I think it depends on the expense ratio. Geico may be able to handle a LR that’s 11pts higher if their LAE and acquisition costs are lower. Don’t you think?
What happened to their boost from acquiring Esurance? I thought that was supposed to add to the total Auto writings. Perhaps the revolution they had with their agents had something to do with this along with GEICO’s rise.
I don’t think GEICO can make up an 11 point difference in LR with the extent of ad buying they do. It’s all about Buffett’s ego. I wonder if we’ll be seeing a GEICO blimp circling Northbrook the same way they did over Cleveland when they surpassed Progressive. In any event, McDonald’s, Burger King, Jack-in-the-box, it’s all low quality fast-food insurance. Too bad the average Joe is a sucker for an ad campaign that leads them to believe cheap = good.
Paul, love your comments and don’t disagree. Having been in the biz 30+ years, however, I remain amazed at the commoditization of personal lines, especially auto. I’m staunchly on the side of the independent agency channel and, in fact, anyone who provides real counsel and advice, advocating for clients and providing protection over price. I’m not alone, but when I see the GEICOs of the world rise to premium levels and market share heretofore not seen, I’m concerned for those of us that see our roles as professional insurance counselors and not just cheap policy peddlers. We are losing our share and makes me wonder, will we ever get it back? Not ready to give up the fight – not yet!
December 16, 2013 at 3:51 pm
Agent says:
Like or Dislike:
3
2
Why wouldn’t they believe it? They voted for Hope & Change, didn’t they?
December 17, 2013 at 10:02 am
Agent says:
Like or Dislike:
3
3
Customers will get a big shock when they have a serious at fault accident and then find that they have minimum limits sold by a geek to sell a price. When a company is selling this way, the customers will lose out when it comes down to inadequate limits. Uncle Warren has the resources to fend off E&O claims.
December 17, 2013 at 12:16 pm
SWFL Agent says:
Like or Dislike:
1
1
John H., nice post. At least you’re looking at the glass as half full. The IA may not get this market share back unless changes occur. I do not benefit from defending Geico’s strategy nor am I a fan of Geico but their market share is not solely based on advertising. Too often we focus on this. Geico looks under every rock to cut expenses, their rate changes are typically manageable from a customer perspective, their share of the “preferred” client base is growing, and they have Berkshire Hathaway money behind them so their investment strategy on reserves can be more aggressive than other carriers. Yes we IA’s can add value and I’m not giving up yet either
December 19, 2013 at 3:25 pm
ssx1 says:
Like or Dislike:
2
2
SWFL, I think you hit the nail on the head with GEICO cutting expenses and especially their aggressive investment strategy. From what I’ve seen, GEICO’s ability to keep rates so low is due far more to their aggressive investment strategy and much higher returns than the rest of the industry. Spending over $1 billion annually on advertising plus staffing huge call centers really eliminates a big chunk of the savings from not paying commissions to an agency force, but earning just a couple percent more on their investment portfolio & float gives them the ability to rate at break even or a CR loss and still turn a profit. Ah, the joys of being privately owned.
February 12, 2014 at 9:38 am
CDA23 says:
Like or Dislike:
5
0
perhaps the “average joe” who is struggling to make ends meet and has seen wages decline for decades has no choice but to buy “cheap” insurance and fast food.
December 20, 2013 at 5:26 pm
Agent says:
Like or Dislike:
4
0
I saw an article on Property Casualty 360 today that said Allstate was having to charge some pension expense to the fourth quarter earnings in the neighborhood of $100 Million to $125 million. It also said that retirement activity of employees was 5 times the normal activity and employees would be offered another plan in the future. I think all may not be well with the Good Hands people, especially after their well publicized revolt of their agents earlier this year.
Agree with what Agent said: This has been my point all along…when an atty goes after a small agent, the E&O carrier won’t fight if it’s not too big.If they have to go against GEICO with a staff of atty’s on payroll, likely they will want a retainer unless it is clear negligence. puts IA’s at a disadvantage for “go away money” claims which are most of them.
We run a good message on our Electronic Message Sign. It simply says that “Dave saved $250,000 on his last Auto claim”. It is designed to make people think about their Auto limits.
Agent2, suing GEICO is a bit like suing Walmart. They have a legion of attorney’s on retainder who will fight and delay and make a claim go away with little payment made.
Geico hires nonlicensed people to answer the phones and questions in order to save on costs. They have some of the lowest paying jobs in the business. Look up reviews of people who work at Geico. All say that the pay is low. Even with all this shaving, they are among the highest in loss ratios, and combined ratio is average for the industry. What do you expect from a company whose main slogan includes the word “cheap”. Cheap is a virus that runs thru.
see… This is where you are wrong. GEICO has ALL phone agents take the state licensing class and take the exam before they actually go through any GEICO training. IF they do not pass the state license they do not get to keep their job at GEICO. So no…. that is not how we save on costs. In fact it costs us more to do it that way.
All licensing tests are required in each state to be passed within a certain amount – my state, you can only miss 5 questions on the test before you’ve failed. And if you miss it, you’re out of luck – they will send you packing. GEICO doesn’t fool around about following the law.
I’m curious to know where you get your information? GEICO licenses their agents in both sales and service. Some of the billing agents may not be licensed, but by and large they spend a lot of money on licensing. I also don’t recall the word “cheap” being in the company’s slogan.
Ryan, can you explain why GEICO keeps pushing low limits on just about every quote they do? A well trained, licensed agent does not push state minimum limits, but advises a potential client on the dangers of low limits. I have run across numerous quotes and they look almost identical every time.
I worked for GEICO for 2 years and as a licensed professional insurance agent I NEVER pushed state minimums on anyone. As a matter of fact, if a potential customer called and was a home owner, if we didn’t offer at least 100/300 we would be reprimanded for not gap counseling. GEICO, in my opinion, has some of the best trained agents in the business.
That is a lie. Look it up on any states DOI imbecile Geico can’t let agents touch a policy without state MANDATED licenses. That’s illegal. Stop spreading inflammatory untruths
Geico is not doing anything from a rate perspective that cannot be found elsewhere. Rates on policies sold through the agency channel vs. the call center channel are not cheaper or more costly simpley because of one channel vs the other. What Geico is / must be doing better than others, is providing constant brand awareness along with rate stability. Even if the client is buying state minimum, the public is getting a product they want. When consumers are low information and / or confused about a product such as insurance, the easiest denominator for this type of consumer to understand is the price. Not saying this is what is best for the client.
I have had discussions with the Progressive rep and he vehemently denies that their online quotes are lower than what an agent quotes. That is patently false and we have compared quotes received direct with our quotes and the agency quote is always higher. The reason may be that Progressive has to pay commsission to the agent and they don’t on the direct quotes. The difference on the quotes is about the same as the 10% commission we get.
Agency rates have been LOWER than direct in many territories near my office for a couple of years. It swings both ways.
December 18, 2013 at 1:37 pm
SWFL Agent says:
Like or Dislike:
2
0
Agent, it not just the commission difference. PGR’s direct and agency auto products have different rating algorithms and methodology. That’s why the IA channel might have a better rate on a NS risk while the direct product has a better rate in a preferred policy. Progressive knows what they’re doing. The direct channel often prices the preferred, longer retaining risks better than the IA product.
Mr. Solvent, please explain how an Agency can quote with the expectation of receiving a 10% commission and have their quote be lower than the online/phone quote with Direct. I have yet to see it swing both ways and I have had Progressive for 20 years.
Lonestar, the problem is that the low information people don’t know what they want and GEICO does not push having better limits. They will not quote higher limits unless someone asks them to. They are all about price and the average consumer who are financially strapped are cutting expenses to the bone. Many are now rolling the dice and hoping the accident will always be the other drivers fault.
