of the markets and we have plenty of the mature markets as well that have had some expansion in growth, the trick for us has been making sure that we have a healthy queue of services that we’re able to automate next, and give them immediate return on those investments because they’re also cutting claims processing costs. So, they’re cutting LAE costs since well.
So, that gives us an opportunity, as long as we regulate that and balance that we’re in good shape. In the U.S, we’ve got a little bit of a good trend that’s occurred here as of late where we have seen more total loss volume because of the downgrading in car values and we’ve got a queue of some new services we’re trying to get out on the decision support side. So, depending on how we time that, we can buffer our way through that and of course the next quarter, I think will be pretty telling as to whether we see increase severity and/or stabilization of volume.
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