When you write the state min limits every time a person calls in for a quote you will almost always have a lower price. Great for the lizzard, sucks for their insureds when they are in a bad accid and the lizzard sends them the letter suggesting they hire an attorney at their own exp because they didn’t buy enough coverage.
Not to defend GEICO, but you do realize that the insured’s legal defense expenses are covered in full in addition to their limits, right? That applies to all auto liability policies.
Ron, you do realize that a carrier will only defend you up to your limits? You kill someone in a car accid with 25k limits and they sue you for $1mil, the lizzard will write the check for $25k so fast it will make your head spin and then tell you that you are on your own. I handled auto claims for Allstate and State Farm for 10 years. Just the facts jack!
Good one Jack. I have seen a number of GEICO policies over the years and often on Min Limits. They could care less on selling proper limits since they are selling a price instead of proper coverage. People tend to go bottom line these days due to the economy and are taking a chance on limits hoping they never have a problem. I have seen them write a little more decent liability limit and turn around and give minimum limits on U/M. Clearly, their reps don’t explain coverage to the applicant and could care less since Uncle Warren provides them with E&O defense.
Shouldn’t the insured bear some responsibility for knowing their current coverages and compare that to what they are buying? What ever happened to personal responsibility for what someone purchases?
I worked in customer service and underwriting at GEICO for 4 years and I can tell you first hand that we were well trained and encouraged to offer higher limits whenever we could. I cannot speak for sales.
The problem is convincing the insureds the value and importance of higher limits. Some were smart and increased their limits and were actually surprised how little their premiums increased.
October 25, 2013 at 12:01 pm
KentU says:
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I agree Agent and let me take it a step further. Even though I am an agency manager I also get a quote from GEICO myself at least once a year just for curiousity sake. The last three times I inquired for an auto quote I made it very clear on my request that I wanted limits of 500/500/100 (note that also carry an umbrella). GEICO responded each time with a comparison of 100/300/25. When I insisted that they at least increase the PD from 25 to 100 the premium increase was $118 for six months on one car. Any major carrier will give a preferred customer like me the higher limits for only about $1 a month or less. GEICO is purposely reducing their risk exposure in an irresponsible manner.
October 22, 2013 at 3:11 pm
Ron says:
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Jack,
How many times did you write a check for minimum or low liability limits then tell the insured that they are on their own when presented with a $1 million lawsuit? There are insureds with all companies that carry minimum limits.
ROn, the thing is, the other companies do not make it a practice to peddle minimum limits like GEICO does. That is their standard quote. They don’t even inquire about coverage. THey give 25/50/25, with 1000 deductibles. Don’t buy it? Call them and check for yourself.
October 22, 2013 at 3:26 pm
Insurance Expert says:
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Ron seriously?
The insured should bear some responsibility? That’s like saying they should bear responsibility if their attorney is an idiot, or they should bear responsibility if the doctor misdiagnosed them.
YOU are the insurance expert in their eyes….They depend on YOU for proper advice, which GEICO does not do. They sell state mins….all the time, with no question on higher options….they have to sell their 15 percent guarantee.
October 22, 2013 at 4:00 pm
jack says:
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You know it’s been about 8 years ago so it’s hard for me to remember. But I remember sending out the you didn’t buy enough coverage so you are screwed letter pretty often. As soon as the claim showed up with serious injuries i would look at my liab limits and send the letter. It said we will defend to your limits, we suggest you hire an attorney at your own exp to defend anything more. At $200 an hour for an attorney it really woke the insured up.
October 22, 2013 at 4:10 pm
Ron says:
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So, it is not just GEICO insureds that carry low or minimum limits and then get screwed by claims who will not provide the defense that they were promised. There are many people who work very hard, but still cannot afford higher limits because they are trying to put food on the table and keep a roof over there heads. I guess they are not as entitled to a full defense as those who could actually afford to pay for the defense themselves. Sounds like class warfare to me.
And then we wonder why people look down on the insurance industry.
October 22, 2013 at 4:17 pm
jack says:
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Ron you have established yourself as an idiot with the last statement. YOU get what YOU pay for. YOU are not ENTITLED to something YOU didn’t pay for because you shop at Wally world.
October 22, 2013 at 4:26 pm
Ron says:
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Jack,
If you purchase a automobile liabilty policy, you are entitled to a defense, in addition to your liability limits, in the event the insured is liable in an accident. If claims wants to work around that promise to save the company money, they are the idiots who are giving our industry a bad name.
On a separate note, I am still waiting for the sources where you stated,“I saw a stat that said 75% of the people in NC that went to sign up ended up being told they qualified for medicaid.” and “I see NY has a $1.3 Bil deficit this year.”
You complain that I use older data, but at least I provide the source of my information.
October 22, 2013 at 6:27 pm
Agent says:
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Ron, agents don’t write checks for policy limits. Claims adjustors do that. Yes, they do send letters out about the claims settlement. They might not word it like you are on your own for the remainder. They will just say they paid policy limits on the claim. The customer can figure out how short they are and the attorney on the other side will tell them about the suit papers. The way to cure the minimum limit problem is for the agent not to write minimum limits. Sometimes an insured will have a claim so bad, high limits are not adequate. That is why we try to write Umbrellas as much as we can, particularly with the more well to do clients. How many Umbrellas did you write with GEICO in your 4 year tenure?
October 23, 2013 at 8:20 am
Ron says:
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Agent,
Please tell me what I wrote that gave you the impression that I was implying that agents write checks for policy limits? Pay attention.
If one of your clients receives a letter that the company has paid the policy limits in a serious accident and will not represent the insured in a lawsuit? Did you tell them that part of liability coverage is a legal defense in the event of a lawsuit when they purchased the policy? Do you fight the claims department? Does it bother you, as the insured’s agent, that a company would do this?
I am glad agents have this belief that everything can be solved by buying more insurance even if it takes cutting out other expenses. Did you ever consider that many people cannot purchase higher limits and umbrella policices because they would rather eat, pay their rent or mortgage, buy their child a birthday present. Believe it or not, many, many people have to make these choices every day and I am not taliking about people on welfare.
The fact that you will send people down the street because they cannot afford the covergae you want to sell is disgraceful. I understandf the possible E&O exposure, but isn’t that why you have the coverage? Maybe you need to just purchase more E&O.
As I said, I did not work in sales at GEICO, but I did refer at least 10 people a day to our umbrella sales unit. I do not know how many of those referrals resulted in policies written.
October 23, 2013 at 10:03 am
Reputable Insurance says:
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Ron, it’s clear by your comments that you honestly have no idea how insurance works….and it makes sense that you work for GEICO.
Let’s say, heaven forbid, that one of your insured’s hits you and is at fault in an accident. Your spouse is killed or maimed, and GEICO pays you $25,000. Would that satisfy you in this scenario? Would you be pleased with how well, your sales department educated the customer at what they had to lose in the event of a catastrophic accident?
Going from 25/50/25 to 250/500/100 would probably increase your premium $10.00 a month on a standard rate.
Is it really worth $10.00 a month for 10x the coverage? Look at your $25,000 check and get back to me.
Seriously….GEICO’s business practices are horrible for the industry.
October 23, 2013 at 11:36 am
Ron says:
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Reputable Insurance,
I know plenty about how insurance is supposed to work. I have been in the industry 12 years and have worked for captive and independent agents, a direct writer as an underwriter, a regional carrier as a staff underwriter and currently a wholesale broker. In addition I have earned my CPCU.
It is clear that you do not understand my position. I have a HUGE problem with any company who will base their decision on whether or not to defend their insured in a lawsuit solely on the limits the insured selected. This is why our industry has such a negative perception.
Some people could afford higher limits and just have the attitude, “I am a safe driver and it will not happen to me.” However, I believe many people have low or minimum limits because they honestly cannot afford to purchase higher limits. Should those people have to foot the bill for their legal defense when they were promised legal representation in the event of a covered loss?
For many people, that $10 equals a couple of dinners for their family a month. Should they forgoe those just to increase their limits? You are so good at spending other people’s money.
It is so easy to judge others without sufficient information. I can only dream of being omniscient as you.
Of course I would not be satisfied with a $25,000 check. That is why I purchase enough AD&D and Life Insurance for my family and me. Anyone who relies on getting money from somewhere else in the event of an accident is irresponsible in my opinion. It is called personal responsibility.
Do you think the government should increase minimum limits to 250/500/100? That would solve the problem, right?
October 23, 2013 at 11:40 am
Reputable Insurance says:
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All I can say to this is…wow. You are so blind, its not even funny.
I’m truly embarrassed for you.
October 23, 2013 at 12:20 pm
Ron says:
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Reputable Insurance,
All I can say is, why did you not answer any of my questions?
You should be embarassed to use the name “Reputable Insurance” if you believe it is ethical to pay just out limits and not defend an insured when faced with a lawsuit.
October 24, 2013 at 10:15 am
Agent says:
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Ron, you said “Where did you get the idea that agents write a check for minimum or low liability limits and then tell the insured they are on their own when presented with a $1million lawsuit? Perhaps it was in your answer to Jack. Your mouth got ahead of your brain as usual. For someone who brags about their education, you are remarkable for your naivety about how insurance business is conducted. By the way, it is not disgraceful to send someone down the street if they insist on having minimum limits. I do everything I can to convince them to buy higher limits for their protection and point out there is not much difference in the premium to have proper limits. I give them a few scare stories drawn from experience and they usually come around, but the ones that insist on the lowest coverage for the cheapest price are customers I don’t want because they will leave for a dollar on the next renewal. I would just as soon have GEICO or Farmer’s write them. That is called being a good agent and using good business practices which is a concept you certainly don’t understand.
October 25, 2013 at 12:08 pm
KentU says:
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Ron, from you comments it looks like you didn’t learn much about being an insurance professional in your four years at GEICO. You obviously don’t have a clue what attorneys are doing with E&O exposure in the insurance industry.
October 23, 2013 at 12:16 pm
jw says:
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Actually, Jack, in KY the insurer is mandated by law to provide a defense in addition to the limits of liability.
They have insurance in KY? Look, it comes down to this: GEICO pushes a premium number, the proposed insured accepts the number. By accepting the number, the customer is essentially becoming his own “agent”. I live in Fairifeld County, CT. I call GEICO, and then tell them I own a home. They reactive clerk on the telephone reads from the script that they recommend limits of $100,000/$300,000/$50,000. I tell the clerk that the market value of my home is $800,000. I am again told they recommend limits of 100/300/50. No mention of an umbrella. First, they do not want to sell higher limits, they are probably told not to offer higher limits. And, fif you are going to need higher limits, you better know so, and you better ask for them yourself, because they are NOT going to let you in on the fact that you NEED higher limits.
October 23, 2013 at 2:01 pm
jw says:
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paul, I was just commenting on the defense in addition to the limit of liability. That cost, by the way, has no limit.
I wasn’t disputing that GEICO sells minimum coverage. For that matter, GEICO isn’t alone. Safe Auto and a couple other companies also only quote minimum limits. I happen to agree that people should buy the coverage they need, not just the minimum.
October 24, 2013 at 8:35 am
jack says:
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jw- it’s that way in most states. When I say up to the limits of the policy I mean if you kill someone in a car accid and you have $25k limits you better retain a 2nd attorney yourself and most carriers will tell you to do so. Why you might say? Because of people like Ron. You see after the verdict comes back for lets say $1mil and the def atty did everything possible for you, Ron’s then going to sue you saying the def atty didn’t do a good enough job and its the companies fault he now owes $975,000 to dead person estate. It’s called CYA.
October 24, 2013 at 9:27 am
Ron says:
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Jack,
That may or may not be true. I would only sue if I believed the company hired a defense attorney to represent me that they knew or should have known was incompetent. I will definitely sue for bad faith if the company promised me a defense when I purchased a policy, then renegged to save money. Please explain how that CYA is working for the company?
BTW, I am still waiting for the sources where you stated,“I saw a stat that said 75% of the people in NC that went to sign up ended up being told they qualified for medicaid.” and “I see NY has a $1.3 Bil deficit this year.”
October 24, 2013 at 9:59 am
Insurance Expert says:
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Ron…are you that thick?
The company is on the line for the policy amount. There is no company out there that will defend you beyond what their contract with you states…and that contract is the policy limit.
Is it any surprise that most of your comments here are hidden? You clearly have no idea how insurance works, 12 years ‘experience’ or not.
October 24, 2013 at 10:17 am
Ron says:
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Insurance Expert,
So, if I have 250/500/100 plus a $1 million umbrella, and I get sued for $2 million, my insurance company will not defend me in a lawsuit?
How can anyone ever have enough insurance?
October 24, 2013 at 12:42 pm
Insurance Expert says:
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They will defend you up to the 1.25 mil or 1.5 mil, depending on the accident. That’s all they are on the hook for! That’s basic insurance 101…and now I am seriously doubting you have passed one exam of the CPCU if you don’t understand that….
Average death settlement is $1.3 mil. It’s not that far fetched. Besides, if I have 250/500 plus a million $ umbrella, the judge or jury is not going to throw the book at me, since the family has already received over a million in compensation as it is….had I gone to your company and got the 25/50 it sells, then yeah, I’m in a world of hurt.
Basic insurance, Ron.
October 22, 2013 at 3:05 pm
Insurance Expert says:
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Actually Jack, Geico does not cover legal defense. GEICO is a travesty in the insurance world. Focusing everyone on price as opposed to coverage. There are far too many GEICO insureds that are so underinsured it is scary. Call them up for a quote, and they will quote you state minimums, no questions asked, and insurance ignorant people think they have a great deal. It’s almost criminal.