Agent, I agree, and I think we are saying the same thing. I understand the whole “We are professional advisors” spiel, but at some point individual responsibility has to come into play. I am not going to talk “common sense” into someone’s way of thinking, unless they want my opinion. Very much like the captives that push life insurance on clients. Hey, if a person is not smart enough to realize their need for life insurance to protect their family, I am not going to harass them to do what is logical. Everyone needs to lookout for themselves.
Lonestar, don’t forget you’re also fighting the battle with the “state mandated” limits. Many consumers think that if the state has determined a “minimum limit” then that’s all they need. The state is the authority in their mind and no one can convince them otherwise. Doesn’t make it right but it’s reality.
lonestar, I think the best way to explain limits is to give examples of claims that have happened to some of our customers. When someone is carrying a $25,000 BI limit each person, $50,000 each accident and they have an at fault and several people are injured in the other auto, the medical will eat it up in a heart beat. A $50,000 limit for PD is also useless if they hit a Mercedes and total it. They quickly join the ranks of the Underinsured and the other carrier comes after them for subrogation. From what I have heard from customers who have tried GEICO, they are not given this kind of information on what can happen with inadequate limits. They are more interested in selling a price.
lonestar, I wish more people would take personal responsibility for their actions, but we live in a world of corruption, entitlement and people just act stupidly. All one has to do is look at who we elected in 08 &12.
I have a friend who has a son who died tragically a few weeks ago. He had been married and divorced, had a new wife with a baby on the way. He also had a $500,000 Life Insurance policy. He never changed the beneficiary on the policy to the new wife so she will be up the creek without a paddle and the ex will get the proceeds.
So I work for GEICO lol. Definitely no hate on any other companies. But the assumptions made about other companies, including my own, are hilarious lol. We don’t default-quote state minimums (that’s actually counter-logic for sales strategy, both sale and price), every agent that answers these phones are licensed (some aren’t for all states, so maybe that was the meaning?), our service isn’t ‘cheap’ or second rate (is among top in the industry in terms of facilities, price, turnaround, quality, etc), our pay isn’t low for the industry (less than a year with the company I’m not far behind 50k, AND I backtracked industries so I anticipated a lower salary..but still not bad for just outta college…). I do agree, our financial backing from Warren makes more better flexibility and bolder moves…but that is our advantage. I recommend others go find their own, or the trends will continue. Our strategies work and with some of the most recent changes being implemented, I expect to see more.
Bill, I appreciate your response, but I’d also suggest that one year just out of college doesn’t give you the experience necessary to form a reasonable perspective. GEICO shoppers are price sensitive, disloyal and cheap. They don’t care that they go through the drive-thru at the low quality taco stand but also have to make their own taco. They don’t care that each time they call, they get a reactive salaried clerk, who is probably not a career person, who has no aspirations, or is just using the job as a stepping stone. Thay don’t care that they never will know the name of the person answering the phone, and that they will never get the same person twice. They don’t care that when they call in with a claim question it is recorded on CLUE as a reported incident. They don’t care if the guy at the other end of the phone is a local businessperson who contributes to their community, who has many years of experience and advanced designations. They don’t care that the agent has local knowledge and a whole network of professionals who can immediately begin to mitigate a loss instead of getting a possible misfit dispatched by the regional claim office. They don’t care that they have to drive to the claim center and deal with the clipboard carrying claim rep who instead of arriving at a price with the repair shop of choice, will simply cut them a check – and he better hope it’s enough to pay the whole claim. The GEICO buyer, like the Costco buyer, or the Taco Bell buyer doesn’t care about good, they want acceptable or cheap. It’s more than who answer the phone. It’s more than a cute commercial. It’s more than a billionaire-investor’s ego. It’s about value. Subway is the largest food chain in the world. You wouldn’t take your wife to Subway for your anniversary dinner. GEICO is the Subway of the insurance world.
Paul, I’ve read your response; here’s mine. I’ve worked for the company for over 10 years, all in claims.
1) Every single person in our building who handles calls is a licensed agent or adjuster.
2) Our retention is the highest it’s ever been
3) If you think we don’t investigate claims and just “cut them a check and hope it’s enough”, how do you think we stay in business? It’s a violation of the unfair claims laws to not pay what we owe in a claim.
4) A local agent is great – until you need something done after their business hours, or charges you more on your premium because he needs to get a piece of the pie.
5) I’ve dealt with numerous Agents for other insurance companies who steer their people wrong when it comes to claims – most of those people end up thanking me for the information I give them when I handle their claim.
6) The majority of people don’t want insurance, they purchase it because they have to. We can educate them on coverages and how they apply, but these are adults who make their own decisions. None of us on here drive around with minimum limits – but are you going to tell me that as an Agent if I told you that’s all I wanted you would respectfully not write me a policy? I’m pretty sure you’d write it if that’s what I want, even after my options are laid out in front of me.
Sorry for the rant – but we work hard for our customers, and being where we are didn’t happen overnight. And, State Farm is the largest insurance company, not GEICO, so they would be the subway of the insurance world.
“paying what you owe on a claim” includes off shore or used parts for late model cars if they are available for first party collision claims. That’s one way to keep costs down. This is what the body shops tell me.
claims adjuster, I read your reply, and I think you expressed your POV in an intelligent manner, except in one area.
“4) A local agent is great – until you need something done after their business hours, or charges you more on your premium because he needs to get a piece of the pie.”
I have yet to see any evidence that a customer, on average, pays any more to have an agent versus doing business with a call center. Any small commissions an agent makes are offset on the call center side by other costs of doing business. Real estate, employees with benefits, extensive advertising campaigns, do not come cheap. So I do take exception whenever I see the suggestion that a customer’s rate will be higher with an agent. My experience, is that products offered through my agency, beat the call center’s rates a vast majority of the time. Just my experience.
You’ve been a claim adjuster with McDonald’s drive-thru window of insurance for years – it’s the only point of reference you have. Whoop-dee-doo. Never said the reactive clerk who answers the call doesn’t have a license. They sure as hell don’t have the breadth of knowledge even a personal lines-only IA CSR has. They will also NEVER know their customer, because they answer the phone in the order the call is received. Never the same CSR. I’ve had friends and relatives who have had insurance with GEICO – I’ve had to go to bat for them in fixing the mess, particularly when it came to depreciated paint, junk yard parts, etc. or getting replacement cost coverage on building elements. BTW, I know the quality repai shops, I know the crap. I know who’s going to be there when you get a puff-back or broken pipe, or flood, and I know who’s going to gouge you. You don’t. You can’t, you’re not allowed to send your people anywhere except for the network hack shop. As for me getting my piece of pie? Do you work for free, Pal? Do those reactive clerks who answer your phone work for free? Does that freaking lizard, or Maxwell the Pig – the ad agency – do they work for free? Those reactive clerks, just like you claim people are salaried employees – in other words, you are OVERHEAD. I get paid for ONLY the business I produce. I produce nothing, I get paid nothing. You and the clerks are clock punchers. And, most agents on here, captive and IA will tell you we beat GEICO’s price probably 8 out of 10 times we quote it. Yes, GEICO has a formula – Just like Obama has a formular – squeeze every last dime out of overhead including quality, target the young people with a discounted introductory rate and they’ll protect that GEICO policy like it’s gold. Meanwhile, across the industry, after 5 years, the rates are lower than what that poor dupe is paying because he believes the hype, and the BS about the so-called “middle man”, so he blissfully ignorantly keeps paying and believing he’s got the best rates possible. And, I can’t tell you how many successful financial types we insure in Fairifield County, CT who have multimillion dollar estates, and who still have their $25,000/$50,000 college GEICO policies. Yeah, that’s doing a professional service!
