In our business, as an independent agency, we represent over 40 different insurance companies. They all provide various products, features, and services, often same or better than leading “brand name” insurance carriers. But because you don’t see their names on TV, in magazines or online, customers can be wary of switching. They are afraid of the “unknown”. Everyone knows Geico, State Farm or Aflac based on the ubiquity of green lizards, skunks or geese (or is it a duck?) on our televisions. But what about Allied, Safeco or Travelers? Those are some of the largest and financially stable insurance companies in the US, some of them even related to a well-known advertiser (Allied is a Nationwide Company and Safeco is Liberty Mutual) but no one has ever heard of them because they choose not to spend large chunks of their budgets on advertising but rather focus on customer service and lower rates. The lower rates are also due to a different distribution model. These carriers don’t target direct but go through agents like us, which also helps the customers with additional expertise.
In 2014, S&P Global analyzed how much auto insurance companies spent on advertising and found that GEICO spent close to $1.2 billion (about the same as Anheuser-Busch), Allstate a little than $937 million (654 million in 2013). Right behind was State Farm and Progressive (around 600 million). All other companies that came close spent approximately half or third of State Farm and Progressive. It seems that the figures are getting higher from year to year but how does this match with customer service and insurance rates?
Based on Insure.com who surveyed current customers of large insurance companies, Travelers and Mercury were the in the top 5 rated as Best Auto Insurance companies and as you know you can’t see these on TV (none of the well-known advertisers were represented). The same company also rated the Homeowners insurance and the top was USAA*, Chubb, Allstate, AIG and State Farm respectively and only Allstate and State Farm have massive TV advertising.
J.D. Power performed Claim Satisfaction Study in 2016 for Car Insurance and out of the large advertisers, Amica was #7, Nationwide #8 and Allstate #10, with Progressive #14, GEICO #18 and State Farm #22.
In the J.D. Power U.S. Home Insurance Study for Homeowners Insurance in 2016, among the top 5 companies were only Amica and GEICO that heavily advertise. Interestingly enough, a lot of the top 5 companies known for auto insurance have had high satisfaction ratings for homeowners insurance. State Farm falls to #7 and Allstate to #12.
So based on these rough numbers, there is not much relation between advertising budget and customer service leading to customer satisfaction. So how should you choose your insurance company?
- Talk to your agent. Independent agents will have a larger selection of carriers and will also know about their customer service and claim satisfaction through experience.
- Look at the company financial ratings like A.M. Best and Demotech.
- Look at reviews and reports from reputable financial and statistical organizations (not individual consumer reviews that are largely subjective).
How are you satisfied with your car and home insurance carriers? Let us know!