Imagine getting hit by someone who has state minimums? GEICO should be ashamed of themselves.
Ron, do you realize that if an insurance carrier is given the opportunity to settle a claim within the limits of the policy but, refuses to do so then, the court can hold the carrier liable to pay the full judgement even though it may exceed the limits of insurance on the policy. This is why carriers must settle at policy limits in many cases rather than carry on an expensive defense. The consumer didn’t pay for the legal defense it needs. It is the responsibility of an insurance professional to bring this to a consumer’s attention. It is the responsibility of the consumer to chose appropriate limits of insurance. It is irresponsible for an insurance carrier’s representative not to write limits of insurance that adequately protect the consumer.
One more comment for Ron! My postman’s wife came by today to pay their auto insurance. It reminded me of a bad accident he got into about 15 years ago when he was insured with GEICO at state minimums. I quote them 100/300/100 but, they were convinced by the GEICO guy over the phone that state minimums were OK and they would save a little money on their premium. Later that year when Steve (the postman) got into a bad accident the damages exceeded the state minimums of their GEICO policy by more than $14,000. Both Steve and his wife will tell you that the $210 a month they paid into the court each month on the judgement took a lot more food off their table than the couple of dollars each month for the auto policy which I quoted.
Jack, we have all heard about the Reservation of Rights letter sent out to insured except for the uninformed Ron. That letter is not a good thing to get when a serious accident happens. They will settle for policy limits and go their merry way and the insured has to take bankruptcy because he has inadequate limits. Minimum limits only work if an insured never has a serious at fault accident. I have never seen a GEICO Umbrella that goes over their Auto policy either.
Agent, KentU & Insurance Expert: When a claim is “settled” it is settled. That means the claimant accepted the settlement that the insurer offered ON BEHALF of their client.
It’s only when a case goes to trial and a JUDGEMENT is rendered that exceeds policy limits that the insured is financially exposed.
As for defense on an auto policy, I think it is a standard clause in both the PAP and BAP and would be shocked if someone can direct me to an auto policy that does not include defense.
There’s your lesson on Insurance 101. Thanks, Class.
should carry at least 100/300; they must not be training their phone reps (also, losing revenue that practice). one of my insureds sqwitched to usaa and the rep asked him why he had so much bi protection – i think he had 100/300 or maybe even 250/500. He had money in stocks etc. and insisted the quote was at least what he had with me
most companies match um/uim to 100/300 or more — who doesn’t want cash if they are seriously injured or killed (estate) by someone at fault
Be careful when you say “most” companies match U/M limits to the liability limits. I have seen numerous policies from other carriers with Allstate & Farmers being the worst examples of minimum limits U/M. It comes down to what the agent, either captive or Independent request or in GEICO direct when the non licensed phone person puts in the system to low ball a quote. The customer doesn’t know what they are doing, just wants the lowest quote possible.
Agent, I have been a Farmers agent for over 32 years and tell you that they strongly push their agents to match UM with liability limits. My staff always quotes matching liability and UM limits but, some customers insist on matching what they had with their prior carrier. We get the customer to sign off of the quote for E&O purposes.
GEICO underwrite their policies after issue. They base their rates on what the information the consumer provides. Issue of policies without underwriting at the start is illegal in our state for agents. Throw enough on the wall and some is bound to stick
The only customers we can’t beat Geico on is bad drivers. Sad to say Jack is 100% correct Geico employees tend to sell state minimums. Now how do you sue a huge direct writer for poor advice when your limits of liability are lacking? Our clients love us and our excellent service, price shoppers love Geico until they compare apples to apples with a good independent agency.
To say that “Progressive has agents that do not deliver” is ridiculous. They have a direct writing division which delivers lower rates than their independent agency division putting us on an unlevel playing field. Just like several of our other “Preferred” carriers who sell their HO products through GEICO’s independent agency. Put us all on a level field and see who comes out first!! Knowledge is power!
You are right Maureen. I have had Progressive Marketing Reps tell me there is no difference in the premium charge between the Direct and Agency quotes. We have tested that statement and found it wanting. The Direct quote was always less because they didn’t have to pay a commission on the business. I have them, but they are only used when my other standards can’t compete or don’t want the business. Progressive will write most anything for a price. When violations, accidents disappear, they can be competitive. I don’t particularly like them, but they are a necessary evil. On GEICO, they have a “special” relationship with Travelers to do HO. Travelers tells us not to submit HO without Auto or we will take a reduced commission and yet GEICO probably gets some kind of remuneration for sending business there way. Unbelivable what goes on in today’s insurance world.
True that Progressive Direct is less but that is because the 1st time around the get $50 credit for getting it However I have been a Progressive Independent agent for many years and I have found that I have been able to capture Direct clients even if we were a tad higher just for the service alone. I also have been able to beat Progressive Direct rates with Progressive rates with in our agency By talking and listening to the clients needs and finding out that some of the discounts available were not offered from direct. But then again I run my office 24/7 And clients would rather call the agent then an 800 number
Good for you Brenda. It has been just the opposite with us on the difference between Direct and Agency quotes and we do ask all the relevant questions to try to get the best rate possible. By the way, when do you sleep? If you are open 24/7, do you wake up and answer a beep on your computer to quote insurance? You must be tired all the time.
In rare territories, agency rates are lower than direct. We’re fortunate enough to be in one of those areas. Sometimes the loss ratio is much higher on the direct side…
The direct rates suck for the most part. The rates are set to capture new customers, but creep up. The IA book is more stable and the retention is much better. Over time, the IA rates are more competitive than the direct rate.
Most of you are not aware that back in the 60’s Geico also known as Government Employees Insurance Company was bankrupt but the various insurance companies around the country were trying to figure out how to manage the bankrupcy because of seperate state laws and several other insuance companies stepped in to provide financing to help them get out of bankruptcy. Why because they were concerned about certain federal laws at the time.
October 24, 2013 at 9:56 am
Charley says:
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sorry meant “State Insurance Departments” around the country
October 22, 2013 at 2:07 pm
Cheetoh Mulligan says:
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State Farm, AllState and Progressive all have agents. GEICO gets business because people can mess with the coverage levels online and get a lower price, but get no advice. Or they can call in and the csr can suggest coverage reductions to get a better price. Professional agents give good coverage advice first. FU to the authors for a biased article.
Not sure how much of the article is biased. The facts are that Geico has increased market share with lower expenses and aggressive advertising. I hate to see it, but if their goal is growing policy counts then I guess you could argue they are a success. While IA’s can and do offer more choices and consultative services, evidently many consumers don’t find this too valuable.
It’s not the Geico results that surprise me in this article as much as it is Progressive’s poor performance. Progressive has built two mouse traps, the agent & direct channel, and you would think they would or could dominate overall market share with this combined effort. If I were Progressive Sr. Management I would have to ask, “where have we failed”.
We’re still talking about a carrier that can’t touch a carrier that almost exclusively uses agents. Progressive needs to examine their market position that’s for sure, but it’s nothing to sneeze at.
Progressive is a joke. I can’t tell you how many times I provided a quote through my IA platform just to have that same client turn around and get a cheaper rate-with Progressive Direct!
In this and any market everything is a matter of price. GEICO sells cheaper, then will be the # one selling. In the auto insurance market does no sell quality but price. If all insurance companies have a similar price all sell the same, there is no reason to be mad at this.
Geico’s success is admirable in many ways, but it is also duplicatable, and most of the big companies are incorporating new distribution/sales channels into thei sales/marketing matrix. Everyone has to adapt to the changes made available by changing technology and consumer preference.
Progressive’s loss ratio and persistency is better through their direct agents is a fact. Agents don’t write a policy at 3 in the morning after the guy had a single car accident drunk.
GEICO’s success is not due to not paying commissions, it is due to the ineptitude of the other carriers. The companies have let Lexus Nexus and Deloitte sell them software to underwrite rather than use humans.
I write policies at 3 am in the morning I personally run my office 24/7 I have had many happy Progressive clients when it comes to claim also My best client had a claim at 5 in the morning and totaled her car and by 8 am the next morning . I have had that call also of the drunk who just got into an accident and wanted it covered But as a hard working agent I made sure that there was no coverage for that accident. It is all about service in our small community and even though that green critter is cute he isn’t putting a dent in my business. Many would rather have someone local.
Bottom line is, if GEICO thinks “Humpday” commercials are effective….then they are sadly mistaken. GEICO sells based on price only, which is an ethical issue in this business. Sure, you save them money, but once they kill someone in an accident, they wash their hands after paying only $25,000…while the insured is on the hook for the other $1,000,000.
People who buy insurance on price only are sadly ignorant, and GEICO feeds on the ignorant.
So in your example what BI limits would be best? How about $250k. Then the insured is on the hook for the other $750k that they don’t have. Why would Geico be “sadly mistaken” by thinking their Humpday commericials are effective. If their strategy is to put policyholders on the books and make money then there is nothing to be mistaken. They’re doing it. And your stategy, being an Insurance Expert, is to satsify another niche. That’s not a new business strategy. Many industries have their low cost providers that cater to the masses. Look at what the legal industry is going through. It’s just our turn.
Their commercials aren’t even talking about insurance anymore!
A good agent would be selling umbrella policies to every client that walks through the door. GEICO is simply peddling policies.
Low cost providers are just feeding ignorance, and it puts the rest of us (all people, not just insurance people) at risk….I do not want to be hit by an uninformed GEICO insured who thinks they are covered if they have an accident.
Expert, We are living in a dumbed down society and that is a big issue. A low information customer will easily fall for a line. Look at who they voted for in the past 2 Presidential elections.
many people don’t want automobile insurance at all and only buy it because it is mandatory. Many can’t afford to buy it and want the lowest price for the mandatory coverage. The market share of people wanting higher limits (price) is dwindling. Geico is providing the product that a large market share of people want – just like Walmart low price is everything. It’s just the way it is – no agents needed.
Ignorant is a strong word. I have no problem with someone buying the state statutory limits if that’s all they can afford. My insurance purchase is based on my needs and my UM limit is based on the assumption that the person that hits me has no insurance at all. If they have insurance it’s a bonus. It wouldn’t matter if the state’s BI requirements were $1mm for all drivers. Why would I jeopardize my own health and financial safety over the hope that the other driver is complying with the law. I can’t.
As much as I dislike it, Geico’s weaseled their way into the American psyche with low rates and they are not going away.
I assume SWFL means Southwest Florida. Our state doesn’t even require statutory BI limits! And until the PIP reform, we had the largest insurance fraud and pill-mill distributors in the country because of pain clinics via sit and squat accidents. Florida should require a minimum BI limit like every other state and do away with no-fault altogether. IMMHO.
Someone please tell me how every one of the big companies can promise up to $500 savings on Auto Insurance. Talk about false advertising. Flo tells people to pick their own price. Hello!
Are you saying the customer is ignorant? Then, yes, I agree. They should purchase the coverage they need, not just the minimum to get by. The problem is, the consumer/insured doesn’t have the money to buy what they need; therefore, they go for the cheapest product possible and pray they don’t need it.
Yeah, and they don’t have the money to buy that IPhone, IPad, Cable TV, Dish Antenna,etc., then cry poor when it comes to auto insurance to cover their Lexus.
Fine, the insured goes for the cheapest possible policy (for whatever stupid reason they have) and the rest of us carry UM/UIM.
October 25, 2013 at 10:09 am
Agent says:
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You mean the Lexus with the thousand dollar rims? Insurance is just a necessary evil with a lot of these people and I prefer to write a better informed customer with real assets to protect.
October 28, 2013 at 6:18 pm
Mackenzie says:
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I have to agree. As an agent I feel like it’s my duty to provide the best possible policy. Honestly, 9 out of 10 times, stepping up your BI limits is less than a pizza a month. There’s a difference between not wanting to afford it and truly not being able to afford it. That’s why a personal touch should be put on every policy. There should be conversation about what you’re really protecting.
October 22, 2013 at 3:53 pm
jack says:
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And thats the client I as an indep agent kick to the curb. You want min lim, call the lizzard. Let the lizzard explain how when you get in that really bad not at fault accid and the other veh has state min limits and you come back to your own policy for underinsurance and not have it because you were shopping at Walmart. Good luck when you file BK. Recover from that one, you will be shopping at wally world the rest of your life with your EBT card.
I completely agree, and did that in my practice. I would tell customers that I cannot in good conscience offer them minimum coverage.
Geico and Progressive are killing the industry…Progressive with their name your own price nonsense (Tell me, do YOU want to get hit by someone who named their price??) and geico with offering minimum coverage without even asking the insured what they want. Don’t believe it? Call them and they will give you 25/50/25 with 1000 deductibles, no questions asked.
There are good, mediocore, and poor agents around. I once reviewed my 85 year old grandmother’s policy and found wage replacement on the PIP and physical damage on her 20 year old car. Her agent did a great job earning commission on coverage she could never use. Good agents do the review themselves and earn their commission and keep their customers.
Milner, for every Independent Agent you say work this way, there are 10 Captives like Allstate & Farmers who do much worse. Independents as a whole do a very good job of explaining coverage options, ask about deleting physical damage from older vehicles etc. They also write insurance to value on homes as well. You can’t believe how many homes I see from Farmers and Allstate that are inadequately valued for Replacement Cost and have plain vanilla coverage in order to sell a price.
