GEICO Auto renewal Premium Jump

[Grenville]

I thought I saw a topic on car insurance renewals, but I was just surprised by the jump in our premium and wanted to vent a little. 

 

Our six month policy came up for renewal, we are long time Geico customers and our policy jumped 63%. I was shocked after it staying around the same amount for a long time. The last six month bumped up 10%, but this last one was a doozy. No accidents and only one car on the policy, my wife's 2000s Corolla. What was odd to me is that after lowering my limits on the Geico auto policy for renewal, it still came in 73% higher than the progressive quote. 

 

Hopefully Todd Combs knows what he's doing, but I was shocked by the discrepancy in premiums. I also was disappointed when I talked to the GEICO rep and she seemed to understand and seemed like it was a common thing for the premiums to jump so much. Maybe I am missing something but seems weird to drive away long term customers with such drastic premium jumps all of a sudden, but I am probably missing something. 

[Gopinath]

We have the similar experience with GEICO price increases, we decided to switch to Progressive as they quoted similar prices to our previous Geico premium. We even reached out to Geico for a price match, Geico couldn't even come closer on the negotiation. GEICO definitely lost us, one of the long term customers and never had any  accident claims history.

[dealraker]

LOL.  You got lumped into a group whose costs/claims were ramping up so you got the "group" bill (the one where they know X% will stay and X% will leave). 

 

Now you start over...to go through the same process all over again.

 

Welcome to a very entry level insurance 101 class.  

[rogermunibond]

GEICO's had pretty poor underwriting in certain states MD, VA, NJ, NY iirc.

 

Rates went up across the board in these states.

[Grenville]

Gopinath thanks for sharing your experience as well. 

 

dealraker: Interesting, I assumed something was at play where we are subsidizing the cost of higher claims, but the magnitude of the delta in premium is what shocked me. If this type of tactic works then great for Geico i guess. I would have assumed the insurance business could target with more granularity given the quality of data analytics (like Snowflake) now. 

 

Roger: my data point is TX

Edited December 9, 2022 by Grenville

[DooDiligence]

9 hours ago, Grenville said:

Gopinath thanks for sharing your experience as well. 

 

dealraker: Interesting, I assumed something was at play where we are subsidizing the cost of higher claims, but the magnitude of the delta in premium is what shocked me. If this type of tactic works then great for Geico i guess. I would have assumed the insurance business could target with more granularity given the quality of data analytics (like Snowflake) now. 

 

Roger: my data point is TX

 

Try this.

 

https://www.geico.com/driveeasy/

 

It lowered my premiums by $280 / year.

I hope I don't get jacked on renewal in NWFL.

[dealraker]

On 12/9/2022 at 12:06 PM, Grenville said:

Gopinath thanks for sharing your experience as well. 

 

dealraker: Interesting, I assumed something was at play where we are subsidizing the cost of higher claims, but the magnitude of the delta in premium is what shocked me. If this type of tactic works then great for Geico i guess. I would have assumed the insurance business could target with more granularity given the quality of data analytics (like Snowflake) now. 

 

Roger: my data point is TX

I've of course been out of the business for some time and go with whatever company I can...and such.  More than once I have cancelled with x or y company knowing I'm lumped in a group that they are up pricing...then get a call from someone from the co I left offering substantially lower premiums.  Like everybody else I'm lazy and dislike change thus I let them raise my premiums to a level that I know is higher than new clients.  But eventually I get motivated and switch.  It is not accurate to say that all companies do this with all clients, but it is accurate to say all companies do this with most clients.  Geico is nothing special here, expect this in some fashion as a life script experience that repeats.

Edited December 11, 2022 by dealraker

[Spekulatius]

@Grenville All insurance cos do this from time to time. You need to good agent to search out the right insurance for you. On the East coast where I live, it’s often a mutual insurance cos. I also bundle everything (homeowners, car, umbrella)  into one. They are also very good on the claim side - at least that’s what my agent tells me (haven’t had any).

 

I guess that goes into @dealraker thesis regarding insurance brokers. I used to do this all myself (finding cheap insurance), but the brokers are worth their money, if you find a good one.

[dealraker]

My next door neighbor owned what I'll term a self-employed agency for Nationwide.   Years ago I think they were employees, then captive self-employed agents, then self-employed independent agencies but still mostly wrote the Nationwide policies.  Honestly I'm too lazy or disinterested to even know exactly.

