Most auto insurance companies actually lose money on the insurance itself (and make it up by investing the pre-paid premiums). One rare exception to this strange business model is Progressive Casualty Insurance. It leverages customer intelligence to make money on insurance and differentiate itself in the marketplace, explains Harvard Business School professor Frances X. Frei.

One of the key ways it accomplishes this feat is through its Comparison Quote service. When prospective customers go to the Progressive Web site, they receive a quote for Progressive auto insurance and an array of other competitors. What you might not realize is that Progressive's quotes are the lowest ones in less than half the cases, which usually encourages the prospect to abandon the Progressive site.

"So how does that make sense? What they're capitalizing on is that Progressive is better at data analysis than all of their competition. Comparison Quote is their clever service design that takes advantage of their data analysis superiority. They can get at the true 'riskiness' of a customer in a more refined way than anyone else can, so they know the true risk better than the competition," Frei says.

The riskiest customers, in other words, are encouraged to shop elsewhere -- and that's just fine with Progressive because they also are likely to be the least profitable. As Frei puts it: "They are happy to have the competition get those customers."