Libby, leave it to you to jump in and criticize. I was making a comparison between Independents and Captives. Independents are much better working with clients than a sorry captive like I see all the time. I do agree with you that Milner’s grandmother was probably had a captive agent not interested in doing a good job for her. They tend to automatically renew with little or no review.
Grandma had an independent agent with a fine regional company. Being independent doesn’t make one good or bad.
October 25, 2013 at 10:13 am
Agent says:
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Milner, I guess you didn’t read my post and understand. I said Independents as a whole do a better job of explaining coverage and offering options. If your Grandmother was with an Independent and didn’t get the right advice or service, she was with the wrong agent. Captives are far worse on the advice and service. I have run up against many of them and most are a joke.
October 22, 2013 at 6:47 pm
Tim says:
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Yes they dont write to value or explain very well. Advertising needs to reach the millions not the hundreds. BIG I needs to rethink its approach to Independent agents or we want exisit in 20 to 25 years. We need to take charge. I speak about progressive all the time and most independent agents say the are a necessary evil BS they are your competitor not your friend. They say if i dont write it the agent down the street will BS. Tell Progressive, GEICO to write homeowners lets see how the auto works then. Tell Travelers to stick with GEICO, and Progressive for all their Homeowners customers. Quit feeding the fox with your stock. It’s really simple. They know we cant get along, want get along, so they use us aginst our selves. Really are we businessmen and women or just in business?
The difference between the Geico customers and my customers is…. Geico can’t entertain my type of customers. Once a customer is educated about insurance, the agent becomes beneficial in what they do. People look for price, but yet they grab all the extras in everything else. Your oncologist does not want to hear your opinion on treating cancer, and I don’t want to hear my customers opinion on their coverage. I have good bedside manner, but I will treat you with expertise. You won’t get this from a Geico representative making a few bucks an hour. The good customers have agents, and it is up to the agent to make a bad customer a good one.
I have not seen the marketing report but the base analysis / conclusion appears to be missing review of recognition based on value. Did the consultant study consumers to get a feel for the numbers recognizing each carrier and making a comment on their view as to if they are low cost or value based or both?
Here in CA we are overloaded with ads for all these carriers as well as that GEICO is advertising they have local agents. How are they perceived compared to their rate adequacy should be the primary question before going after expense dollars reallocation.
I have only read this article, not the consultant’s report, but with only a base glance it appears the carriers might be interested in a different view than they are receiving.
Can’t afford their insurance? If they can’t afford good coverage, then hey need to down size the price on their car…. No! that would be unheard of. They can afford their insurance, it is all the commercials that give them subliminal messages that they can’t. Watch the customer run around and buy every thing from starbucks to the newest cell phone, but they can’t afford their insurance…. Hog wash. If you believe this then you are just as guilty as Geico when taking care of your customers.
Here we go again. Another doomsday prediction for the independent agent by someone who has probably never sold an insurance policy in their life or didn’t learn from their experience. Granted GEICO has been impressive and they should see results from their saturation advertising. And price is number one…when it comes to driving traffic to your website or phone. After all, would anybody respond if they said they had low prices some of the time? Of course not. In fact, I believe that GEICO says, “Spend 15 minutes to save 15%”. A 15% savings from what a customer is paying now still may not be the cheapest price for that particular customer. But it’s the perception in the messaging that makes people contact and buy from GEICO and they have been good at conveying it. Truth is GEICO would have to be the lowest price for every GEICO inquiry to make this article valid. But we all know GEICO, as well as every other carrier, isn’t the lowest price all the time. Also, how many customers buy from GEICO because after they go through the lengthy online questionnaire, they decide to buy because the price is close enough and they don’t want to start all over again with a lengthy online questionnaire with someone else? That is something that cannot be measured but I’m sure plays a part over all. Let’s not forget that car insurance is also a “grudge buy” and people are happy to be done with it after a half hearted attempt to find the lowest price. The lesson learned here is the power of advertising and you simply have to spend a buck to make a buck. The real problem is that independent agents are unable or unwilling to commit to any meaningful advertising expense due to the lack of resources or fear of failure. Most will buy a cheap yellow page ad that doesn’t work or have a Facebook page posted with recipes or the “10 Things You Need to Prepare For an Earthquake”. Unfortunately, that isn’t enough to grab any attention or interest. Kudos to GEICO for their ability to buy market share with over a billion dollars a year in advertising. It is certainly not the panacea for all auto insurance selling. They just happen to have the deep Warren Buffet pockets.
I beg to differ with some of the statements in the article. What do they mean agents don’t deliver? Guess they have never shopped our office I am taking Geico clients Daily AND I run my office 24/7 My clients don’t have to call an 800 # and get a stranger. I also have had clients that thought they had coverage and didn’t that they had purchased through them Also have they read the recent article in insurancejournal.com about how people are fed up with online only and are leaving it to come to a local agent who they can put a face and a name to.
As agents you can work your butts off writing minimum limits policies – something that many agents chase when they are just getting started in the business – survival mode. Successful agents soon realize the value of an agent is as an insurance advisor. Customers that look for agents that can skillfully weave auto, home, umbrella, life, health, disability and financial planning into efficient risk management programs are priceless – as are the competent agents who fit this description. Those agents who place the blame for lack of success on GEICO should go to work for them answering the phone for $15 bucks an hour.
You are right Bob. When I have one of those minimum limits prospects who are price shopping, if I can’t make them see the light of day in 5 minutes, I send them down the street. I don’t want the E&O exposure because I promise you that they will say that you didn’t recommend higher limits after they have had a serious accident and the coverage was inadequate. We also make them sign off if they buy limits lower than recommended. We never, ever sell minimum limits Auto.
It apparently is to the low information people who flock there every day of the week. We like to sell to the more informed, higher credit score people with serious assets to protect with their nice cars, nice homes, boats, RV’s, Umbrella needs etc. They make nice customers and they stay with us. A wise agent once told me when I first got into this field that if you sell by price, you will lose by price. A lot of these price shoppers, particularly the iphone crowd will leave in a heartbeat if they get an online quote for a few dollars less. No loyalty whatsoever. I say good riddance and grow up.
October 22, 2013 at 6:40 pm
Tim says:
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Seriously STOP the bitching about GEICO. They spend a BILLION PLUS DOLLARS A Year on advertising. Independent Agents need a organization that allows us to pool our advertising dollars together a squash the little green squirt, that want happen because Independent Agents dont get it then, now or in the future. It’s our fault not the little lizaed. We get Co-OP monies from carriers who tell us how to spend it, and most dont take advantage of it anyway. Really it’s simple the BIG I isnt so BIG.
We have 38,500 (per Insurance Journal) independent agencies in the US. If PIA and the Big I played nice together we’d have plenty of power to make an impact especially when combined with our carriers.
GEICO and Progressive will hit a wall due to the type of client they go after-younger/less wealthy/forced to buy insurance rather than want to protect assets.
The carrier independent agents should worry about is USAA-great products on Home and Auto, an educated internal sales force and great cross sell into consumer banking and loans for both car and home.
They are quitely expanding out of service members into relatives of service members.
I have USAA as I’m an ex officer and could buy my insurance from the company I work for at a hefty discount, but they can’t beat USAA for really impressive claims service-not just fast but they have overpaid several 1st party claims I’ve had in several instances by as much as 10 or 15%. Never seen anything like it.
And they are cheaper than most IA carriers as well. Great company.
I see them send their long time clients here on the coast of SC crazy high renewal on homeowners ins. They are bending them over and giving it to them twice. If you have homeowners with USSR on the coast they are laughing at you in home office! Their commercial about helping our service people makes me sick! They rape them here in SC!
No Doubt, I don’t know what state you are in, but in Texas USAA’s home rates are about double the IA carrier’s rates. The auto is in line with market rates, but no better than what everyone else can offer. As far them expanding their offering to friends, relatives, 5th cousins twice removed, this will actually lead to even more uncompetitive rates. When USAA only offered policies to officers,(which by the way, is redlining) they had a market niche with low claims. Not so much anymore. I have been an agent for 15 years and have experienced many claims through many different carriers. I have never seen a claim not paid that was covered by the policy. Nothing against USAA. They train their hourly call center employees to be nice on the phone. But their product and rate is no different that what is offered by hundreds of other companies. Like State Farm, USAA has done an effective smoke and mirrors marketing job of convincing their clients that they have something that is not offered anywhere else as far as product. Marketing at it’s best.
As an Army brat, I have been insured with USAA since I bought my first car at age 19. They have been insuring military family members for over 30 years. This is nothing new.
And if you have not experienced their service, you don’t know what you’re talking about. It’s superb. Fast, efficient, and tailored to the military’s needs.
My mother had a rear-ender when some creep stopped suddenly in front of her in a scam. USAA investigated, denied liability, and didn’t pay a dime. Let’s see some of the standard IA carriers do that. They say, rearender? You’re at fault and pay.
I am a USAA policyholder as well. They are excellent but haven’t cornered the market on fast & efficient. Amica and some others can provide the same level of service. Also, not the lowest or highest on rate. Their real value, at least for me, is rate stability which is something IA companies cannot seem to master. Look at what Travelers has done to PL rates this year (in Florida). Or try to add a teen driver to a Safeco or PGR policy.
USSA is a receipicle insurance company just like Erie and farmers. There is a certain claim culture with a receipicle carrier that I won’t allow in my office. They have their place but not my office. Rear ending someone and having no fault sounds like some information is missing but again it is part of the culture to deny and make you prove it.
That’s not true, Charley. These people were in a ring of scammers that rode around town looking for elderly drivers to cut in front of and slam on the brakes for a rear-ender because people like you say “Rear ending someone and having no fault sounds like some information is missing” and pay.
I have been an IA for 34 years, but USAA is my carrier. They cater to the needs of military families in a way IA carriers can’t. If you move your household furnishings, you have coverage under your homeowners. Will any of your carriers provide that coverage?
They are an excellent carrier, but unless you are military you would not be able to experience their service – so should therefore not comment.
October 25, 2013 at 7:59 am
lonestar says:
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Libby, again, nothing against USAA. And if you are convinced that is the best place for you, regardless of price, then that is where you should be, period. Price should never be an issue for you. I have written several customers away from USAA over the past 15 years to another company. Many of these clients had claims with USAA, and also had claims experience with the company I moved them too. I have yet to have a client complain about their non-USAA claim service, and go back to USAA. Just sayin’…
lonestar – I understand what you are saying. I’m not dissing IA carriers, I am an IA for crying outloud. I’m just saying, in my experience, USAA provides outstanding service and understands the needs of it’s clients. Period.
October 23, 2013 at 3:33 pm
SWFL Agent says:
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I wonder how USAA over pays claims and still has less expensive rates?
You bring up a good point SWFL: All the insurance companies have very similar loss ratios. Similar rate of returns. Insurance is a business. When I hear of claims that a particular company has the lowest rates and overpays on claims, I have to wonder which South American country the declarer of such information obtained their “left-handed” cigarette from?
I agree with you on GEICO & Progressive. I’m still deciding on USAA but, agree their auto & home products are good and so is their claims service. I quote a lot against USAA with members of my American Legion and VFW posts plus my P&C customer base. Sometimes USAA is less than Farmers and sometimes they are not. A substantial number of retired military vets I know are not happy with USAA for now letting all veterans apply. They are concerned that it will deteriorate the risk base and make rates higher in a couple of years. Allowing all veterans to apply to USAA has also damaged a loyalty that many retired vets had with USAA – now they will shop around and before they would not.
I agree USAA has many great things about them and the rates usually are untouchable except the homes they are VERY high in rates I have many clients that I have twice the coverage that USAA gave them and half the rate but could not touch the autos. I send many clients away to them telling them that the rates they have are good and the carrier appears to be good I called for a client here in my office and helped them even sell to my client an auto policy as I sat here and completed the home for them. After a year with USAA they left them and wanted to keep everything in my agency even if I was not the Best Price But USAA is a good Carrier
USAA is not into bundling like most other standards. I have a client who is loyal to them because of the military connection, but he won’t let them write his home for a good reason. They are terrible on homes. I quoted both lines to him with companions and he hasn’t moved yet, but he is thinking about it.
If progressive goal is to be #2 then maybe they should imitate the lizard.
But they should not close their eyes to the fact that the #1 writer by far, focus on and advertise supporting agents. And pays a commission to an agent on every personal policy to insurer personal service. This will always be a #1 strategy.
Geico’s rates are no more competitive than any other carriers’ rates, on any given day. I have not had a problem beating their rates with any one of my carriers, a majority of the time. When I run into the occaisional Geico policy that does have a great rate, it seems that the customer profile is substandard, in the way of activity or credit issues. The clean stuff is going to preferred carriers, such as Safeco, MetLife, Encompass, Kemper, etc. It is just that the IA channel is not able to advertise as much, and therefore get looked at as often as Geico. I have seen no correlation between rate competitiveness and product being delivered via an agent or a call center. Call centers cost money to run too(buildings, employees and employee benefits, turnover, etc.) but the article does not point this out. People call Geico and get a quote, but the majority of the customers are not getting quotes from several other companies, and are therefore not getting the best rate a majority of the time when they go with Geico.