 

But anyway it was a family thing...the father lived next door to me and then he transferred the house and business to his son (retired at Myrtle Beach) who was my close friend.  This son...we had birthday parties together (one day apart) from age 6 to age 50.  At 50 we had two rotating bands on his decks and two on mine, fed 250 people most who came by boats, and cleared it all out by 10 p.m. so's not to get shut down - we'd gone door to door to ok this with all our neighbors.

 

In any even my neighbor and close friend retired a few years ago.  Immediately I switched over to another friend who is sporsored by Erie - this is they guy who literally impaled me with such fear - he was so good at this business - that I responded to Gallagher's proposals for a buy-out even given my two partners greatly disagreeing with me.  And...guess what?  Going with my old competitor I immediately saved almost 50% as to premiums from going with the new insurance company Erie vs Nationwide.

 

Now this year my rates all-of-a-sudden skyrocketed.  I'll mess around and switch next year...or I may do the dreaded call saying, "Look, I'm gunna bail on all your stuff if..."

 

Insurance is a great business to be in.  You collect in advance of delivering your product.  Then when the client wants your product you deliver it slowly, particularly if it is a big claim, and raise your premiums labeling the client as a claim x'er or whatnot.  Gotta love pre-pay and slow delivery...the of course the claim x status that goes with that client wherever that client goes.  LOL.

 

Anyway Gallagher calls my current insurance guy at least once a month.  My current insuance guy has two sons with him in the business and he's checking out to see how good there are- how interested they are- as to whether or not to sell out.  He has 60 some agents in house in my town and about the same in other close-by towns.  He is knocking it down big time mostly networking with Erie.  

 

And so some 20 plus years ago I woke up and dumped a big amount of money for me at the time in Erie Indemnity stock.  Oh my...monkey see, monkey do.  Braindead finally awoke.  I'd watched him for years and thought nothing about it all.

 

Rambling.

Edited December 11, 2022 by dealraker

[UK]

11 hours ago, Spekulatius said:

@Grenville All insurance cos do this from time to time. You need to good agent to search out the right insurance for you. On the East coast where I live, it’s often a mutual insurance cos. I also bundle everything (homeowners, car, umbrella)  into one. They are also very good on the claim side - at least that’s what my agent tells me (haven’t had any).

 

I guess that goes into @dealraker thesis regarding insurance brokers. I used to do this all myself (finding cheap insurance), but the brokers are worth their money, if you find a good one.

 

A company I used to work for and me personally always used insurance brokers for reasons you described, but thar was like more than 10 years ago. Nowdays I just put some basic numbers in some brokers or agregators website or app and instantly receive up to 6 different offers. You could stop here, but ussualy I pick the lowest offer and go directly (to save some commision) to insurers website to make a final deal. I understand that insurer brokers still provides value for more complex products, but in case of auto insurance, at least in my countr, this business line seems like was very disrupted by internet. 

[longterminvestor]

Auto insurance specifically is admitted meaning state insurance commissioners approve the rate filings.  Inside the filings are rates charged (what consumers care about) but also is the actual contract language so if the insurance company wants to change the language of how a policy reads it must be approved by state insurance commissioner.  All increases (and decreases funny enough) need to be "Approved" individually by each state - some are easy others are tougher.  Covid had an interesting effect on auto insurance business with respect to exposures, rates, loss costs, and underlying risks.

 

#1 initially carriers were making too much money so they gave money back (short memory - insureds were not complaining when premium was returned) - interesting mechanics to how much/how fast/why carriers gave money back for another time.  #2 the value of new/used cars soared about 12-18 months into Covid and the previously approved rate filings did not account for the increase in car valuations - a good amount of the increases seen today are accounting for the increase in costs to repair a vehicle where insurers were losing because claims occurring today are based on car valuations 12-18 months ago depending upon when filings were approved - there is a lag on when rates are calculated, approved, and put into use.  #3 Insurance commissioners were slow (incredibly slow) to allow rate increases for risk bearers coming out of Covid (remember the commissioner is usually elected and protects constituents from the big bad insurance company) - for example California put a 2 year rate freeze on auto rates. So increases seen today are a function of the lag there as well.  #4 Some but not all carriers bundle (Home, Auto, Umbrella, ect) so you get multiline discount, the multiline discount can be a big advantage so when considering situation monoline auto maybe treated differently than bundled homeowner package.  #5 - auto insurance is a commodity and if low rate/best rate is the goal - you gotta shop a lot - agents/brokers can help with this but only with the carriers they are appointed with.  Good example was mentioned, Nationwide was captive agent (only could provide 1 quote from Nationwide) and then Nationwide sold/gave their books to the captive agents and they got ability to shop against Nationwide with new carriers.  Key with picking agent is carrier representation - if the agent has all the carriers actively writing in your market - the quoting process is in a 3rd party rater - super easy process to provide multiple quotes.  #6 - simple and 1 word - inflation.  Inflation on nuclear verdicts and plaintiff cases as well as general cost of parts, supply chain, ect - some of that is settling.  