Sorry – I forgot to answer the Subway analogy. Probably, McDonald’s would be more appropriate an analogy, if you use the drive-thru only. You are given the menu, you speak to an electronic voice and are handed what you ordered. No answer to the question “what would you recommend”, just a reactive clerk who hands you a bag. State Fram is more like the pancake house or Golden Corral – Peter Luger’s it’s not, but at least there is some interaction with the service personnel who could tell you what they prefer, and you can go visit your favorite waitress face-to-face.
Even more nicely said Paul. I believe the typical shopper buying GEICO are the cell phone/face book crowd. They have almost no loyalty and will move for a dollar. They look at Auto Insurance as a necessary evil, don’t know squat about proper limits, coverage or what happens after an accident. They will also be screaming the loudest when their policy does not cover a claim due to low limits. However, Uncle Warren has a legion of defense attorney’s on staff to fight whatever comes up.
Paul, the perfect customer for GEICO is the Millenial crowd who don’t own a home, only have one car, do not buy Renters Insurance for their apartment belongings. A recent article in Property Casualty 360 stated that 66% of Millenials do not own their home and 70% do not buy Renters Insurance. They think they are smart, but they act dumb.
Taco Bell Customer – Enjoy the drive thru. I’m sure you probably are one of the Costco “grazers” – those people who don’t even bother to push a shopping cart, but who are at Costco for the sample food items. Do you take your wife out there on Saturdays?
Paul, I am not a Geico advocate, or an advocate for any 1-800-cheep-cheep company for that matter. But Geico is providing what at least some customers want at the time they want it. Geico is spending a phenomenal amount of money to put themselves in front of the low information consumer, or just the consumer that believes the commercials so they buy from them without checking around. I say, nothing wrong with that. What I would really like to see, since Geico’s profit numbers are not public info from what I can tell, is what is their true cost of doing business. (first year revenue minus Acquisition cost + overhead.) I don’t think Buffett is as concerned with making a true profit year in and year out like most insurance companies are, as he is with simply selling policies and using the premium as an ATM machine to fund / finance other ventures. Everything runs in cycles. 5-8 years ago, Geico was not very competitive. They are in some sort of growth mode, but this will most likely not last. But who knows?
Mr. Buffett loves the “float” and gets great investment income off of same. They can have a higher loss ratio and make great investment income to help offset any possible U/W losses. That’s the real key—money to invest by the worlds smartest investor. GEICO has come a long way, thanks to Mr. Buffett. He basically saved them from going broke back in 1975—please check the record in this regard.
Paul, I have been through a number of cycles in insurance over the years. Some companies jump in and have rates lower than many of their competitors for a time hoping to capture market share. Then, the Loss Ratio deteriorates and they realize their reserves are in jeopardy so they raise rates to cool it down. I am not saying Uncle Warren will necessarily slow down much because we know he has deep pockets, but when he sees the Combined Ratio getting bad, he may slow down some.
By 1975, it was clear that GEICO had expanded far too rapidly (during the 1973–75 recession) when it reported a $126.5 million loss. To prevent GEICO from collapsing, a consortium of 45 insurance companies agreed to take over a quarter of its policies, and it was forced to issue a stock offering (thus diluting existing stockholders) to raise money to pay claims. It took five years (during which the company shrank significantly) and a massive reorganization to set GEICO on the path to recovery.
Boy the attack trolls come out with knives. First, I’m not “angry”. I am somewhat frustrated that people cannot see value, or prefer to be ignorant lest they’d have to acknowledge they made a mistake.They are also ignorant when they cuss out the “middleman” as an expense. First, I am an Independent Agent. It shouldn’t be too hard to comprehend that from my past statements. I get paidd a fixed commission amount for my production. If I produce nothing, I get paid nothing. GEICO has to pay recruiters, they have to train, they have to pay fixed overhead expenses like the light bill, like the licensing fees, like the CE, like the rent, and nobody works for free. I’m sure that the reactive lerks and the junior claim adjusters all get a salary, an annual review and scheduled raises. The ad costs for GEICO exceed a Billion Dollars alone. Kevin, where does that money come from? I have to do it all for an average of 13% of gross premium. Difference? I am a career agent, 29 years. I own the agency. We represent upwards of 30 different companies requiring a breadth of knowledge of insurance far in excess of of a single one-product insurance carrier. Sorry Flo, but we can quote multiple carriers too, the difference being that we can actually write them all without bias. The advantages we can offer over the reactive phone clerk: 1.) You have a dedicated CSR who knows you, that knows your circumstances, your childrens names, where you live, etc. – GEICO, you get a different clerk answering the phone, never the same one twice. 2.)When the puff back happens, we know which restoration company provides the best service. We know which repair shop does the best work. In other words, we have local knowledge that a call center could never have. 3.) We can write ALL LINES of coverage. We don’t just write auto, then farm out a homeowners to another carrier, or the airplane, or the jewelry schedule, or the business insurance. 4.) When the account goes sour due to experience, we have markets to write it with. We don’t just throw you to the sharks. 5.) When you do have a loss, we will discuss the loss and whether it makes sense to even report it to begin with. It might be less than the deductible, you might’ve had other small losses and this small loss would put you over the top for a non-renewal. If it makes sense, we’ll report it. When an insured calls GEICO, it’s recorded as a loss and is entered into CLUE whether money is paid out or not. Our orientation is that of professionals providing a professional service, providing longterm value to the client. GEICO’s proposition is to sell a PRODUCT on a transactional basis, and to deliver it as cheaply as possible. Insurance isn’t ITunes. The gentlemean who stated Warren is all about the float is exactly right, but by using a device designed to protect a person’s financial well-being to suck in the money, irregardless of whether the product is providing security, or a false sense thereof, is to give us all a black eye under a false premise. And, yes, I resent it. Insurance is a sophisticated financial device which is a toll to accomplish a means, not the means itself. I have read websites like http://www.alltateinsurancesucks.com, and there is probably one for GEICO where probably 95% of the complaints are ignorance on the part of the insured. Thanks to GEICO for contributing to that ignorance solely to profit Berkshire Hathaway Shareholders.
Paul, I am in 100% agreement with you since I have the same role you do. GEICO caters to the low information customer who is married to their cell phone. They have no clue and only shop price and will leave you in a heartbeat since they have no loyalty. They are the Hope & Changers of our society. Fortunately for us, there are still more than enough customers who appreciate our service and advice and our ability to handle all their insurance needs. Allstate agents got screwed over when Allstate bought Esurance and do the direct thing. I am sure they are real happy about that development.
I’m a captive agent since 2009 and working a lot of quotes in January to kick off the new year. Geico may have been the lowest common denominator in the past but I am seeing them in more and more of our “confident planner” households. Mulitline $250k plus home and multiple autos with limits 100/300 and higher.
They were less HALF my rate on a multiline 250/500, 3 cars, no claims, tickets, or issues client. Less than HALF!
Good for them – bad for me!
State by state it may be different but in my state they are selling pretty much the same coverage we offer – even the perks like roadside assistance, loss of use, etc and they will cover permissive use as far as I know.
Its time to pull you know what out of you know where and realize a major player just jumped to second place.
Michael, GEICO farms out their HO and that market sucks. I ran up against them on an account and their HO coverage was very bad, inadequate values, high deductibles and worst of all, it was 20% higher than my market. They are a joke when it comes to HO.
Confident Planner=Farmers, right?
Regardless of the sweet spot Farmers is targeting, every big insurer needs to have a certain volume fo flow business and that has to include low limit price sensitive buyers who are struggling and can’t afford higher limits even if they wanted to buy them
Farmers Auto lost market share last year in private auto after taking some huge rate increases in the last several years.
Look for Farmers to take rates down this year so that they can recapture that lost market share.