This piece comes to a lot of conclusions without any bases in fact to back them up. First, what is GEICO’s tue acquisition costs? We know that Progressive has a flat 10% new, 8% renewal commission that they pay their agents. If they paid just 2% more, they would get a whole lot more support. GEICO spends a billion dollars a year and then hires reactive, unknowledgeable clerks to malpractice, and that does a disservice to the community. What this article also fails to bring to light is that GEICO has been opnening agency offices, which flies in the face of this article’s entire premise. Finally, McDonald’s sells more volume of food than does Ruth’s Chris Steak House. You get what you pay for still holds true. You’re not taking your bride to McDonald’s for your Anniversary dinner, but unwitting insurance buyers purchase fast-food insurance through that drive-through window insurance company known as GEICO. Big difference? GEICO, by making the consumer choose the coverage limit hence the rate is the same as the cook at McDonald’s handing the customer the spatula and making them cook their own hamburger.
McDonald’s may be #1 in overall sales, but according to an article on MSN.com they are #2 in average per-store sales. KFC and Taco Bell weren’t even in the top 10 in per-store sales. Big doesn’t necessarily mean most profitable.
Paul, I believe the article gave enough information to assume that Geico’s acquisition costs are lower than PGR’s. In fact it’s pretty widely known their that cost structure is lower, including LAE. They can’t charge lower rates with higher costs unless they’re not making money. Which we know is not the case. Yes, they do have some local offices but I’d be willing to bet this strategy will not become widespread.
State Farm has expanded into Financial Services and even car loans. They have been neglecting their core P&C for quite a while and it shows in their recent results. They are currently making their customers mad in Texas by applying a 2% deductible for Wind & Hail on HO. We really like seeing these former loyal customers who are mad as H – – – and not going to take it anymore.
I’m surprised you’re just now seeing a % deductible on wind. We (KY) have had that for a couple of years now. It’s actually rare for a company to offer a flat deductible on roofs here. For that matter, most are trying to go to ACV.
jw, we haven’t seen lower than 1% deductible for many years in Texas, however, State Farm is upping the deductible and hoping the others follow them. Kemper tried the 1 1/2% deductible, started getting blow back from agents and customers started leaving and now they have decided to give the customer an option of keeping the 1% for a charge or converting to the 1 1/2%. They should have done that first with the option, but just decided to renew that way and hoping people would just accept it and move on. It didn’t work out so well for them.
Ho do you know what State Farm’s “results” have been? As a mutual, they do not make their performance info available to the street. I live in CT; everyone is getting a cat deductible in one fashion or another. Big deal. As far as GEICO’s acquistion costs; I think they use differing accounting methodologies when determining expense ratios than do a carrier with a real sales force. GEICO has a higher rate of misrepresentation, they have a higher rate of fraud, they have a lower retention, and what are their REAL acquisition costs when you factor in the attrition of employees and constant training of new ones, as well the the over a billion dollar advertising budget? The final factor is you get what you pay for – depreciated paint, used and aftermarket parts, a claim location the customer must drive to, often settling on a damage reimbursement only to find later that is inadequate to repair the damage, and a litigation department that deprives the general public from being made whole after being injured by a GEICO insured.
I do have my theories on how GEICO grew so fast, besides the usual ad dollars and lower limits strategy.
1) Millenials are discriminated against with higher premium and are carrying heavy student debt. They don’t care for service, they want cheap. GEICO’s ads and ease of business caters to this demographic. 2) GEICO capitalized on P&C carriers’ vulnerable exposure to homeowners. For a long time, home insurance was the bread and butter for carriers. That blew up in everyone’s face and GEICO was able to capitalize on lower auto premiums when others were raising them to recoup losses from homeowner’s. 3) There is the hard reality that baby boomers are retiring. Customers are more frugal. Public Transportation is cheaper. Insurance Companies rating schemes are too complicated and gimmicky. The application for an auto policy is like applying for a mortgage… This list is long.
I think the article leaves out several key pieces of information. It does not account for Geico’s true expense ratio per policy versus true expense ratio for an non call center channel. Even though agent expense was mentioned, it did not mention their other expenses that they occur that agency channel companies do not occur. The bigger picture here, is not that Geico is the cheapest. They are not. Any company’s minimum liability rate will be cheap. Customers are not necessarily choosing Geico because they are the cheapest, but customers are choosing a method to buy without much obvious human interaction. Look around at your friends, their kids, your husbands and wifes: How many times at night do you notice these people on their smart phones or Ipads surving the net? People these days would rather spend 45 minutes on a website or emailing back and forth instead of spending 10 minutes making a phone call to speak to a human being. Just my observation. Geico has not reinvented insurance 101. They are just the first to make it easy for people to interact without talking to a human. Other companies will follow suit.
You make good points about the internet issue and ease of business. That’s a big part of it. Plus it’s just easier to switch these days with instant MVR’s and proof or prior databases. While this article may have fallen short with all the expense details, Geico does in fact have lower expenses than IA companies. And it’s something that IA companies need to address. Unfortunately agent commission always seems to be the first target because it’s such a large line item.
Also, size probably does matter with respect to pricing, data analysis, and segmentation, which means their size could potentially create pricing advantages. That’s a concern.
Agent commissions may be a target but, let me share with you information that was given to a group of us agents that Progressive held several years ago in Arlington, Texas. Their actuaries said that the agent issued policies have a better profit margin than internet sales and 1-800 sales. First, Progressive doesn’t have to lease huge amounts of office space, pay employees with benefits and workers compensation with agent issued policies. It is cheaper for Progressive to ‘subcontract’ underwriting and policy services to agents than do it themselves. The actuary also thinks that insurance fraud is considerably greater with internet and 1-800 sales as people with damaged vehicles (especially those that just now wrecked their cars) will get insurance via the internet and 1-800 rather than go to an agent because the agent will want to look at the car. GEICO probably has these same issues to deal with.
KentU, valid points. Also, retention has to be several points higher with an agent than with a call center. If retention means anything to these companies, that is…
Price shoppers will always leave in a heartbeat to save a dollar. They have 0 loyalty so I prefer to build a relationship of trust with my clients. If they are solicited, they let me see what was quoted to them. I can usually point out the missing coverage and show them why the competitors cost was less. We keep 99+% of them when they realize what was quoted.
October 25, 2013 at 10:23 am
SWFL Agent says:
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KentU, I’m not sure the PGR reps gave you the full picture. Or to give them the benefit of the doubt the picture may be a little clearly now as PGR’s direct results are more mature. Yes it’s true that the sales/acquisition cost for their direct policies is greater than on agency business. The direct policies have front loaded sales/acquisition costs but these costs are greatly reduced, or really non existent, over the life of the policy. The longer it retains, the lower these sales/acquisition cost become on a per policy basis. On the other hand, every time the agency policy renews, PGR pays another 8% to 10% to the agent. With regards to policy processing and servicing cost, these costs are generally less than 4% of total premium and there is not a huge variance between agency and direct. Ask your PGR rep next time to you see him/her about the expenses on direct vs agency. Progressive has different pricing models for agency vs direct in most states and that’s to take advantage of the expense differences.
You make good points and as I said that Progressive meeting was a few years ago. A Progressive marketing representative stops by the office every couple of months. I told the representative that stopped by my office recently (who was a new one) that I had been writting with Progressive for over 34 years and recenting renewed a commercial policy that I placed with them over 20 years ago. I don’t remember the actual numbers but, she stated that policy retention is considerably better with agent written policies. Agent written policies also tend to have higher limits of liability and UM so, Progessive is collecting more premium. These are factors that make it nearly impossible for any analyst to present completely accurate data. Having said this, I recently wrote a new customer whose auto and motorcycles were with Progressive Direct. I placed her with another carrier and got the auto, home, motorcycle, trailer and a life policy in the deal. I was able to beat her Progressive Direct premium by several hundred dollars and with higher limits of liability.
October 31, 2013 at 10:32 am
lonestar says:
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SWFL, I hear from Progressive that their agency written auto business stays on the books about 2.7 time as long as direct written auto. 38 months average time for agency written vs. 14 months direct written.
October 25, 2013 at 9:51 am
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Have you ever had one of these iphone addicts in your office trying to explain coverages and trying to make a sale? I have and they have an attention span of about 30 seconds and they are always checking their social media or someone is texting them. It is very annoying. I think that cell phone is never out of their hand even when they are sleeping. It is worse than drug addiction. These are the very people who are texting while driving and causing accidents.
The point is, GEICO, by being top-of-mind due to their exhorbitent advertising expenditures, is reaching people on a repetive, consistent basis and keeping themselves top-of-mind in the thoughts of consumers. It’s not by their message, but by their shear volume. All GEICO needs is to have some half-whit call them and get a lower price than they’re paying. It doesn’t need to be the cheapest price, just cheaper than their current renewal, and they’ll switch.
It always comes down to the same thing – price vs. value. This is a price conversation and price is where we, as agents, are all guaranteed to lose. There’s a great article in the October 2013 issue of Money Magazine entitled “Plan…Make Sure You’re Fully Covered” (page 23). In short, the article advises consumers to beware of the pitfalls of reduced coverages and lower limits such as liability, uninsured motorist and repairs (ie new parts as opposed to recycled or aftermarket parts). In our agency we stress the importance of $100/$300 coverage (at a minimum), umbrellas and UM/UIM. In California, over 1/3 of drivers on the road carry no insurance so we would be doing our clients a tremendous disservice if we quoted and sold minimums simply to secure a sale. We’re an agency with close to 10,000 PIF which tells me we’re doing something right. I can assure you we didn’t get to where we are today by selling on price. We sell value – something Geico does not.
An agent nor insurance carrier representative should never use the term ‘full coverage’ because it does not exist – except with attorneys that sue agents for E&O when they mistakenly say ‘full coverage’. Judges and juries have decided all too often that using the term ‘full coverage’ means the agent/carrier will pay the full damages regardless of the policy limits. Thats why carriers don’t use the term ‘full coverage’. I remember an agent in my area that advertised full coverage for $XX a month. One of his customers got in a bad accident where the limits of his insurance were not even close to covering the damages – high BI & PD damages. I don’t remember the limits that he wrote on the guy’s policy but, that carrier offered $1M limits on their auto policy and the agent wrote lesser limits. The insured’s attorney sued and won a court judgement for the $1M and the agent’s E&O carrier refused to pay because the agent had not received permission from the carrier to use the term ‘full coverage’ he was a captive agent. Lots of people think it was the stress of this situation that caused the agent to have a fatal heart attack.
I have worked in the insurance industry for 30 plus years, on both the insurer and brokerage sides of the business. I am also a GEICO customer. I switched to GEICO in 1996 for a very simple reason. I needed to insure a one-year-old car and my existing insurer (State Farm) required a physical inspection. I was incapacitated with a back problem at the time and driving to the State Farm location was going to be difficult. GEICO did not require an inspection. The premium was about the same as State Farm’s. I have stuck with GEICO ever since. The company has excellent service and a good, user-friendly website. I do not, nor have I ever had, minimum auto liability limits. I also have a GEICO umbrella policy. I have priced auto and umbrella coverage at other insurers a few times, and they have always been higher than GEICO’s. So why should I switch? I think other insurers could learn a few things from GEICO but it seems they are too busy bath-mouthing the company.
Vehicle inspections are for the customer’s protection. I’ve had several customers that came to me from GEICO with complaints that they were involved in a hit & run accident where more than one side of their vehicle was damaged. The GEICO adjuster said in his opinion that the damage on one side looked older than the other side and some of the damage was probably already there when GEICO first insured the vehicle. As such, he refused to pay for damage to one side of the car. Had those customers allowed the agent to inspect and photo the vehicle when it was added to the policy then, this would not be a problem. I’ve ran into problems with claims adjusters over the same situations and all I had to do is prove the vehicle was not damaged when I first insured it for the adjuster to include all of the damages in one claim. Once again, agent inspections are for the customer’s protection. Rates: I beat GEICO every week when the customer wants responsible limits of insurance.
It’s easy to bash the company because it’s a horrible company. Wait until you have a claim, Geico Customer. You do know having an umbrella with only an auto policy will not extend to your home, right?
State Farm and many other major carriers don’t require a physical inspection for new purchases but, they strongly suggest it to their agents. The physical inspection protects both the carrier and the insured.
The fact that you have worked in the industry a long time helped you since you probably told them what you wanted. I bet they didn’t volunteer to write an Umbrella for you. Almost every GEICO account I have run into are either minimum limits or slightly higher than minimum. They often give U/M at minimum if the liability limits are slightly higher. Does that Umbrella go over your Homeowners Personal Liability limits if it is with a different carrier or is it just over the Auto limits? If it doesn’t, you have a gap in coverage if there is ever a problem on the Homeowners PL limit.
Good independent agents know GEICO isn’t really their competition. Want to gain some marketshare and pull those clients in that actually understand or are willing to be educated? Try advertising with a sign that reads “Dave saved $225,000 when he had an auto accident.”
That is a great idea. I have one of those electronic signs. I will put it up next week. That should get some attention. We have about 25,000 passing by our office each work day. Some may be curious enough to call or stop in.
GEICO spent 1.1 BILLIOINS in advertising, the competitors an equal amount based on subscribers ……We, the consumer pay for the ridiculous amount of advertising by paying premiums that are out of touch with the consumers….. Time to boycott these companies that spend our money trying to steal consumers from each other.
Pretty much like the modern Telecommunication industry …There’s a limited number of phone users, stealing from each other is the norm …Who pays for the ads …WE DO !!!
Ok so the Lizard is not even in the BBB and I know it. Who would buy insurance from them except MORONS or the customers like me, who are going MAD because of the price of our insurance never goes down even though we’ve paid thousands of dollars over 40 years, with no claims, it just goes up and we feel locked in.
