Tuesday, July 06, 2010
Auto Insurance Wars
If you have noticed the clever Progressive and GEICO television ads for vehicle insurance, then you may find this post of interest.
Judging by recent advertising activity, those two startups have triggered strong reactions from two long-lived giants in the sector, All State and State Farm.
GEICO is a subsidiary of Berkshire Hathaway, while State Farm is still a mutual insurance company, with no outstanding equity. Policyholders are, essentially, owners.
GEICO has made 'The Gekko' famous from years of ads. Playing on the similar sounding names, the firm has commissioned a very memorable series of ads featuring the talking gekko. While separate, complete financials are obviously not available, recent advertising by State Farm and All State suggest GEICO has made inroads into their market share.
The same appears to be true for Progressive, whose ads feature the bubbly saleswoman with an attitude. She wields the 'pricing gun,' and emphasizes Progressive's do-it-yourself assembly of policy features and great service.
Now, All State is airing commercials observing that if you chose your own policy features, you might not be covered by commonly-occurring car damage such as falling tree limbs.
State Farm, on the other hand, is pushing its special discounts and market share, citing the relatively small customer bases for both GEICO and Progressive.
The five year price chart above for All State and Progressive does show the latter outperforming the former, but both trailing the index.
Still, just on the basis of competitive reactions alone, it's a good bet that Progressive and GEICO are making serious dents in the pricing structures and market shares of fellow vehicle P&C firms All State and State Farm.