Michael if you are with FIG, I feel for you. Especially if you are on the 2009 contract. Farmers has to send up to 20% of each dollar over to Zurich, so that will not go away. You might want to develop an exit strategy, IMHO. I left FIG 3 years ago after being with them 11 years. FIG will keep telling you it will get better, but it never does.
Warren Buffett does not run GEICO.. Warren Buffett is an owner not operator.. All B/H does is take profit and advertise with a percentage.. No ego is involved just pure profit making machines within B/H.. GEICO has one of the nations most respected CEO’s.. He runs GEICO not Warren.. Next..
I find it comical to read all these “ideas, facts and opinions” I have been in the industry for many years. I have numerous family members in the industry and we all work for different companies: (USAA, Allstate, GEICO, Progressive and State Farm) I get information from all of them and we talk about the industry in length, often. The fact of the matter is GEICO is not on some “growth trend” that will likely go away. To say they are profitable due to Warren Buffet’s investment team is idiotic. They write 4.5B in policies and have one of the lowest underwriting ratios in the industry. In all they have formula to spend less per dollar of premium than the industry. Yes, this is directly attributed to lower overhead and no “agency commissions.” (those of you on here that say there is no added cost for an agency over direct sales are ignorant. My brother is an agent and he at times cannot compete with his own company for policies sold online) Why do you think the industry as a whole is reducing agent offices and licenses to sell their product. It is because of cost of business. You all say they have no advantage in claims writing due to sub-par practices with aftermarket parts… ALL insurance companies on this list use aftermarket parts. If you would like to have an all-oem policy you can add that for a premium. That is with all insurance companies on this list. Again there are “higher” cost policies and companies that will offer you an all OE policy… i.e. Chubb insurance. Additionally, you say GEICO is some “fly by night” “800-cheap insurance” “.com bust” The fact of the matter is the consumer is changing. If you do not recognize that we live in a time where people want less interaction and more “microwave” commerce, then you have no clue what business is doing right now. GEICO has an advantage on the industry due to this, Progressive’s direct model is proof of this success too, and Allstate absolutely recognizes it with their acquisition of e-surance. If you read the business section of your newspaper or on yahoo’s home page you will see the rate of “brick and mortar” stores decreasing. The Amazon’s of the world will continue to grow and you will see the trend of increased e-commerce year over year. E-commerce grew by almost 15% in 2013. It is expected that that e-commerce will grow at a compound annual growth rate of approximately 14% over the next 4 years. This will attribute to over 434 Billion in annual e-commerce sales with smartphones and tablets accounting for 11-14% of those sales. Watch out because GEICO has already beat the industry in smartphone and tablet apps to both sale and service policies and claims handling. Allstate has recently began advertising a claims app. This is an industry change and not a GEICO fad. If you do not recognize these things you will continue to sit and judge what innovators are doing as “short-lived trends or fads” and find yourself beat in the market. GEICO’s 10 year growth exceeds the industry by double digits and is forecasted to continue growth by over a million policies per year. I do not see them going away anytime soon and they have both the financial stability and financial backing for long term strategic growth with high levels of retention. I’d say the direct sale method will lead the industry in percentage within 15 years. Each insurance company has its own unique niche. My grandmother used her “agent” with State Farm for over 45 years, when he retired and his son took over she said she didn’t like him. She wanted a new agent, when my brother asked what her agent would do for her that his son doesn’t she didn’t know. Her response… He helped me get insurance… when she had a claim she would have to call an 800 number and talk to a claims person at a call center. The agent had no clue what the claims process was. An agent can counsel and advise on many things. They can sell you more insurance and more of their products. At the end of the day she was getting no different service than what she would have received in a direct sell model. Today she is insured by a direct sell company and pays approximately 40% less per year. I’m sure GEICO, Progressive, E-Surance and any other direct sell model has 1000’s of these type customers. They will continue to use a direct-sale model. I don’t work for all these companies obviously; however, I’d say Progressive, GEICO, Nationwide, USAA, Kemper, or any other direct sale company are going to see growth due to their sales model. As far as the comment I read about GEICO only making money because of Berkshire Hathaway.. research the company and see it is a subsidiary of the BH model but not funded by them. GEICO is one of the most financially stable insurers in the nation. AM Best gave them an A++ rating along with State Farm and USAA.
FYI. I used to work for Kemper Direct and they are folding up the tent and packing it in. They no longer do any marketing and are running off the book.
Russ, We have had Kemper Preferred for several years. Their Commercial lines went belly up and Personal Lines sold to Unitrin Group which has been equally poor managers. They are agent unfriendly, have a very narrow focus and not so good rates. We are currently looking at book rolling to another carrier or carriers.
I hate to break it to all you insurance people, but most people, as far as I understand, don’t view insurance as a valuable, salvific, all-protecting, etc. mechanism. To most of the non-insurance salesmen that I know, most insurance, especially auto, is simply paying someone else money that you don’t have the self-control to save – that, and if you don’t use it, you lose it. I’ve been in several accidents over the years, and I’ve still spent far more on insurance than I ever would have on repairs.
Bottom line: I buy Geico because the law says I must have insurance, and it’s the cheapest. I don’t care if someone is nice, personable, has me in a customer-relationship database (real personable!), etc.
How does a non insurance person have access to Insurance Journal to make stupid comments like this. She/he is a perfect customer for GEICO, probably has minimum limits, no U/M or any other coverage that might be valuable in an accident. Probably a cell phone addict who texts while driving as well. The most dangerous driver on the road.
…or maybe he did a Google search for auto insurance liability limits and found out how much he needs. It isn’t a complex formula that only an independent insurance agent can solve.
Soon Progressive is going to take second place. Allstate Managers suck, here in south florida they spent their time in facebook and pretending to the company that they’re producing great work. I think new blood is needed in order to get back that second place if they wait to long, they will fall back down even harder.
What do you think managers should be doing that are not doing… I am very curious to know. It sounds like you have a very good handle on things down in Florida
Nothing new here. For decades, district managers and upper management would tout how much GEICO sucks and that consumers would get screwed on a claim. Well, the numbers are certainly telling another side of the story. Clearly, the GEICO and Progressive’s of the world are proving they can offer a similar product and a substantially lower price.
America is tired of getting fleeced by these over-priced outdated insurance companies that continue to use captive agents that for the most part have probably even never read the policies they are selling.
Stop fighting it captives and if you can sell your deteriorating agency do it now while you still can. I DID!
Ex, I agre with you that captive agents are having a rough go of it the past few years. Please don’t lump Independents in with them. We can offer several choices to consumers and if one doesn’t deliver, we go somewhere else. I have had several calls from Farmer’s agents who wanted to broker some business to us they couldn’t handle. They also have tried to get appointed by some of our carriers who spurn their requests.
I contracted a freelancer to complete my search engine optimisation and within a month or so the blog had gone down in the rankings, I assume that wasnt meant to happen.
Added a share on my Facebook, hope you dont mind
My old company once contracted a local business to complete my SEO and within a month or so the
site had lost a lot of the rankings, not a good sign I take it?
Allstate will like their EVEVEN point lower loss ratio over that premium increase, don’t you think? (know it’s just quarterly results, but $$ is $$$.
I think it depends on the expense ratio. Geico may be able to handle a LR that’s 11pts higher if their LAE and acquisition costs are lower. Don’t you think?
What happened to their boost from acquiring Esurance? I thought that was supposed to add to the total Auto writings. Perhaps the revolution they had with their agents had something to do with this along with GEICO’s rise.
I don’t think GEICO can make up an 11 point difference in LR with the extent of ad buying they do. It’s all about Buffett’s ego. I wonder if we’ll be seeing a GEICO blimp circling Northbrook the same way they did over Cleveland when they surpassed Progressive. In any event, McDonald’s, Burger King, Jack-in-the-box, it’s all low quality fast-food insurance. Too bad the average Joe is a sucker for an ad campaign that leads them to believe cheap = good.