I wish god’s kingdom would take over the earth- all insurance businesses gone! and courts and Corporate greed, gone, gone, gone, and sickness, gone, and death, gone. In the new system all bills gone! hip hip hooray! In the mean time it is just as the Bible says, a very sad, frustrating time. 2 Tim 3:1-5. In this time please God and Christ Jesus, by having fruitage of the holy spirit, self control, kindness, mildness, goodness, joy, peace,love. Pray!
Spending one day on the phone with insurance companies yikes! I need to pray pray pray, for joy, peace to see the big picture.
See ya all around with my fruitage of the spirit intact.
When you write the state min limits every time a person calls in for a quote you will almost always have a lower price. Great for the lizzard, sucks for their insureds when they are in a bad accid and the lizzard sends them the letter suggesting they hire an attorney at their own exp because they didn’t buy enough coverage.
Jack,
Not to defend GEICO, but you do realize that the insured’s legal defense expenses are covered in full in addition to their limits, right? That applies to all auto liability policies.
Ron, you do realize that a carrier will only defend you up to your limits? You kill someone in a car accid with 25k limits and they sue you for $1mil, the lizzard will write the check for $25k so fast it will make your head spin and then tell you that you are on your own. I handled auto claims for Allstate and State Farm for 10 years. Just the facts jack!
Good one Jack. I have seen a number of GEICO policies over the years and often on Min Limits. They could care less on selling proper limits since they are selling a price instead of proper coverage. People tend to go bottom line these days due to the economy and are taking a chance on limits hoping they never have a problem. I have seen them write a little more decent liability limit and turn around and give minimum limits on U/M. Clearly, their reps don’t explain coverage to the applicant and could care less since Uncle Warren provides them with E&O defense.
Agent,
Shouldn’t the insured bear some responsibility for knowing their current coverages and compare that to what they are buying? What ever happened to personal responsibility for what someone purchases?
I worked in customer service and underwriting at GEICO for 4 years and I can tell you first hand that we were well trained and encouraged to offer higher limits whenever we could. I cannot speak for sales.
The problem is convincing the insureds the value and importance of higher limits. Some were smart and increased their limits and were actually surprised how little their premiums increased.
I agree Agent and let me take it a step further. Even though I am an agency manager I also get a quote from GEICO myself at least once a year just for curiousity sake. The last three times I inquired for an auto quote I made it very clear on my request that I wanted limits of 500/500/100 (note that also carry an umbrella). GEICO responded each time with a comparison of 100/300/25. When I insisted that they at least increase the PD from 25 to 100 the premium increase was $118 for six months on one car. Any major carrier will give a preferred customer like me the higher limits for only about $1 a month or less. GEICO is purposely reducing their risk exposure in an irresponsible manner.
Jack,
How many times did you write a check for minimum or low liability limits then tell the insured that they are on their own when presented with a $1 million lawsuit? There are insureds with all companies that carry minimum limits.
ROn, the thing is, the other companies do not make it a practice to peddle minimum limits like GEICO does. That is their standard quote. They don’t even inquire about coverage. THey give 25/50/25, with 1000 deductibles. Don’t buy it? Call them and check for yourself.
Ron seriously?
The insured should bear some responsibility? That’s like saying they should bear responsibility if their attorney is an idiot, or they should bear responsibility if the doctor misdiagnosed them.
YOU are the insurance expert in their eyes….They depend on YOU for proper advice, which GEICO does not do. They sell state mins….all the time, with no question on higher options….they have to sell their 15 percent guarantee.
You know it’s been about 8 years ago so it’s hard for me to remember. But I remember sending out the you didn’t buy enough coverage so you are screwed letter pretty often. As soon as the claim showed up with serious injuries i would look at my liab limits and send the letter. It said we will defend to your limits, we suggest you hire an attorney at your own exp to defend anything more. At $200 an hour for an attorney it really woke the insured up.
So, it is not just GEICO insureds that carry low or minimum limits and then get screwed by claims who will not provide the defense that they were promised. There are many people who work very hard, but still cannot afford higher limits because they are trying to put food on the table and keep a roof over there heads. I guess they are not as entitled to a full defense as those who could actually afford to pay for the defense themselves. Sounds like class warfare to me.
And then we wonder why people look down on the insurance industry.
Ron you have established yourself as an idiot with the last statement. YOU get what YOU pay for. YOU are not ENTITLED to something YOU didn’t pay for because you shop at Wally world.
Jack,
If you purchase a automobile liabilty policy, you are entitled to a defense, in addition to your liability limits, in the event the insured is liable in an accident. If claims wants to work around that promise to save the company money, they are the idiots who are giving our industry a bad name.
On a separate note, I am still waiting for the sources where you stated,“I saw a stat that said 75% of the people in NC that went to sign up ended up being told they qualified for medicaid.” and “I see NY has a $1.3 Bil deficit this year.”
You complain that I use older data, but at least I provide the source of my information.
Ron, agents don’t write checks for policy limits. Claims adjustors do that. Yes, they do send letters out about the claims settlement. They might not word it like you are on your own for the remainder. They will just say they paid policy limits on the claim. The customer can figure out how short they are and the attorney on the other side will tell them about the suit papers. The way to cure the minimum limit problem is for the agent not to write minimum limits. Sometimes an insured will have a claim so bad, high limits are not adequate. That is why we try to write Umbrellas as much as we can, particularly with the more well to do clients. How many Umbrellas did you write with GEICO in your 4 year tenure?
Agent,
Please tell me what I wrote that gave you the impression that I was implying that agents write checks for policy limits? Pay attention.
If one of your clients receives a letter that the company has paid the policy limits in a serious accident and will not represent the insured in a lawsuit? Did you tell them that part of liability coverage is a legal defense in the event of a lawsuit when they purchased the policy? Do you fight the claims department? Does it bother you, as the insured’s agent, that a company would do this?
I am glad agents have this belief that everything can be solved by buying more insurance even if it takes cutting out other expenses. Did you ever consider that many people cannot purchase higher limits and umbrella policices because they would rather eat, pay their rent or mortgage, buy their child a birthday present. Believe it or not, many, many people have to make these choices every day and I am not taliking about people on welfare.
The fact that you will send people down the street because they cannot afford the covergae you want to sell is disgraceful. I understandf the possible E&O exposure, but isn’t that why you have the coverage? Maybe you need to just purchase more E&O.
As I said, I did not work in sales at GEICO, but I did refer at least 10 people a day to our umbrella sales unit. I do not know how many of those referrals resulted in policies written.
Ron, it’s clear by your comments that you honestly have no idea how insurance works….and it makes sense that you work for GEICO.
Let’s say, heaven forbid, that one of your insured’s hits you and is at fault in an accident. Your spouse is killed or maimed, and GEICO pays you $25,000. Would that satisfy you in this scenario? Would you be pleased with how well, your sales department educated the customer at what they had to lose in the event of a catastrophic accident?
Going from 25/50/25 to 250/500/100 would probably increase your premium $10.00 a month on a standard rate.
Is it really worth $10.00 a month for 10x the coverage? Look at your $25,000 check and get back to me.
Seriously….GEICO’s business practices are horrible for the industry.
Reputable Insurance,
I know plenty about how insurance is supposed to work. I have been in the industry 12 years and have worked for captive and independent agents, a direct writer as an underwriter, a regional carrier as a staff underwriter and currently a wholesale broker. In addition I have earned my CPCU.
It is clear that you do not understand my position. I have a HUGE problem with any company who will base their decision on whether or not to defend their insured in a lawsuit solely on the limits the insured selected. This is why our industry has such a negative perception.
Some people could afford higher limits and just have the attitude, “I am a safe driver and it will not happen to me.” However, I believe many people have low or minimum limits because they honestly cannot afford to purchase higher limits. Should those people have to foot the bill for their legal defense when they were promised legal representation in the event of a covered loss?
For many people, that $10 equals a couple of dinners for their family a month. Should they forgoe those just to increase their limits? You are so good at spending other people’s money.
It is so easy to judge others without sufficient information. I can only dream of being omniscient as you.
Of course I would not be satisfied with a $25,000 check. That is why I purchase enough AD&D and Life Insurance for my family and me. Anyone who relies on getting money from somewhere else in the event of an accident is irresponsible in my opinion. It is called personal responsibility.
Do you think the government should increase minimum limits to 250/500/100? That would solve the problem, right?
All I can say to this is…wow. You are so blind, its not even funny.
I’m truly embarrassed for you.
Reputable Insurance,
All I can say is, why did you not answer any of my questions?
You should be embarassed to use the name “Reputable Insurance” if you believe it is ethical to pay just out limits and not defend an insured when faced with a lawsuit.
Ron, you said “Where did you get the idea that agents write a check for minimum or low liability limits and then tell the insured they are on their own when presented with a $1million lawsuit? Perhaps it was in your answer to Jack. Your mouth got ahead of your brain as usual. For someone who brags about their education, you are remarkable for your naivety about how insurance business is conducted. By the way, it is not disgraceful to send someone down the street if they insist on having minimum limits. I do everything I can to convince them to buy higher limits for their protection and point out there is not much difference in the premium to have proper limits. I give them a few scare stories drawn from experience and they usually come around, but the ones that insist on the lowest coverage for the cheapest price are customers I don’t want because they will leave for a dollar on the next renewal. I would just as soon have GEICO or Farmer’s write them. That is called being a good agent and using good business practices which is a concept you certainly don’t understand.
Ron, from you comments it looks like you didn’t learn much about being an insurance professional in your four years at GEICO. You obviously don’t have a clue what attorneys are doing with E&O exposure in the insurance industry.
Actually, Jack, in KY the insurer is mandated by law to provide a defense in addition to the limits of liability.
They have insurance in KY? Look, it comes down to this: GEICO pushes a premium number, the proposed insured accepts the number. By accepting the number, the customer is essentially becoming his own “agent”. I live in Fairifeld County, CT. I call GEICO, and then tell them I own a home. They reactive clerk on the telephone reads from the script that they recommend limits of $100,000/$300,000/$50,000. I tell the clerk that the market value of my home is $800,000. I am again told they recommend limits of 100/300/50. No mention of an umbrella. First, they do not want to sell higher limits, they are probably told not to offer higher limits. And, fif you are going to need higher limits, you better know so, and you better ask for them yourself, because they are NOT going to let you in on the fact that you NEED higher limits.
paul, I was just commenting on the defense in addition to the limit of liability. That cost, by the way, has no limit.
I wasn’t disputing that GEICO sells minimum coverage. For that matter, GEICO isn’t alone. Safe Auto and a couple other companies also only quote minimum limits. I happen to agree that people should buy the coverage they need, not just the minimum.
jw- it’s that way in most states. When I say up to the limits of the policy I mean if you kill someone in a car accid and you have $25k limits you better retain a 2nd attorney yourself and most carriers will tell you to do so. Why you might say? Because of people like Ron. You see after the verdict comes back for lets say $1mil and the def atty did everything possible for you, Ron’s then going to sue you saying the def atty didn’t do a good enough job and its the companies fault he now owes $975,000 to dead person estate. It’s called CYA.
Jack,
That may or may not be true. I would only sue if I believed the company hired a defense attorney to represent me that they knew or should have known was incompetent. I will definitely sue for bad faith if the company promised me a defense when I purchased a policy, then renegged to save money. Please explain how that CYA is working for the company?
BTW, I am still waiting for the sources where you stated,“I saw a stat that said 75% of the people in NC that went to sign up ended up being told they qualified for medicaid.” and “I see NY has a $1.3 Bil deficit this year.”
Ron…are you that thick?
The company is on the line for the policy amount. There is no company out there that will defend you beyond what their contract with you states…and that contract is the policy limit.
Is it any surprise that most of your comments here are hidden? You clearly have no idea how insurance works, 12 years ‘experience’ or not.
Insurance Expert,
So, if I have 250/500/100 plus a $1 million umbrella, and I get sued for $2 million, my insurance company will not defend me in a lawsuit?
How can anyone ever have enough insurance?
They will defend you up to the 1.25 mil or 1.5 mil, depending on the accident. That’s all they are on the hook for! That’s basic insurance 101…and now I am seriously doubting you have passed one exam of the CPCU if you don’t understand that….
Average death settlement is $1.3 mil. It’s not that far fetched. Besides, if I have 250/500 plus a million $ umbrella, the judge or jury is not going to throw the book at me, since the family has already received over a million in compensation as it is….had I gone to your company and got the 25/50 it sells, then yeah, I’m in a world of hurt.
Basic insurance, Ron.
Actually Jack, Geico does not cover legal defense. GEICO is a travesty in the insurance world. Focusing everyone on price as opposed to coverage. There are far too many GEICO insureds that are so underinsured it is scary. Call them up for a quote, and they will quote you state minimums, no questions asked, and insurance ignorant people think they have a great deal. It’s almost criminal.
Imagine getting hit by someone who has state minimums? GEICO should be ashamed of themselves.
Actually, Ron…GEICO does not cover legal defense. It’s not mandated in all states.
Brad- WOW! Which states don’t include defense of the insured in the policy? That is a shocker!
Ron, do you realize that if an insurance carrier is given the opportunity to settle a claim within the limits of the policy but, refuses to do so then, the court can hold the carrier liable to pay the full judgement even though it may exceed the limits of insurance on the policy. This is why carriers must settle at policy limits in many cases rather than carry on an expensive defense. The consumer didn’t pay for the legal defense it needs. It is the responsibility of an insurance professional to bring this to a consumer’s attention. It is the responsibility of the consumer to chose appropriate limits of insurance. It is irresponsible for an insurance carrier’s representative not to write limits of insurance that adequately protect the consumer.