 

Specifically with GEICO vs Progressive.  This is first time I have seen GEICO pull back when earnings are not great (unknown why they are pulling back - not enough info to just say its because they are not as profitable b/c Mr. Buffett does not care about short term earnings).  I personally think Todd is trying some new things and filling out his shoes as CEO.  They gotta figure out telematics and they will.  Progressive is getting rate on renewal however they seem very competitive in my market (south Florida) vs GEICO for the past 12 months and that was not the case for a long, long time.  In south Florida the bundle doesn't work well at all because GEICO/Progressive don't write Homeowners.  So in Florida (south Florida specifically) its monoline auto all the way in a big way.  Both are stable over time.  Nationwide on other hand in Florida is streaky - you can watch them buy market share and instead of just tick up rates there have been times where Nationwide will straight up non-renew an entire book.  I have always seen Nationwide as a market timer.  That's a personal opinion and not backed up with data - just have seen it over the years.  

 

I personally have not shopped my auto in 7 years.  but that's more cultural for me.  Pro tip, if you qualify by age - the Hartford AARP auto program has always been solid.  That deal beats us out when they quote.   and Hartford is a great carrier.  

   

[Spekulatius]

Actually used car values have been coming down quite a bit since Summer 2022. Lets take a typical sedan - Honda Accord:

https://www.edmunds.com/honda/accord/2020/vin/1HGCV1F16LA089349/?radius=100

 

Most used car charts for different brands and  models etc look like this. Fred shows this too, but their trend line lags a bit behind.

Edited December 12, 2022 by Spekulatius

[Cod Liver Oil]

Strange but true::

Geico is trying to raise my car insurance premiums (NJ)  from $700 to $4000 (500% increase). They said it is because my wife got a speeding ticket a year ago. No claims or change in driving habits otherwise.

[adesigar]

I’ve got insurance through Costco for 15+ years. Tried to find cheaper rates every few years or so and have given up. No one has been able match the rate we get. 

[Spekulatius]

20 hours ago, Cod Liver Oil said:

Strange but true::

Geico is trying to raise my car insurance premiums (NJ)  from $700 to $4000 (500% increase). They said it is because my wife got a speeding ticket a year ago. No claims or change in driving habits otherwise.

@Cod Liver OilHow fast did your wife drive?

I have gotten speeding tickets too in the past but typically with the driving school remediation, there is no premium increase.

 

I think you just need to go a n insurance broker and let them find the best insurance for you. Bundle up with homeowners and umbrella and i found that i could always get better rates than Geico.

Edited December 14, 2022 by Spekulatius

[Cod Liver Oil]

I wrote a letter to WB asking what’s up with that and switched to Costco to keep it in the family. I’ll let you guys know if Mr. B answers. Thanks for the suggestions. 

[Grenville]

Cod Liver Oil: That's crazy to have your insurance jump that much, WOW. I am surprised they are using the speeding ticket from over a year ago. Premiums usually renew every 6 months, so why didn't it jump earlier. One thing that might be at play is a push towards telematics given someone else enjoyed a meaningful drop in rates once they added the monitoring. I just don't like the idea of someone tracking my driving habits all of a sudden when for the meaninful past they did not. It also seems not a great way to gain compliance by jacking up rates and then throwing out a carrot that you might get some savings by implementing this. 

 

I appreciate you reaching out to him. I just don't get why they are all of a sudden driving away good policyholders. It would be different if they implemented this on a consistent basis with so called groups, but this is more like we don't want to write premium and we also don't want good risk. So far in this small sample size it probably is people with older cars, good driving habits and no recent claims history...

 

adesigar: Thanks for sharing your long tenor with Costco. I didn't know they offered auto/home. Have you had any claims expereince with them, how were they to deal with versus other carriers you might have had experience with? 

[Blugolds]

5 hours ago, Grenville said:

 

 

adesigar: Thanks for sharing your long tenor with Costco. I didn't know they offered auto/home. Have you had any claims expereince with them, how were they to deal with versus other carriers you might have had experience with? 

also thank you for the heads up, Costco customer but didn’t know they offered insurance! Quick quote for auto offers yearly premium that is half the cost for me vs my current Gieco offering. Haven’t seen a premium increase yet but I’m sure it’s coming. I’ll likely switch to Costco offerings soon and have already told several friends/family to check out Costco offerings and at least get a quote! 
 