Paul, love your comments and don’t disagree. Having been in the biz 30+ years, however, I remain amazed at the commoditization of personal lines, especially auto. I’m staunchly on the side of the independent agency channel and, in fact, anyone who provides real counsel and advice, advocating for clients and providing protection over price. I’m not alone, but when I see the GEICOs of the world rise to premium levels and market share heretofore not seen, I’m concerned for those of us that see our roles as professional insurance counselors and not just cheap policy peddlers. We are losing our share and makes me wonder, will we ever get it back? Not ready to give up the fight – not yet!
Why wouldn’t they believe it? They voted for Hope & Change, didn’t they?
Customers will get a big shock when they have a serious at fault accident and then find that they have minimum limits sold by a geek to sell a price. When a company is selling this way, the customers will lose out when it comes down to inadequate limits. Uncle Warren has the resources to fend off E&O claims.
John H., nice post. At least you’re looking at the glass as half full. The IA may not get this market share back unless changes occur. I do not benefit from defending Geico’s strategy nor am I a fan of Geico but their market share is not solely based on advertising. Too often we focus on this. Geico looks under every rock to cut expenses, their rate changes are typically manageable from a customer perspective, their share of the “preferred” client base is growing, and they have Berkshire Hathaway money behind them so their investment strategy on reserves can be more aggressive than other carriers. Yes we IA’s can add value and I’m not giving up yet either
SWFL, I think you hit the nail on the head with GEICO cutting expenses and especially their aggressive investment strategy. From what I’ve seen, GEICO’s ability to keep rates so low is due far more to their aggressive investment strategy and much higher returns than the rest of the industry. Spending over $1 billion annually on advertising plus staffing huge call centers really eliminates a big chunk of the savings from not paying commissions to an agency force, but earning just a couple percent more on their investment portfolio & float gives them the ability to rate at break even or a CR loss and still turn a profit. Ah, the joys of being privately owned.
perhaps the “average joe” who is struggling to make ends meet and has seen wages decline for decades has no choice but to buy “cheap” insurance and fast food.
I saw an article on Property Casualty 360 today that said Allstate was having to charge some pension expense to the fourth quarter earnings in the neighborhood of $100 Million to $125 million. It also said that retirement activity of employees was 5 times the normal activity and employees would be offered another plan in the future. I think all may not be well with the Good Hands people, especially after their well publicized revolt of their agents earlier this year.
Allstate will have to resort to optimization on existing customers and hope it doesn’t run more off than it already has.
Do you think they will pay their agents more commission? Not so much considering recent articles with the way they have treated their agents.
Agree with what Agent said: This has been my point all along…when an atty goes after a small agent, the E&O carrier won’t fight if it’s not too big.If they have to go against GEICO with a staff of atty’s on payroll, likely they will want a retainer unless it is clear negligence. puts IA’s at a disadvantage for “go away money” claims which are most of them.
We run a good message on our Electronic Message Sign. It simply says that “Dave saved $250,000 on his last Auto claim”. It is designed to make people think about their Auto limits.
Love it!
Agent2, suing GEICO is a bit like suing Walmart. They have a legion of attorney’s on retainder who will fight and delay and make a claim go away with little payment made.
Am I the only one who saw the title of the article and thought:
Saturday Night Live
Nope.
SNL…Me too
Geico hires nonlicensed people to answer the phones and questions in order to save on costs. They have some of the lowest paying jobs in the business. Look up reviews of people who work at Geico. All say that the pay is low. Even with all this shaving, they are among the highest in loss ratios, and combined ratio is average for the industry. What do you expect from a company whose main slogan includes the word “cheap”. Cheap is a virus that runs thru.
see… This is where you are wrong. GEICO has ALL phone agents take the state licensing class and take the exam before they actually go through any GEICO training. IF they do not pass the state license they do not get to keep their job at GEICO. So no…. that is not how we save on costs. In fact it costs us more to do it that way.
All licensing tests are required in each state to be passed within a certain amount – my state, you can only miss 5 questions on the test before you’ve failed. And if you miss it, you’re out of luck – they will send you packing. GEICO doesn’t fool around about following the law.
I’m curious to know where you get your information? GEICO licenses their agents in both sales and service. Some of the billing agents may not be licensed, but by and large they spend a lot of money on licensing. I also don’t recall the word “cheap” being in the company’s slogan.
Ryan, can you explain why GEICO keeps pushing low limits on just about every quote they do? A well trained, licensed agent does not push state minimum limits, but advises a potential client on the dangers of low limits. I have run across numerous quotes and they look almost identical every time.
I worked for GEICO for 2 years and as a licensed professional insurance agent I NEVER pushed state minimums on anyone. As a matter of fact, if a potential customer called and was a home owner, if we didn’t offer at least 100/300 we would be reprimanded for not gap counseling. GEICO, in my opinion, has some of the best trained agents in the business.
That is a lie. Look it up on any states DOI imbecile Geico can’t let agents touch a policy without state MANDATED licenses. That’s illegal. Stop spreading inflammatory untruths
I’m surprised that Arbella or 4AutoInsuranceQuoe aren’t on that top list. I’ve had good experiences with both of those companies.
Geico is not doing anything from a rate perspective that cannot be found elsewhere. Rates on policies sold through the agency channel vs. the call center channel are not cheaper or more costly simpley because of one channel vs the other. What Geico is / must be doing better than others, is providing constant brand awareness along with rate stability. Even if the client is buying state minimum, the public is getting a product they want. When consumers are low information and / or confused about a product such as insurance, the easiest denominator for this type of consumer to understand is the price. Not saying this is what is best for the client.
I have had discussions with the Progressive rep and he vehemently denies that their online quotes are lower than what an agent quotes. That is patently false and we have compared quotes received direct with our quotes and the agency quote is always higher. The reason may be that Progressive has to pay commsission to the agent and they don’t on the direct quotes. The difference on the quotes is about the same as the 10% commission we get.
The Progressive rep. sounds like a tool. That stinks!
Well, we only have them to take things our standards don’t. They will write about anything for a price.
Agency rates have been LOWER than direct in many territories near my office for a couple of years. It swings both ways.
Agent, it not just the commission difference. PGR’s direct and agency auto products have different rating algorithms and methodology. That’s why the IA channel might have a better rate on a NS risk while the direct product has a better rate in a preferred policy. Progressive knows what they’re doing. The direct channel often prices the preferred, longer retaining risks better than the IA product.
Mr. Solvent, please explain how an Agency can quote with the expectation of receiving a 10% commission and have their quote be lower than the online/phone quote with Direct. I have yet to see it swing both ways and I have had Progressive for 20 years.
Lonestar, the problem is that the low information people don’t know what they want and GEICO does not push having better limits. They will not quote higher limits unless someone asks them to. They are all about price and the average consumer who are financially strapped are cutting expenses to the bone. Many are now rolling the dice and hoping the accident will always be the other drivers fault.
Agent, I agree, and I think we are saying the same thing. I understand the whole “We are professional advisors” spiel, but at some point individual responsibility has to come into play. I am not going to talk “common sense” into someone’s way of thinking, unless they want my opinion. Very much like the captives that push life insurance on clients. Hey, if a person is not smart enough to realize their need for life insurance to protect their family, I am not going to harass them to do what is logical. Everyone needs to lookout for themselves.