One more comment for Ron! My postman’s wife came by today to pay their auto insurance. It reminded me of a bad accident he got into about 15 years ago when he was insured with GEICO at state minimums. I quote them 100/300/100 but, they were convinced by the GEICO guy over the phone that state minimums were OK and they would save a little money on their premium. Later that year when Steve (the postman) got into a bad accident the damages exceeded the state minimums of their GEICO policy by more than $14,000. Both Steve and his wife will tell you that the $210 a month they paid into the court each month on the judgement took a lot more food off their table than the couple of dollars each month for the auto policy which I quoted.
Jack, we have all heard about the Reservation of Rights letter sent out to insured except for the uninformed Ron. That letter is not a good thing to get when a serious accident happens. They will settle for policy limits and go their merry way and the insured has to take bankruptcy because he has inadequate limits. Minimum limits only work if an insured never has a serious at fault accident. I have never seen a GEICO Umbrella that goes over their Auto policy either.
Bankruptcy does not protect you from a court ordered judgement.
Agent, KentU & Insurance Expert: When a claim is “settled” it is settled. That means the claimant accepted the settlement that the insurer offered ON BEHALF of their client.
It’s only when a case goes to trial and a JUDGEMENT is rendered that exceeds policy limits that the insured is financially exposed.
As for defense on an auto policy, I think it is a standard clause in both the PAP and BAP and would be shocked if someone can direct me to an auto policy that does not include defense.
There’s your lesson on Insurance 101. Thanks, Class.
should carry at least 100/300; they must not be training their phone reps (also, losing revenue that practice). one of my insureds sqwitched to usaa and the rep asked him why he had so much bi protection – i think he had 100/300 or maybe even 250/500. He had money in stocks etc. and insisted the quote was at least what he had with me
most companies match um/uim to 100/300 or more — who doesn’t want cash if they are seriously injured or killed (estate) by someone at fault
Be careful when you say “most” companies match U/M limits to the liability limits. I have seen numerous policies from other carriers with Allstate & Farmers being the worst examples of minimum limits U/M. It comes down to what the agent, either captive or Independent request or in GEICO direct when the non licensed phone person puts in the system to low ball a quote. The customer doesn’t know what they are doing, just wants the lowest quote possible.
When I said “match”; I meant they offer that option
Agent, I have been a Farmers agent for over 32 years and tell you that they strongly push their agents to match UM with liability limits. My staff always quotes matching liability and UM limits but, some customers insist on matching what they had with their prior carrier. We get the customer to sign off of the quote for E&O purposes.
GEICO underwrite their policies after issue. They base their rates on what the information the consumer provides. Issue of policies without underwriting at the start is illegal in our state for agents. Throw enough on the wall and some is bound to stick
The only customers we can’t beat Geico on is bad drivers. Sad to say Jack is 100% correct Geico employees tend to sell state minimums. Now how do you sue a huge direct writer for poor advice when your limits of liability are lacking? Our clients love us and our excellent service, price shoppers love Geico until they compare apples to apples with a good independent agency.
To say that “Progressive has agents that do not deliver” is ridiculous. They have a direct writing division which delivers lower rates than their independent agency division putting us on an unlevel playing field. Just like several of our other “Preferred” carriers who sell their HO products through GEICO’s independent agency. Put us all on a level field and see who comes out first!! Knowledge is power!
You are right Maureen. I have had Progressive Marketing Reps tell me there is no difference in the premium charge between the Direct and Agency quotes. We have tested that statement and found it wanting. The Direct quote was always less because they didn’t have to pay a commission on the business. I have them, but they are only used when my other standards can’t compete or don’t want the business. Progressive will write most anything for a price. When violations, accidents disappear, they can be competitive. I don’t particularly like them, but they are a necessary evil. On GEICO, they have a “special” relationship with Travelers to do HO. Travelers tells us not to submit HO without Auto or we will take a reduced commission and yet GEICO probably gets some kind of remuneration for sending business there way. Unbelivable what goes on in today’s insurance world.
True that Progressive Direct is less but that is because the 1st time around the get $50 credit for getting it However I have been a Progressive Independent agent for many years and I have found that I have been able to capture Direct clients even if we were a tad higher just for the service alone. I also have been able to beat Progressive Direct rates with Progressive rates with in our agency By talking and listening to the clients needs and finding out that some of the discounts available were not offered from direct. But then again I run my office 24/7 And clients would rather call the agent then an 800 number
Good for you Brenda. It has been just the opposite with us on the difference between Direct and Agency quotes and we do ask all the relevant questions to try to get the best rate possible. By the way, when do you sleep? If you are open 24/7, do you wake up and answer a beep on your computer to quote insurance? You must be tired all the time.
In rare territories, agency rates are lower than direct. We’re fortunate enough to be in one of those areas. Sometimes the loss ratio is much higher on the direct side…
The direct rates suck for the most part. The rates are set to capture new customers, but creep up. The IA book is more stable and the retention is much better. Over time, the IA rates are more competitive than the direct rate.
Most of you are not aware that back in the 60’s Geico also known as Government Employees Insurance Company was bankrupt but the various insurance companies around the country were trying to figure out how to manage the bankrupcy because of seperate state laws and several other insuance companies stepped in to provide financing to help them get out of bankruptcy. Why because they were concerned about certain federal laws at the time.
sorry meant “State Insurance Departments” around the country
State Farm, AllState and Progressive all have agents. GEICO gets business because people can mess with the coverage levels online and get a lower price, but get no advice. Or they can call in and the csr can suggest coverage reductions to get a better price. Professional agents give good coverage advice first. FU to the authors for a biased article.
Not sure how much of the article is biased. The facts are that Geico has increased market share with lower expenses and aggressive advertising. I hate to see it, but if their goal is growing policy counts then I guess you could argue they are a success. While IA’s can and do offer more choices and consultative services, evidently many consumers don’t find this too valuable.
It’s not the Geico results that surprise me in this article as much as it is Progressive’s poor performance. Progressive has built two mouse traps, the agent & direct channel, and you would think they would or could dominate overall market share with this combined effort. If I were Progressive Sr. Management I would have to ask, “where have we failed”.
We’re still talking about a carrier that can’t touch a carrier that almost exclusively uses agents. Progressive needs to examine their market position that’s for sure, but it’s nothing to sneeze at.
Progressive is a joke. I can’t tell you how many times I provided a quote through my IA platform just to have that same client turn around and get a cheaper rate-with Progressive Direct!
Shouldn’t your job as an IA be to convince the customer of you and your agency’s value? That’s how you earn your commission.
In this and any market everything is a matter of price. GEICO sells cheaper, then will be the # one selling. In the auto insurance market does no sell quality but price. If all insurance companies have a similar price all sell the same, there is no reason to be mad at this.
Geico’s success is admirable in many ways, but it is also duplicatable, and most of the big companies are incorporating new distribution/sales channels into thei sales/marketing matrix. Everyone has to adapt to the changes made available by changing technology and consumer preference.
Progressive’s loss ratio and persistency is better through their direct agents is a fact. Agents don’t write a policy at 3 in the morning after the guy had a single car accident drunk.
GEICO’s success is not due to not paying commissions, it is due to the ineptitude of the other carriers. The companies have let Lexus Nexus and Deloitte sell them software to underwrite rather than use humans.
I write policies at 3 am in the morning I personally run my office 24/7 I have had many happy Progressive clients when it comes to claim also My best client had a claim at 5 in the morning and totaled her car and by 8 am the next morning . I have had that call also of the drunk who just got into an accident and wanted it covered But as a hard working agent I made sure that there was no coverage for that accident. It is all about service in our small community and even though that green critter is cute he isn’t putting a dent in my business. Many would rather have someone local.
Bottom line is, if GEICO thinks “Humpday” commercials are effective….then they are sadly mistaken. GEICO sells based on price only, which is an ethical issue in this business. Sure, you save them money, but once they kill someone in an accident, they wash their hands after paying only $25,000…while the insured is on the hook for the other $1,000,000.
People who buy insurance on price only are sadly ignorant, and GEICO feeds on the ignorant.
So in your example what BI limits would be best? How about $250k. Then the insured is on the hook for the other $750k that they don’t have. Why would Geico be “sadly mistaken” by thinking their Humpday commericials are effective. If their strategy is to put policyholders on the books and make money then there is nothing to be mistaken. They’re doing it. And your stategy, being an Insurance Expert, is to satsify another niche. That’s not a new business strategy. Many industries have their low cost providers that cater to the masses. Look at what the legal industry is going through. It’s just our turn.
Their commercials aren’t even talking about insurance anymore!
A good agent would be selling umbrella policies to every client that walks through the door. GEICO is simply peddling policies.
Low cost providers are just feeding ignorance, and it puts the rest of us (all people, not just insurance people) at risk….I do not want to be hit by an uninformed GEICO insured who thinks they are covered if they have an accident.
Expert, We are living in a dumbed down society and that is a big issue. A low information customer will easily fall for a line. Look at who they voted for in the past 2 Presidential elections.
many people don’t want automobile insurance at all and only buy it because it is mandatory. Many can’t afford to buy it and want the lowest price for the mandatory coverage. The market share of people wanting higher limits (price) is dwindling. Geico is providing the product that a large market share of people want – just like Walmart low price is everything. It’s just the way it is – no agents needed.
That is simply ignorant thinking.
Ignorant is a strong word. I have no problem with someone buying the state statutory limits if that’s all they can afford. My insurance purchase is based on my needs and my UM limit is based on the assumption that the person that hits me has no insurance at all. If they have insurance it’s a bonus. It wouldn’t matter if the state’s BI requirements were $1mm for all drivers. Why would I jeopardize my own health and financial safety over the hope that the other driver is complying with the law. I can’t.
As much as I dislike it, Geico’s weaseled their way into the American psyche with low rates and they are not going away.
I assume SWFL means Southwest Florida. Our state doesn’t even require statutory BI limits! And until the PIP reform, we had the largest insurance fraud and pill-mill distributors in the country because of pain clinics via sit and squat accidents. Florida should require a minimum BI limit like every other state and do away with no-fault altogether. IMMHO.
Someone please tell me how every one of the big companies can promise up to $500 savings on Auto Insurance. Talk about false advertising. Flo tells people to pick their own price. Hello!
Easy. They talk about customers who switch, not the average of all quotes.
Are you saying the customer is ignorant? Then, yes, I agree. They should purchase the coverage they need, not just the minimum to get by. The problem is, the consumer/insured doesn’t have the money to buy what they need; therefore, they go for the cheapest product possible and pray they don’t need it.
Yeah, and they don’t have the money to buy that IPhone, IPad, Cable TV, Dish Antenna,etc., then cry poor when it comes to auto insurance to cover their Lexus.
Fine, the insured goes for the cheapest possible policy (for whatever stupid reason they have) and the rest of us carry UM/UIM.
You mean the Lexus with the thousand dollar rims? Insurance is just a necessary evil with a lot of these people and I prefer to write a better informed customer with real assets to protect.
I have to agree. As an agent I feel like it’s my duty to provide the best possible policy. Honestly, 9 out of 10 times, stepping up your BI limits is less than a pizza a month. There’s a difference between not wanting to afford it and truly not being able to afford it. That’s why a personal touch should be put on every policy. There should be conversation about what you’re really protecting.
And thats the client I as an indep agent kick to the curb. You want min lim, call the lizzard. Let the lizzard explain how when you get in that really bad not at fault accid and the other veh has state min limits and you come back to your own policy for underinsurance and not have it because you were shopping at Walmart. Good luck when you file BK. Recover from that one, you will be shopping at wally world the rest of your life with your EBT card.
I completely agree, and did that in my practice. I would tell customers that I cannot in good conscience offer them minimum coverage.
Geico and Progressive are killing the industry…Progressive with their name your own price nonsense (Tell me, do YOU want to get hit by someone who named their price??) and geico with offering minimum coverage without even asking the insured what they want. Don’t believe it? Call them and they will give you 25/50/25 with 1000 deductibles, no questions asked.
It’s nearly criminal, if you ask me.
There are good, mediocore, and poor agents around. I once reviewed my 85 year old grandmother’s policy and found wage replacement on the PIP and physical damage on her 20 year old car. Her agent did a great job earning commission on coverage she could never use. Good agents do the review themselves and earn their commission and keep their customers.
Milner, for every Independent Agent you say work this way, there are 10 Captives like Allstate & Farmers who do much worse. Independents as a whole do a very good job of explaining coverage options, ask about deleting physical damage from older vehicles etc. They also write insurance to value on homes as well. You can’t believe how many homes I see from Farmers and Allstate that are inadequately valued for Replacement Cost and have plain vanilla coverage in order to sell a price.
Agent – Milner didn’t say his grandmother’s agent was an independent. He was probably a direct writer.
Libby, leave it to you to jump in and criticize. I was making a comparison between Independents and Captives. Independents are much better working with clients than a sorry captive like I see all the time. I do agree with you that Milner’s grandmother was probably had a captive agent not interested in doing a good job for her. They tend to automatically renew with little or no review.
Grandma had an independent agent with a fine regional company. Being independent doesn’t make one good or bad.
Milner, I guess you didn’t read my post and understand. I said Independents as a whole do a better job of explaining coverage and offering options. If your Grandmother was with an Independent and didn’t get the right advice or service, she was with the wrong agent. Captives are far worse on the advice and service. I have run up against many of them and most are a joke.
