New Year's prediction: The Geico gecko will soon take a victory lap through America's living rooms after serving Allstate a little mayhem of its own to unseat its archrival as the nation's second-largest auto insurance company.
According to data released last week by SNL Financial, Geico posted $4.89 billion in direct auto premiums for the third quarter of this year, compared to $4.65 billion by Allstate. That edge, combined with a similar first-quarter victory, lifted Geico's 12-month premium tally to $18.11 billion, compared to Allstate's $17.97 billion in direct premiums, to surpass the "good hands" folks for the first time.
Both companies continue to trail perennial top dog State Farm, which posted $8.7 billion in premiums for the quarter.
In a statement to SNL, Allstate spokeswoman Maryellen Thielen characterized the defeat this way: "Allstate's strategy is to provide a broad set of competitively differentiated products to the four consumer segments of the insurance market, not to focus solely on one product line."
That strategy has been made painfully apparent the past few years as Allstate washed its hands of "unprofitable" business by shedding 55,000 homeowners insurance customers in North Carolina and South Carolina who refused to bundle their auto insurance with the company.
Geico, which specializes in selling insurance online, became a subsidiary of Warren Buffett's Berkshire Hathaway in 2007. Its ascent to the top of the auto charts has been assisted by aggressive multiplatform advertising featuring the nameless, Cockney-accented gecko, as well as Maxwell the pig and other zany characters.
Consumers vote with their wallets
Allstate, which bolstered its own online presence in 2011 with the $1 billion purchase of Esurance, has expanded its iconic "You're in good hands" advertising campaign with a darkly funny series featuring Mayhem, a character who physically manifests the many hazards covered by insurance. Allstate has been bucking the industry trend toward lower rates by strategically raising its premiums and reducing its home insurance risk in some states.
"In recent years, profit improvement actions in our homeowners' business have had a negative impact on auto policies (on the books)," Thielen said last spring.
My take: Predictably, consumers are voting with their pocketbooks by choosing to insure with a company that focuses on rock-bottom pricing. Independent brokers and agents warn that low prices aren't everything.
Follow me on Twitter: @omnisaurus.
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