Lonestar, don’t forget you’re also fighting the battle with the “state mandated” limits. Many consumers think that if the state has determined a “minimum limit” then that’s all they need. The state is the authority in their mind and no one can convince them otherwise. Doesn’t make it right but it’s reality.
lonestar, I think the best way to explain limits is to give examples of claims that have happened to some of our customers. When someone is carrying a $25,000 BI limit each person, $50,000 each accident and they have an at fault and several people are injured in the other auto, the medical will eat it up in a heart beat. A $50,000 limit for PD is also useless if they hit a Mercedes and total it. They quickly join the ranks of the Underinsured and the other carrier comes after them for subrogation. From what I have heard from customers who have tried GEICO, they are not given this kind of information on what can happen with inadequate limits. They are more interested in selling a price.
lonestar, I wish more people would take personal responsibility for their actions, but we live in a world of corruption, entitlement and people just act stupidly. All one has to do is look at who we elected in 08 &12.
I have a friend who has a son who died tragically a few weeks ago. He had been married and divorced, had a new wife with a baby on the way. He also had a $500,000 Life Insurance policy. He never changed the beneficiary on the policy to the new wife so she will be up the creek without a paddle and the ex will get the proceeds.
So I work for GEICO lol. Definitely no hate on any other companies. But the assumptions made about other companies, including my own, are hilarious lol. We don’t default-quote state minimums (that’s actually counter-logic for sales strategy, both sale and price), every agent that answers these phones are licensed (some aren’t for all states, so maybe that was the meaning?), our service isn’t ‘cheap’ or second rate (is among top in the industry in terms of facilities, price, turnaround, quality, etc), our pay isn’t low for the industry (less than a year with the company I’m not far behind 50k, AND I backtracked industries so I anticipated a lower salary..but still not bad for just outta college…). I do agree, our financial backing from Warren makes more better flexibility and bolder moves…but that is our advantage. I recommend others go find their own, or the trends will continue. Our strategies work and with some of the most recent changes being implemented, I expect to see more.
Thanks Bill. I believe you’ve summed it up nicely.
sure thing, and again no offense. respect for everybody
Nicely said Bill. I myself have passed my 20 yr anniversary at GEICO and am very proud to work there.
Bill, I appreciate your response, but I’d also suggest that one year just out of college doesn’t give you the experience necessary to form a reasonable perspective. GEICO shoppers are price sensitive, disloyal and cheap. They don’t care that they go through the drive-thru at the low quality taco stand but also have to make their own taco. They don’t care that each time they call, they get a reactive salaried clerk, who is probably not a career person, who has no aspirations, or is just using the job as a stepping stone. Thay don’t care that they never will know the name of the person answering the phone, and that they will never get the same person twice. They don’t care that when they call in with a claim question it is recorded on CLUE as a reported incident. They don’t care if the guy at the other end of the phone is a local businessperson who contributes to their community, who has many years of experience and advanced designations. They don’t care that the agent has local knowledge and a whole network of professionals who can immediately begin to mitigate a loss instead of getting a possible misfit dispatched by the regional claim office. They don’t care that they have to drive to the claim center and deal with the clipboard carrying claim rep who instead of arriving at a price with the repair shop of choice, will simply cut them a check – and he better hope it’s enough to pay the whole claim. The GEICO buyer, like the Costco buyer, or the Taco Bell buyer doesn’t care about good, they want acceptable or cheap. It’s more than who answer the phone. It’s more than a cute commercial. It’s more than a billionaire-investor’s ego. It’s about value. Subway is the largest food chain in the world. You wouldn’t take your wife to Subway for your anniversary dinner. GEICO is the Subway of the insurance world.
Paul, I’ve read your response; here’s mine. I’ve worked for the company for over 10 years, all in claims.
1) Every single person in our building who handles calls is a licensed agent or adjuster.
2) Our retention is the highest it’s ever been
3) If you think we don’t investigate claims and just “cut them a check and hope it’s enough”, how do you think we stay in business? It’s a violation of the unfair claims laws to not pay what we owe in a claim.
4) A local agent is great – until you need something done after their business hours, or charges you more on your premium because he needs to get a piece of the pie.
5) I’ve dealt with numerous Agents for other insurance companies who steer their people wrong when it comes to claims – most of those people end up thanking me for the information I give them when I handle their claim.
6) The majority of people don’t want insurance, they purchase it because they have to. We can educate them on coverages and how they apply, but these are adults who make their own decisions. None of us on here drive around with minimum limits – but are you going to tell me that as an Agent if I told you that’s all I wanted you would respectfully not write me a policy? I’m pretty sure you’d write it if that’s what I want, even after my options are laid out in front of me.
Sorry for the rant – but we work hard for our customers, and being where we are didn’t happen overnight. And, State Farm is the largest insurance company, not GEICO, so they would be the subway of the insurance world.
“paying what you owe on a claim” includes off shore or used parts for late model cars if they are available for first party collision claims. That’s one way to keep costs down. This is what the body shops tell me.
claims adjuster, I read your reply, and I think you expressed your POV in an intelligent manner, except in one area.
“4) A local agent is great – until you need something done after their business hours, or charges you more on your premium because he needs to get a piece of the pie.”
I have yet to see any evidence that a customer, on average, pays any more to have an agent versus doing business with a call center. Any small commissions an agent makes are offset on the call center side by other costs of doing business. Real estate, employees with benefits, extensive advertising campaigns, do not come cheap. So I do take exception whenever I see the suggestion that a customer’s rate will be higher with an agent. My experience, is that products offered through my agency, beat the call center’s rates a vast majority of the time. Just my experience.
You’ve been a claim adjuster with McDonald’s drive-thru window of insurance for years – it’s the only point of reference you have. Whoop-dee-doo. Never said the reactive clerk who answers the call doesn’t have a license. They sure as hell don’t have the breadth of knowledge even a personal lines-only IA CSR has. They will also NEVER know their customer, because they answer the phone in the order the call is received. Never the same CSR. I’ve had friends and relatives who have had insurance with GEICO – I’ve had to go to bat for them in fixing the mess, particularly when it came to depreciated paint, junk yard parts, etc. or getting replacement cost coverage on building elements. BTW, I know the quality repai shops, I know the crap. I know who’s going to be there when you get a puff-back or broken pipe, or flood, and I know who’s going to gouge you. You don’t. You can’t, you’re not allowed to send your people anywhere except for the network hack shop. As for me getting my piece of pie? Do you work for free, Pal? Do those reactive clerks who answer your phone work for free? Does that freaking lizard, or Maxwell the Pig – the ad agency – do they work for free? Those reactive clerks, just like you claim people are salaried employees – in other words, you are OVERHEAD. I get paid for ONLY the business I produce. I produce nothing, I get paid nothing. You and the clerks are clock punchers. And, most agents on here, captive and IA will tell you we beat GEICO’s price probably 8 out of 10 times we quote it. Yes, GEICO has a formula – Just like Obama has a formular – squeeze every last dime out of overhead including quality, target the young people with a discounted introductory rate and they’ll protect that GEICO policy like it’s gold. Meanwhile, across the industry, after 5 years, the rates are lower than what that poor dupe is paying because he believes the hype, and the BS about the so-called “middle man”, so he blissfully ignorantly keeps paying and believing he’s got the best rates possible. And, I can’t tell you how many successful financial types we insure in Fairifield County, CT who have multimillion dollar estates, and who still have their $25,000/$50,000 college GEICO policies. Yeah, that’s doing a professional service!
Sorry – I forgot to answer the Subway analogy. Probably, McDonald’s would be more appropriate an analogy, if you use the drive-thru only. You are given the menu, you speak to an electronic voice and are handed what you ordered. No answer to the question “what would you recommend”, just a reactive clerk who hands you a bag. State Fram is more like the pancake house or Golden Corral – Peter Luger’s it’s not, but at least there is some interaction with the service personnel who could tell you what they prefer, and you can go visit your favorite waitress face-to-face.