Yes they dont write to value or explain very well. Advertising needs to reach the millions not the hundreds. BIG I needs to rethink its approach to Independent agents or we want exisit in 20 to 25 years. We need to take charge. I speak about progressive all the time and most independent agents say the are a necessary evil BS they are your competitor not your friend. They say if i dont write it the agent down the street will BS. Tell Progressive, GEICO to write homeowners lets see how the auto works then. Tell Travelers to stick with GEICO, and Progressive for all their Homeowners customers. Quit feeding the fox with your stock. It’s really simple. They know we cant get along, want get along, so they use us aginst our selves. Really are we businessmen and women or just in business?
The difference between the Geico customers and my customers is…. Geico can’t entertain my type of customers. Once a customer is educated about insurance, the agent becomes beneficial in what they do. People look for price, but yet they grab all the extras in everything else. Your oncologist does not want to hear your opinion on treating cancer, and I don’t want to hear my customers opinion on their coverage. I have good bedside manner, but I will treat you with expertise. You won’t get this from a Geico representative making a few bucks an hour. The good customers have agents, and it is up to the agent to make a bad customer a good one.
I have not seen the marketing report but the base analysis / conclusion appears to be missing review of recognition based on value. Did the consultant study consumers to get a feel for the numbers recognizing each carrier and making a comment on their view as to if they are low cost or value based or both?
Here in CA we are overloaded with ads for all these carriers as well as that GEICO is advertising they have local agents. How are they perceived compared to their rate adequacy should be the primary question before going after expense dollars reallocation.
I have only read this article, not the consultant’s report, but with only a base glance it appears the carriers might be interested in a different view than they are receiving.
Pat Pawlowski
Can’t afford their insurance? If they can’t afford good coverage, then hey need to down size the price on their car…. No! that would be unheard of. They can afford their insurance, it is all the commercials that give them subliminal messages that they can’t. Watch the customer run around and buy every thing from starbucks to the newest cell phone, but they can’t afford their insurance…. Hog wash. If you believe this then you are just as guilty as Geico when taking care of your customers.
Here we go again. Another doomsday prediction for the independent agent by someone who has probably never sold an insurance policy in their life or didn’t learn from their experience. Granted GEICO has been impressive and they should see results from their saturation advertising. And price is number one…when it comes to driving traffic to your website or phone. After all, would anybody respond if they said they had low prices some of the time? Of course not. In fact, I believe that GEICO says, “Spend 15 minutes to save 15%”. A 15% savings from what a customer is paying now still may not be the cheapest price for that particular customer. But it’s the perception in the messaging that makes people contact and buy from GEICO and they have been good at conveying it. Truth is GEICO would have to be the lowest price for every GEICO inquiry to make this article valid. But we all know GEICO, as well as every other carrier, isn’t the lowest price all the time. Also, how many customers buy from GEICO because after they go through the lengthy online questionnaire, they decide to buy because the price is close enough and they don’t want to start all over again with a lengthy online questionnaire with someone else? That is something that cannot be measured but I’m sure plays a part over all. Let’s not forget that car insurance is also a “grudge buy” and people are happy to be done with it after a half hearted attempt to find the lowest price. The lesson learned here is the power of advertising and you simply have to spend a buck to make a buck. The real problem is that independent agents are unable or unwilling to commit to any meaningful advertising expense due to the lack of resources or fear of failure. Most will buy a cheap yellow page ad that doesn’t work or have a Facebook page posted with recipes or the “10 Things You Need to Prepare For an Earthquake”. Unfortunately, that isn’t enough to grab any attention or interest. Kudos to GEICO for their ability to buy market share with over a billion dollars a year in advertising. It is certainly not the panacea for all auto insurance selling. They just happen to have the deep Warren Buffet pockets.
I beg to differ with some of the statements in the article. What do they mean agents don’t deliver? Guess they have never shopped our office I am taking Geico clients Daily AND I run my office 24/7 My clients don’t have to call an 800 # and get a stranger. I also have had clients that thought they had coverage and didn’t that they had purchased through them Also have they read the recent article in insurancejournal.com about how people are fed up with online only and are leaving it to come to a local agent who they can put a face and a name to.
As agents you can work your butts off writing minimum limits policies – something that many agents chase when they are just getting started in the business – survival mode. Successful agents soon realize the value of an agent is as an insurance advisor. Customers that look for agents that can skillfully weave auto, home, umbrella, life, health, disability and financial planning into efficient risk management programs are priceless – as are the competent agents who fit this description. Those agents who place the blame for lack of success on GEICO should go to work for them answering the phone for $15 bucks an hour.
You are right Bob. When I have one of those minimum limits prospects who are price shopping, if I can’t make them see the light of day in 5 minutes, I send them down the street. I don’t want the E&O exposure because I promise you that they will say that you didn’t recommend higher limits after they have had a serious accident and the coverage was inadequate. We also make them sign off if they buy limits lower than recommended. We never, ever sell minimum limits Auto.
And there you have it Agent. Wal-Mart is the world’s largest retailer. It doesn’t mean it’s a great place to shop…
It apparently is to the low information people who flock there every day of the week. We like to sell to the more informed, higher credit score people with serious assets to protect with their nice cars, nice homes, boats, RV’s, Umbrella needs etc. They make nice customers and they stay with us. A wise agent once told me when I first got into this field that if you sell by price, you will lose by price. A lot of these price shoppers, particularly the iphone crowd will leave in a heartbeat if they get an online quote for a few dollars less. No loyalty whatsoever. I say good riddance and grow up.
Seriously STOP the bitching about GEICO. They spend a BILLION PLUS DOLLARS A Year on advertising. Independent Agents need a organization that allows us to pool our advertising dollars together a squash the little green squirt, that want happen because Independent Agents dont get it then, now or in the future. It’s our fault not the little lizaed. We get Co-OP monies from carriers who tell us how to spend it, and most dont take advantage of it anyway. Really it’s simple the BIG I isnt so BIG.
We have 38,500 (per Insurance Journal) independent agencies in the US. If PIA and the Big I played nice together we’d have plenty of power to make an impact especially when combined with our carriers.
GEICO and Progressive will hit a wall due to the type of client they go after-younger/less wealthy/forced to buy insurance rather than want to protect assets.
The carrier independent agents should worry about is USAA-great products on Home and Auto, an educated internal sales force and great cross sell into consumer banking and loans for both car and home.
They are quitely expanding out of service members into relatives of service members.
I have USAA as I’m an ex officer and could buy my insurance from the company I work for at a hefty discount, but they can’t beat USAA for really impressive claims service-not just fast but they have overpaid several 1st party claims I’ve had in several instances by as much as 10 or 15%. Never seen anything like it.
And they are cheaper than most IA carriers as well. Great company.
No doubt- what a crock of crap!
I see them send their long time clients here on the coast of SC crazy high renewal on homeowners ins. They are bending them over and giving it to them twice. If you have homeowners with USSR on the coast they are laughing at you in home office! Their commercial about helping our service people makes me sick! They rape them here in SC!
No Doubt, I don’t know what state you are in, but in Texas USAA’s home rates are about double the IA carrier’s rates. The auto is in line with market rates, but no better than what everyone else can offer. As far them expanding their offering to friends, relatives, 5th cousins twice removed, this will actually lead to even more uncompetitive rates. When USAA only offered policies to officers,(which by the way, is redlining) they had a market niche with low claims. Not so much anymore. I have been an agent for 15 years and have experienced many claims through many different carriers. I have never seen a claim not paid that was covered by the policy. Nothing against USAA. They train their hourly call center employees to be nice on the phone. But their product and rate is no different that what is offered by hundreds of other companies. Like State Farm, USAA has done an effective smoke and mirrors marketing job of convincing their clients that they have something that is not offered anywhere else as far as product. Marketing at it’s best.
As an Army brat, I have been insured with USAA since I bought my first car at age 19. They have been insuring military family members for over 30 years. This is nothing new.
And if you have not experienced their service, you don’t know what you’re talking about. It’s superb. Fast, efficient, and tailored to the military’s needs.
My mother had a rear-ender when some creep stopped suddenly in front of her in a scam. USAA investigated, denied liability, and didn’t pay a dime. Let’s see some of the standard IA carriers do that. They say, rearender? You’re at fault and pay.
I am a USAA policyholder as well. They are excellent but haven’t cornered the market on fast & efficient. Amica and some others can provide the same level of service. Also, not the lowest or highest on rate. Their real value, at least for me, is rate stability which is something IA companies cannot seem to master. Look at what Travelers has done to PL rates this year (in Florida). Or try to add a teen driver to a Safeco or PGR policy.
USSA is a receipicle insurance company just like Erie and farmers. There is a certain claim culture with a receipicle carrier that I won’t allow in my office. They have their place but not my office. Rear ending someone and having no fault sounds like some information is missing but again it is part of the culture to deny and make you prove it.
That’s not true, Charley. These people were in a ring of scammers that rode around town looking for elderly drivers to cut in front of and slam on the brakes for a rear-ender because people like you say “Rear ending someone and having no fault sounds like some information is missing” and pay.
I have been an IA for 34 years, but USAA is my carrier. They cater to the needs of military families in a way IA carriers can’t. If you move your household furnishings, you have coverage under your homeowners. Will any of your carriers provide that coverage?
They are an excellent carrier, but unless you are military you would not be able to experience their service – so should therefore not comment.
Libby, again, nothing against USAA. And if you are convinced that is the best place for you, regardless of price, then that is where you should be, period. Price should never be an issue for you. I have written several customers away from USAA over the past 15 years to another company. Many of these clients had claims with USAA, and also had claims experience with the company I moved them too. I have yet to have a client complain about their non-USAA claim service, and go back to USAA. Just sayin’…
lonestar – I understand what you are saying. I’m not dissing IA carriers, I am an IA for crying outloud. I’m just saying, in my experience, USAA provides outstanding service and understands the needs of it’s clients. Period.
I wonder how USAA over pays claims and still has less expensive rates?
You bring up a good point SWFL: All the insurance companies have very similar loss ratios. Similar rate of returns. Insurance is a business. When I hear of claims that a particular company has the lowest rates and overpays on claims, I have to wonder which South American country the declarer of such information obtained their “left-handed” cigarette from?
I agree with you on GEICO & Progressive. I’m still deciding on USAA but, agree their auto & home products are good and so is their claims service. I quote a lot against USAA with members of my American Legion and VFW posts plus my P&C customer base. Sometimes USAA is less than Farmers and sometimes they are not. A substantial number of retired military vets I know are not happy with USAA for now letting all veterans apply. They are concerned that it will deteriorate the risk base and make rates higher in a couple of years. Allowing all veterans to apply to USAA has also damaged a loyalty that many retired vets had with USAA – now they will shop around and before they would not.
I agree USAA has many great things about them and the rates usually are untouchable except the homes they are VERY high in rates I have many clients that I have twice the coverage that USAA gave them and half the rate but could not touch the autos. I send many clients away to them telling them that the rates they have are good and the carrier appears to be good I called for a client here in my office and helped them even sell to my client an auto policy as I sat here and completed the home for them. After a year with USAA they left them and wanted to keep everything in my agency even if I was not the Best Price But USAA is a good Carrier
USAA is not into bundling like most other standards. I have a client who is loyal to them because of the military connection, but he won’t let them write his home for a good reason. They are terrible on homes. I quoted both lines to him with companions and he hasn’t moved yet, but he is thinking about it.
If progressive goal is to be #2 then maybe they should imitate the lizard.
But they should not close their eyes to the fact that the #1 writer by far, focus on and advertise supporting agents. And pays a commission to an agent on every personal policy to insurer personal service. This will always be a #1 strategy.
Geico’s rates are no more competitive than any other carriers’ rates, on any given day. I have not had a problem beating their rates with any one of my carriers, a majority of the time. When I run into the occaisional Geico policy that does have a great rate, it seems that the customer profile is substandard, in the way of activity or credit issues. The clean stuff is going to preferred carriers, such as Safeco, MetLife, Encompass, Kemper, etc. It is just that the IA channel is not able to advertise as much, and therefore get looked at as often as Geico. I have seen no correlation between rate competitiveness and product being delivered via an agent or a call center. Call centers cost money to run too(buildings, employees and employee benefits, turnover, etc.) but the article does not point this out. People call Geico and get a quote, but the majority of the customers are not getting quotes from several other companies, and are therefore not getting the best rate a majority of the time when they go with Geico.
This piece comes to a lot of conclusions without any bases in fact to back them up. First, what is GEICO’s tue acquisition costs? We know that Progressive has a flat 10% new, 8% renewal commission that they pay their agents. If they paid just 2% more, they would get a whole lot more support. GEICO spends a billion dollars a year and then hires reactive, unknowledgeable clerks to malpractice, and that does a disservice to the community. What this article also fails to bring to light is that GEICO has been opnening agency offices, which flies in the face of this article’s entire premise. Finally, McDonald’s sells more volume of food than does Ruth’s Chris Steak House. You get what you pay for still holds true. You’re not taking your bride to McDonald’s for your Anniversary dinner, but unwitting insurance buyers purchase fast-food insurance through that drive-through window insurance company known as GEICO. Big difference? GEICO, by making the consumer choose the coverage limit hence the rate is the same as the cook at McDonald’s handing the customer the spatula and making them cook their own hamburger.
McDonald’s may be #1 in overall sales, but according to an article on MSN.com they are #2 in average per-store sales. KFC and Taco Bell weren’t even in the top 10 in per-store sales. Big doesn’t necessarily mean most profitable.