Home owners has always been a “game”. Switch providers, after a couple years they start sneaking it up and then I start shopping. I pay everything individually but I wonder if with todays auto withdrawal for everything if providers of services that offer discounts for auto withdrawal sneak rates up thinking most people don’t notice. Incentivize customers to sign up with auto withdrawal for a small discount so they don’t watch as closely then slowly start raising. It’s actually kind of a smart strategy. At least this is what I have noticed, shared by multiple industries, gyms do the same, auto withdrawal setup,  people stop going and they keep withdrawing, soooo many monthly withdrawals it’s hard to keep track and most people don’t watch closely. I’ve always wanted to know what was leaving the account and watch closely, can’t tell you how many times I’ve “caught” things that were wrong, double charges, mistakes etc. if I wasn’t watching closely would have never noticed. Makes ya think.

Edited December 15, 2022 by Blugolds11

[maxthetrade]

On 12/13/2022 at 9:14 PM, Cod Liver Oil said:

Strange but true::

Geico is trying to raise my car insurance premiums (NJ)  from $700 to $4000 (500% increase). They said it is because my wife got a speeding ticket a year ago. No claims or change in driving habits otherwise.

 

Wow, car insurance in the US is very different from Germany. I pay ~500€/year for liability and full comprehensive coverage for a BMW X3M40i, I have never seen such an increase. Speeding tickets don't increase your premium over here, only actual accidents. Otherwise I'd be fucked 

Edited December 15, 2022 by maxthetrade

[adesigar]

7 hours ago, Grenville said:

adesigar: Thanks for sharing your long tenor with Costco. I didn't know they offered auto/home. Have you had any claims expereince with them, how were they to deal with versus other carriers you might have had experience with? 

 

We have had a couple of auto claims and for the house we had a claim because of a water leak. No issues with the claim. All the claims were when company used to be Ameriprise(American Express). It was acquired by AmFam a few years ago. We have not had any claims since it was acquired though.

[Spekulatius]

On 12/15/2022 at 6:14 PM, maxthetrade said:

 

Wow, car insurance in the US is very different from Germany. I pay ~500€/year for liability and full comprehensive coverage for a BMW X3M40i, I have never seen such an increase. Speeding tickets don't increase your premium over here, only actual accidents. Otherwise I'd be fucked 

Car accident and fatality rates in the US are ~3x higher than Germany. That directly impacts insurance costs. You also need to pay for the countless uninsured drivers here (it’s a line item in your insurance bill and optional).

[maxthetrade]

2 hours ago, Spekulatius said:

Car accident and fatality rates in the US are ~3x higher than Germany. That directly impacts insurance costs. You also need to pay for the countless uninsured drivers here (it’s a line item in your insurance bill and optional).

 

Interesting, I didn't knew this. I would have thought litigation (ambulance chasers) is the primary cause for the difference in price.

[Spekulatius]

15 hours ago, maxthetrade said:

 

Interesting, I didn't knew this. I would have thought litigation (ambulance chasers) is the primary cause for the difference in price.

Yes, the litigation is another factor. It is very easy to claim injuries and settle with insurance cos after an accident, but this also goes hand in hand with higher accident frequency.

[gfp]

Yeah, where I live, uninsured drivers and litigation are both off the charts.  We have some of the highest cost auto insurance rates in the US.  On a non-auto claim, we had a tenant slip and fall on some deck stairs (3 stairs high), in a rainstorm, documented on HD video from the security cameras, resulted in a sprained wrist documented by the hospital and multiple doctors visits, imaging, etc.  Our insurance company just settled with the former tenant for $132,500 rather than go to trial in what they kept referring to as a 'horrible venue' - i.e., Orleans parish civil court jury pool.  Yikes.

[pricingpower]

On 12/15/2022 at 1:19 PM, Grenville said:

One thing that might be at play is a push towards telematics given someone else enjoyed a meaningful drop in rates once they added the monitoring. I just don't like the idea of someone tracking my driving habits all of a sudden when for the meaninful past they did not.

Hopefully a nice aspect of telematics is that it should create a clear incentive for people to drive more safely... if drivers know that sharp turns/not using a turn signal/braking will increase their rate they'll hopefully behave better which benefits everyone