Even more nicely said Paul. I believe the typical shopper buying GEICO are the cell phone/face book crowd. They have almost no loyalty and will move for a dollar. They look at Auto Insurance as a necessary evil, don’t know squat about proper limits, coverage or what happens after an accident. They will also be screaming the loudest when their policy does not cover a claim due to low limits. However, Uncle Warren has a legion of defense attorney’s on staff to fight whatever comes up.
Paul, the perfect customer for GEICO is the Millenial crowd who don’t own a home, only have one car, do not buy Renters Insurance for their apartment belongings. A recent article in Property Casualty 360 stated that 66% of Millenials do not own their home and 70% do not buy Renters Insurance. They think they are smart, but they act dumb.
Paul,
You seem to have a real sour view of these ‘taco bell’ customers.
It’s no wonder we are switching to GEICO. GEICO appreciates us!
Sincerely,
– Taco Bell & Costco lover.
Taco Bell Customer – Enjoy the drive thru. I’m sure you probably are one of the Costco “grazers” – those people who don’t even bother to push a shopping cart, but who are at Costco for the sample food items. Do you take your wife out there on Saturdays?
Paul, I am not a Geico advocate, or an advocate for any 1-800-cheep-cheep company for that matter. But Geico is providing what at least some customers want at the time they want it. Geico is spending a phenomenal amount of money to put themselves in front of the low information consumer, or just the consumer that believes the commercials so they buy from them without checking around. I say, nothing wrong with that. What I would really like to see, since Geico’s profit numbers are not public info from what I can tell, is what is their true cost of doing business. (first year revenue minus Acquisition cost + overhead.) I don’t think Buffett is as concerned with making a true profit year in and year out like most insurance companies are, as he is with simply selling policies and using the premium as an ATM machine to fund / finance other ventures. Everything runs in cycles. 5-8 years ago, Geico was not very competitive. They are in some sort of growth mode, but this will most likely not last. But who knows?
Mr. Buffett loves the “float” and gets great investment income off of same. They can have a higher loss ratio and make great investment income to help offset any possible U/W losses. That’s the real key—money to invest by the worlds smartest investor. GEICO has come a long way, thanks to Mr. Buffett. He basically saved them from going broke back in 1975—please check the record in this regard.
It wasn’t Buffett who bailed out GEICO in the ’70’s, it was a consortium of other insurers. Too bad.
Paul, I have been through a number of cycles in insurance over the years. Some companies jump in and have rates lower than many of their competitors for a time hoping to capture market share. Then, the Loss Ratio deteriorates and they realize their reserves are in jeopardy so they raise rates to cool it down. I am not saying Uncle Warren will necessarily slow down much because we know he has deep pockets, but when he sees the Combined Ratio getting bad, he may slow down some.
Paul: Who were these other insurers and what exactly did they do to bail GEICO out? Buffett bought a ton of their stock.
Taken from Wikipedia:
By 1975, it was clear that GEICO had expanded far too rapidly (during the 1973–75 recession) when it reported a $126.5 million loss. To prevent GEICO from collapsing, a consortium of 45 insurance companies agreed to take over a quarter of its policies, and it was forced to issue a stock offering (thus diluting existing stockholders) to raise money to pay claims. It took five years (during which the company shrank significantly) and a massive reorganization to set GEICO on the path to recovery.
Back in the day when Obama and Progressives weren’t around to bail out companies.
Paul you seem to really enjoy fast food.
I feel bad for you Paul – Sore Loser?
Paul what position do you have and with what Company?
Paul… Are you an angry Allstate Agent?
Boy the attack trolls come out with knives. First, I’m not “angry”. I am somewhat frustrated that people cannot see value, or prefer to be ignorant lest they’d have to acknowledge they made a mistake.They are also ignorant when they cuss out the “middleman” as an expense. First, I am an Independent Agent. It shouldn’t be too hard to comprehend that from my past statements. I get paidd a fixed commission amount for my production. If I produce nothing, I get paid nothing. GEICO has to pay recruiters, they have to train, they have to pay fixed overhead expenses like the light bill, like the licensing fees, like the CE, like the rent, and nobody works for free. I’m sure that the reactive lerks and the junior claim adjusters all get a salary, an annual review and scheduled raises. The ad costs for GEICO exceed a Billion Dollars alone. Kevin, where does that money come from? I have to do it all for an average of 13% of gross premium. Difference? I am a career agent, 29 years. I own the agency. We represent upwards of 30 different companies requiring a breadth of knowledge of insurance far in excess of of a single one-product insurance carrier. Sorry Flo, but we can quote multiple carriers too, the difference being that we can actually write them all without bias. The advantages we can offer over the reactive phone clerk: 1.) You have a dedicated CSR who knows you, that knows your circumstances, your childrens names, where you live, etc. – GEICO, you get a different clerk answering the phone, never the same one twice. 2.)When the puff back happens, we know which restoration company provides the best service. We know which repair shop does the best work. In other words, we have local knowledge that a call center could never have. 3.) We can write ALL LINES of coverage. We don’t just write auto, then farm out a homeowners to another carrier, or the airplane, or the jewelry schedule, or the business insurance. 4.) When the account goes sour due to experience, we have markets to write it with. We don’t just throw you to the sharks. 5.) When you do have a loss, we will discuss the loss and whether it makes sense to even report it to begin with. It might be less than the deductible, you might’ve had other small losses and this small loss would put you over the top for a non-renewal. If it makes sense, we’ll report it. When an insured calls GEICO, it’s recorded as a loss and is entered into CLUE whether money is paid out or not. Our orientation is that of professionals providing a professional service, providing longterm value to the client. GEICO’s proposition is to sell a PRODUCT on a transactional basis, and to deliver it as cheaply as possible. Insurance isn’t ITunes. The gentlemean who stated Warren is all about the float is exactly right, but by using a device designed to protect a person’s financial well-being to suck in the money, irregardless of whether the product is providing security, or a false sense thereof, is to give us all a black eye under a false premise. And, yes, I resent it. Insurance is a sophisticated financial device which is a toll to accomplish a means, not the means itself. I have read websites like http://www.alltateinsurancesucks.com, and there is probably one for GEICO where probably 95% of the complaints are ignorance on the part of the insured. Thanks to GEICO for contributing to that ignorance solely to profit Berkshire Hathaway Shareholders.
Amen, brother!
Paul, I am in 100% agreement with you since I have the same role you do. GEICO caters to the low information customer who is married to their cell phone. They have no clue and only shop price and will leave you in a heartbeat since they have no loyalty. They are the Hope & Changers of our society. Fortunately for us, there are still more than enough customers who appreciate our service and advice and our ability to handle all their insurance needs. Allstate agents got screwed over when Allstate bought Esurance and do the direct thing. I am sure they are real happy about that development.
You’re an Idiot we’re Trained to coverage counsel our customers… pure ignorance paul
I’m a captive agent since 2009 and working a lot of quotes in January to kick off the new year. Geico may have been the lowest common denominator in the past but I am seeing them in more and more of our “confident planner” households. Mulitline $250k plus home and multiple autos with limits 100/300 and higher.
They were less HALF my rate on a multiline 250/500, 3 cars, no claims, tickets, or issues client. Less than HALF!
Good for them – bad for me!
State by state it may be different but in my state they are selling pretty much the same coverage we offer – even the perks like roadside assistance, loss of use, etc and they will cover permissive use as far as I know.
Its time to pull you know what out of you know where and realize a major player just jumped to second place.
Michael, GEICO farms out their HO and that market sucks. I ran up against them on an account and their HO coverage was very bad, inadequate values, high deductibles and worst of all, it was 20% higher than my market. They are a joke when it comes to HO.
Confident Planner=Farmers, right?