Paul, I believe the article gave enough information to assume that Geico’s acquisition costs are lower than PGR’s. In fact it’s pretty widely known their that cost structure is lower, including LAE. They can’t charge lower rates with higher costs unless they’re not making money. Which we know is not the case. Yes, they do have some local offices but I’d be willing to bet this strategy will not become widespread.
Also, stupid study doesn’t explain State Farm’s success, which is also counter to the premise of the study “conclusions”.
State Farm has expanded into Financial Services and even car loans. They have been neglecting their core P&C for quite a while and it shows in their recent results. They are currently making their customers mad in Texas by applying a 2% deductible for Wind & Hail on HO. We really like seeing these former loyal customers who are mad as H – – – and not going to take it anymore.
I’m surprised you’re just now seeing a % deductible on wind. We (KY) have had that for a couple of years now. It’s actually rare for a company to offer a flat deductible on roofs here. For that matter, most are trying to go to ACV.
jw, we haven’t seen lower than 1% deductible for many years in Texas, however, State Farm is upping the deductible and hoping the others follow them. Kemper tried the 1 1/2% deductible, started getting blow back from agents and customers started leaving and now they have decided to give the customer an option of keeping the 1% for a charge or converting to the 1 1/2%. They should have done that first with the option, but just decided to renew that way and hoping people would just accept it and move on. It didn’t work out so well for them.
Kemper??? Aren’t they insolvent?
Ho do you know what State Farm’s “results” have been? As a mutual, they do not make their performance info available to the street. I live in CT; everyone is getting a cat deductible in one fashion or another. Big deal. As far as GEICO’s acquistion costs; I think they use differing accounting methodologies when determining expense ratios than do a carrier with a real sales force. GEICO has a higher rate of misrepresentation, they have a higher rate of fraud, they have a lower retention, and what are their REAL acquisition costs when you factor in the attrition of employees and constant training of new ones, as well the the over a billion dollar advertising budget? The final factor is you get what you pay for – depreciated paint, used and aftermarket parts, a claim location the customer must drive to, often settling on a damage reimbursement only to find later that is inadequate to repair the damage, and a litigation department that deprives the general public from being made whole after being injured by a GEICO insured.
Somebody has to underwrite, process and service the policy. Agents aren’t an unnecessary expense. They’re a bargain!
I do have my theories on how GEICO grew so fast, besides the usual ad dollars and lower limits strategy.
1) Millenials are discriminated against with higher premium and are carrying heavy student debt. They don’t care for service, they want cheap. GEICO’s ads and ease of business caters to this demographic. 2) GEICO capitalized on P&C carriers’ vulnerable exposure to homeowners. For a long time, home insurance was the bread and butter for carriers. That blew up in everyone’s face and GEICO was able to capitalize on lower auto premiums when others were raising them to recoup losses from homeowner’s. 3) There is the hard reality that baby boomers are retiring. Customers are more frugal. Public Transportation is cheaper. Insurance Companies rating schemes are too complicated and gimmicky. The application for an auto policy is like applying for a mortgage… This list is long.
I think the article leaves out several key pieces of information. It does not account for Geico’s true expense ratio per policy versus true expense ratio for an non call center channel. Even though agent expense was mentioned, it did not mention their other expenses that they occur that agency channel companies do not occur. The bigger picture here, is not that Geico is the cheapest. They are not. Any company’s minimum liability rate will be cheap. Customers are not necessarily choosing Geico because they are the cheapest, but customers are choosing a method to buy without much obvious human interaction. Look around at your friends, their kids, your husbands and wifes: How many times at night do you notice these people on their smart phones or Ipads surving the net? People these days would rather spend 45 minutes on a website or emailing back and forth instead of spending 10 minutes making a phone call to speak to a human being. Just my observation. Geico has not reinvented insurance 101. They are just the first to make it easy for people to interact without talking to a human. Other companies will follow suit.
You make good points about the internet issue and ease of business. That’s a big part of it. Plus it’s just easier to switch these days with instant MVR’s and proof or prior databases. While this article may have fallen short with all the expense details, Geico does in fact have lower expenses than IA companies. And it’s something that IA companies need to address. Unfortunately agent commission always seems to be the first target because it’s such a large line item.
Also, size probably does matter with respect to pricing, data analysis, and segmentation, which means their size could potentially create pricing advantages. That’s a concern.
Agent commissions may be a target but, let me share with you information that was given to a group of us agents that Progressive held several years ago in Arlington, Texas. Their actuaries said that the agent issued policies have a better profit margin than internet sales and 1-800 sales. First, Progressive doesn’t have to lease huge amounts of office space, pay employees with benefits and workers compensation with agent issued policies. It is cheaper for Progressive to ‘subcontract’ underwriting and policy services to agents than do it themselves. The actuary also thinks that insurance fraud is considerably greater with internet and 1-800 sales as people with damaged vehicles (especially those that just now wrecked their cars) will get insurance via the internet and 1-800 rather than go to an agent because the agent will want to look at the car. GEICO probably has these same issues to deal with.
KentU, valid points. Also, retention has to be several points higher with an agent than with a call center. If retention means anything to these companies, that is…
Price shoppers will always leave in a heartbeat to save a dollar. They have 0 loyalty so I prefer to build a relationship of trust with my clients. If they are solicited, they let me see what was quoted to them. I can usually point out the missing coverage and show them why the competitors cost was less. We keep 99+% of them when they realize what was quoted.
KentU, I’m not sure the PGR reps gave you the full picture. Or to give them the benefit of the doubt the picture may be a little clearly now as PGR’s direct results are more mature. Yes it’s true that the sales/acquisition cost for their direct policies is greater than on agency business. The direct policies have front loaded sales/acquisition costs but these costs are greatly reduced, or really non existent, over the life of the policy. The longer it retains, the lower these sales/acquisition cost become on a per policy basis. On the other hand, every time the agency policy renews, PGR pays another 8% to 10% to the agent. With regards to policy processing and servicing cost, these costs are generally less than 4% of total premium and there is not a huge variance between agency and direct. Ask your PGR rep next time to you see him/her about the expenses on direct vs agency. Progressive has different pricing models for agency vs direct in most states and that’s to take advantage of the expense differences.
You make good points and as I said that Progressive meeting was a few years ago. A Progressive marketing representative stops by the office every couple of months. I told the representative that stopped by my office recently (who was a new one) that I had been writting with Progressive for over 34 years and recenting renewed a commercial policy that I placed with them over 20 years ago. I don’t remember the actual numbers but, she stated that policy retention is considerably better with agent written policies. Agent written policies also tend to have higher limits of liability and UM so, Progessive is collecting more premium. These are factors that make it nearly impossible for any analyst to present completely accurate data. Having said this, I recently wrote a new customer whose auto and motorcycles were with Progressive Direct. I placed her with another carrier and got the auto, home, motorcycle, trailer and a life policy in the deal. I was able to beat her Progressive Direct premium by several hundred dollars and with higher limits of liability.
SWFL, I hear from Progressive that their agency written auto business stays on the books about 2.7 time as long as direct written auto. 38 months average time for agency written vs. 14 months direct written.
Have you ever had one of these iphone addicts in your office trying to explain coverages and trying to make a sale? I have and they have an attention span of about 30 seconds and they are always checking their social media or someone is texting them. It is very annoying. I think that cell phone is never out of their hand even when they are sleeping. It is worse than drug addiction. These are the very people who are texting while driving and causing accidents.
The point is, GEICO, by being top-of-mind due to their exhorbitent advertising expenditures, is reaching people on a repetive, consistent basis and keeping themselves top-of-mind in the thoughts of consumers. It’s not by their message, but by their shear volume. All GEICO needs is to have some half-whit call them and get a lower price than they’re paying. It doesn’t need to be the cheapest price, just cheaper than their current renewal, and they’ll switch.
It always comes down to the same thing – price vs. value. This is a price conversation and price is where we, as agents, are all guaranteed to lose. There’s a great article in the October 2013 issue of Money Magazine entitled “Plan…Make Sure You’re Fully Covered” (page 23). In short, the article advises consumers to beware of the pitfalls of reduced coverages and lower limits such as liability, uninsured motorist and repairs (ie new parts as opposed to recycled or aftermarket parts). In our agency we stress the importance of $100/$300 coverage (at a minimum), umbrellas and UM/UIM. In California, over 1/3 of drivers on the road carry no insurance so we would be doing our clients a tremendous disservice if we quoted and sold minimums simply to secure a sale. We’re an agency with close to 10,000 PIF which tells me we’re doing something right. I can assure you we didn’t get to where we are today by selling on price. We sell value – something Geico does not.
An agent nor insurance carrier representative should never use the term ‘full coverage’ because it does not exist – except with attorneys that sue agents for E&O when they mistakenly say ‘full coverage’. Judges and juries have decided all too often that using the term ‘full coverage’ means the agent/carrier will pay the full damages regardless of the policy limits. Thats why carriers don’t use the term ‘full coverage’. I remember an agent in my area that advertised full coverage for $XX a month. One of his customers got in a bad accident where the limits of his insurance were not even close to covering the damages – high BI & PD damages. I don’t remember the limits that he wrote on the guy’s policy but, that carrier offered $1M limits on their auto policy and the agent wrote lesser limits. The insured’s attorney sued and won a court judgement for the $1M and the agent’s E&O carrier refused to pay because the agent had not received permission from the carrier to use the term ‘full coverage’ he was a captive agent. Lots of people think it was the stress of this situation that caused the agent to have a fatal heart attack.
I have worked in the insurance industry for 30 plus years, on both the insurer and brokerage sides of the business. I am also a GEICO customer. I switched to GEICO in 1996 for a very simple reason. I needed to insure a one-year-old car and my existing insurer (State Farm) required a physical inspection. I was incapacitated with a back problem at the time and driving to the State Farm location was going to be difficult. GEICO did not require an inspection. The premium was about the same as State Farm’s. I have stuck with GEICO ever since. The company has excellent service and a good, user-friendly website. I do not, nor have I ever had, minimum auto liability limits. I also have a GEICO umbrella policy. I have priced auto and umbrella coverage at other insurers a few times, and they have always been higher than GEICO’s. So why should I switch? I think other insurers could learn a few things from GEICO but it seems they are too busy bath-mouthing the company.
Someone I know switched to GEICO; they had the 500/1000 but told them they do not offer the underinsured coverage; although they offer uninsured
Vehicle inspections are for the customer’s protection. I’ve had several customers that came to me from GEICO with complaints that they were involved in a hit & run accident where more than one side of their vehicle was damaged. The GEICO adjuster said in his opinion that the damage on one side looked older than the other side and some of the damage was probably already there when GEICO first insured the vehicle. As such, he refused to pay for damage to one side of the car. Had those customers allowed the agent to inspect and photo the vehicle when it was added to the policy then, this would not be a problem. I’ve ran into problems with claims adjusters over the same situations and all I had to do is prove the vehicle was not damaged when I first insured it for the adjuster to include all of the damages in one claim. Once again, agent inspections are for the customer’s protection. Rates: I beat GEICO every week when the customer wants responsible limits of insurance.
It’s easy to bash the company because it’s a horrible company. Wait until you have a claim, Geico Customer. You do know having an umbrella with only an auto policy will not extend to your home, right?
Oh…and State Farm does not require a physical inspection. Just sayin’.
State Farm and many other major carriers don’t require a physical inspection for new purchases but, they strongly suggest it to their agents. The physical inspection protects both the carrier and the insured.
The fact that you have worked in the industry a long time helped you since you probably told them what you wanted. I bet they didn’t volunteer to write an Umbrella for you. Almost every GEICO account I have run into are either minimum limits or slightly higher than minimum. They often give U/M at minimum if the liability limits are slightly higher. Does that Umbrella go over your Homeowners Personal Liability limits if it is with a different carrier or is it just over the Auto limits? If it doesn’t, you have a gap in coverage if there is ever a problem on the Homeowners PL limit.
Good independent agents know GEICO isn’t really their competition. Want to gain some marketshare and pull those clients in that actually understand or are willing to be educated? Try advertising with a sign that reads “Dave saved $225,000 when he had an auto accident.”
That is a great idea. I have one of those electronic signs. I will put it up next week. That should get some attention. We have about 25,000 passing by our office each work day. Some may be curious enough to call or stop in.
GEICO spent 1.1 BILLIOINS in advertising, the competitors an equal amount based on subscribers ……We, the consumer pay for the ridiculous amount of advertising by paying premiums that are out of touch with the consumers….. Time to boycott these companies that spend our money trying to steal consumers from each other.
Pretty much like the modern Telecommunication industry …There’s a limited number of phone users, stealing from each other is the norm …Who pays for the ads …WE DO !!!
Ok so the Lizard is not even in the BBB and I know it. Who would buy insurance from them except MORONS or the customers like me, who are going MAD because of the price of our insurance never goes down even though we’ve paid thousands of dollars over 40 years, with no claims, it just goes up and we feel locked in.
I wish god’s kingdom would take over the earth- all insurance businesses gone! and courts and Corporate greed, gone, gone, gone, and sickness, gone, and death, gone. In the new system all bills gone! hip hip hooray! In the mean time it is just as the Bible says, a very sad, frustrating time. 2 Tim 3:1-5. In this time please God and Christ Jesus, by having fruitage of the holy spirit, self control, kindness, mildness, goodness, joy, peace,love. Pray!
Spending one day on the phone with insurance companies yikes! I need to pray pray pray, for joy, peace to see the big picture.
See ya all around with my fruitage of the spirit intact.