Regardless of the sweet spot Farmers is targeting, every big insurer needs to have a certain volume fo flow business and that has to include low limit price sensitive buyers who are struggling and can’t afford higher limits even if they wanted to buy them
Farmers Auto lost market share last year in private auto after taking some huge rate increases in the last several years.
Look for Farmers to take rates down this year so that they can recapture that lost market share.
Michael if you are with FIG, I feel for you. Especially if you are on the 2009 contract. Farmers has to send up to 20% of each dollar over to Zurich, so that will not go away. You might want to develop an exit strategy, IMHO. I left FIG 3 years ago after being with them 11 years. FIG will keep telling you it will get better, but it never does.
You can always tell when a DM is lying. His/her lips are moving. F###### criminals.
Paul=Know nothing moron..
Warren Buffett does not run GEICO.. Warren Buffett is an owner not operator.. All B/H does is take profit and advertise with a percentage.. No ego is involved just pure profit making machines within B/H.. GEICO has one of the nations most respected CEO’s.. He runs GEICO not Warren.. Next..
Paul You’re an Idiot geico has a 97 percent customer satisfaction rate and has the highest rated customer satisfaction rate in the industry
I find it comical to read all these “ideas, facts and opinions” I have been in the industry for many years. I have numerous family members in the industry and we all work for different companies: (USAA, Allstate, GEICO, Progressive and State Farm) I get information from all of them and we talk about the industry in length, often. The fact of the matter is GEICO is not on some “growth trend” that will likely go away. To say they are profitable due to Warren Buffet’s investment team is idiotic. They write 4.5B in policies and have one of the lowest underwriting ratios in the industry. In all they have formula to spend less per dollar of premium than the industry. Yes, this is directly attributed to lower overhead and no “agency commissions.” (those of you on here that say there is no added cost for an agency over direct sales are ignorant. My brother is an agent and he at times cannot compete with his own company for policies sold online) Why do you think the industry as a whole is reducing agent offices and licenses to sell their product. It is because of cost of business. You all say they have no advantage in claims writing due to sub-par practices with aftermarket parts… ALL insurance companies on this list use aftermarket parts. If you would like to have an all-oem policy you can add that for a premium. That is with all insurance companies on this list. Again there are “higher” cost policies and companies that will offer you an all OE policy… i.e. Chubb insurance. Additionally, you say GEICO is some “fly by night” “800-cheap insurance” “.com bust” The fact of the matter is the consumer is changing. If you do not recognize that we live in a time where people want less interaction and more “microwave” commerce, then you have no clue what business is doing right now. GEICO has an advantage on the industry due to this, Progressive’s direct model is proof of this success too, and Allstate absolutely recognizes it with their acquisition of e-surance. If you read the business section of your newspaper or on yahoo’s home page you will see the rate of “brick and mortar” stores decreasing. The Amazon’s of the world will continue to grow and you will see the trend of increased e-commerce year over year. E-commerce grew by almost 15% in 2013. It is expected that that e-commerce will grow at a compound annual growth rate of approximately 14% over the next 4 years. This will attribute to over 434 Billion in annual e-commerce sales with smartphones and tablets accounting for 11-14% of those sales. Watch out because GEICO has already beat the industry in smartphone and tablet apps to both sale and service policies and claims handling. Allstate has recently began advertising a claims app. This is an industry change and not a GEICO fad. If you do not recognize these things you will continue to sit and judge what innovators are doing as “short-lived trends or fads” and find yourself beat in the market. GEICO’s 10 year growth exceeds the industry by double digits and is forecasted to continue growth by over a million policies per year. I do not see them going away anytime soon and they have both the financial stability and financial backing for long term strategic growth with high levels of retention. I’d say the direct sale method will lead the industry in percentage within 15 years. Each insurance company has its own unique niche. My grandmother used her “agent” with State Farm for over 45 years, when he retired and his son took over she said she didn’t like him. She wanted a new agent, when my brother asked what her agent would do for her that his son doesn’t she didn’t know. Her response… He helped me get insurance… when she had a claim she would have to call an 800 number and talk to a claims person at a call center. The agent had no clue what the claims process was. An agent can counsel and advise on many things. They can sell you more insurance and more of their products. At the end of the day she was getting no different service than what she would have received in a direct sell model. Today she is insured by a direct sell company and pays approximately 40% less per year. I’m sure GEICO, Progressive, E-Surance and any other direct sell model has 1000’s of these type customers. They will continue to use a direct-sale model. I don’t work for all these companies obviously; however, I’d say Progressive, GEICO, Nationwide, USAA, Kemper, or any other direct sale company are going to see growth due to their sales model. As far as the comment I read about GEICO only making money because of Berkshire Hathaway.. research the company and see it is a subsidiary of the BH model but not funded by them. GEICO is one of the most financially stable insurers in the nation. AM Best gave them an A++ rating along with State Farm and USAA.
Perhaps you should go back to handling claims instead of writing treatises.
FYI. I used to work for Kemper Direct and they are folding up the tent and packing it in. They no longer do any marketing and are running off the book.
Russ, We have had Kemper Preferred for several years. Their Commercial lines went belly up and Personal Lines sold to Unitrin Group which has been equally poor managers. They are agent unfriendly, have a very narrow focus and not so good rates. We are currently looking at book rolling to another carrier or carriers.
I hate to break it to all you insurance people, but most people, as far as I understand, don’t view insurance as a valuable, salvific, all-protecting, etc. mechanism. To most of the non-insurance salesmen that I know, most insurance, especially auto, is simply paying someone else money that you don’t have the self-control to save – that, and if you don’t use it, you lose it. I’ve been in several accidents over the years, and I’ve still spent far more on insurance than I ever would have on repairs.
Bottom line: I buy Geico because the law says I must have insurance, and it’s the cheapest. I don’t care if someone is nice, personable, has me in a customer-relationship database (real personable!), etc.
You are a sub-cretin!!
How does a non insurance person have access to Insurance Journal to make stupid comments like this. She/he is a perfect customer for GEICO, probably has minimum limits, no U/M or any other coverage that might be valuable in an accident. Probably a cell phone addict who texts while driving as well. The most dangerous driver on the road.
…or maybe he did a Google search for auto insurance liability limits and found out how much he needs. It isn’t a complex formula that only an independent insurance agent can solve.
Soon Progressive is going to take second place. Allstate Managers suck, here in south florida they spent their time in facebook and pretending to the company that they’re producing great work. I think new blood is needed in order to get back that second place if they wait to long, they will fall back down even harder.
Jay,
What do you think managers should be doing that are not doing… I am very curious to know. It sounds like you have a very good handle on things down in Florida
Nothing new here. For decades, district managers and upper management would tout how much GEICO sucks and that consumers would get screwed on a claim. Well, the numbers are certainly telling another side of the story. Clearly, the GEICO and Progressive’s of the world are proving they can offer a similar product and a substantially lower price.
America is tired of getting fleeced by these over-priced outdated insurance companies that continue to use captive agents that for the most part have probably even never read the policies they are selling.
Stop fighting it captives and if you can sell your deteriorating agency do it now while you still can. I DID!
Ex, I agre with you that captive agents are having a rough go of it the past few years. Please don’t lump Independents in with them. We can offer several choices to consumers and if one doesn’t deliver, we go somewhere else. I have had several calls from Farmer’s agents who wanted to broker some business to us they couldn’t handle. They also have tried to get appointed by some of our carriers who spurn their requests.
I contracted a freelancer to complete my search engine optimisation and within a month or so the blog had gone down in the rankings, I assume that wasnt meant to happen.
Added a share on my Facebook, hope you dont mind
My old company once contracted a local business to complete my SEO and within a month or so the
site had lost a lot of the rankings, not a good sign I take it?
Are you active on any discussion boards
Great article, exactly what I was looking
for. liverpool trøje