GEICO Auto renewal Premium Jump

[CassiusKing1]

Same thing is happening with Tesla insurance.  I have Geico, but have read complaints on Tesla groups where the individual's driving score has gotten better month to month, but premium increases. Tesla insurance is a monthly premium, supposedly based off your driving score.  But the correlation is not there with the price increases.

[MarioP]

The premium cannot be base only on your driving. It is a part of it but if, for example, the cost of repairs increase or the number of car steal is increasing in your area or there is higher risk of a major weather event the premium will increase. What they can guarantee is that the premium would be higher if your driving is not better

[MCR]

As a result of following this conversation, I decided to review my auto (and home) insurance. Just switched providers, saving over $5K for 2023 for auto policy. New 2023 policy for home is effectively same as 2022, but I consider this a gain as I avoid the inevitable increase that's coming from my current provider (increase was just over 26% in 2022).

[mjm]

1 hour ago, MCR said:

As a result of following this conversation, I decided to review my auto (and home) insurance. Just switched providers, saving over $5K for 2023 for auto policy. New 2023 policy for home is effectively same as 2022, but I consider this a gain as I avoid the inevitable increase that's coming from my current provider (increase was just over 26% in 2022).

what state are you in?

[MCR]

18 hours ago, mjm said:

what state are you in?

I'm in North Carolina

[ke4436]

Geico customer from Texas with Car, Home, and Umbrella bundled, no claims ever.

2023 Geico increases:

 

Auto         +25%

Home       +40%

Umbrella  +50%

 

geico representative told me they couldn't lower any of the increases.

[Cod Liver Oil]

Insane stuff!!!! 
I switched my auto to Progressive and kept my home with Chubb.

[gfp]

This chorus of GEICO cancellations has been everywhere lately.  There is going to be a huge reset coming out of GEICO and I have to wonder how PGR's underwriting results are going to look on all this growth.  Is PGR looking at this as a customer acquisition cost and hope to retain these customers down the line when it needs to take price or is GEICO really that out of line on price.  PGR reports monthly so I guess we will see it play out almost in real time.

 

 

 

 

[MCR]

Speaking personally, we switched last month from Liberty Mutual to Progressive. We went from $8,700 annual premium for 3 cars (4 drivers) to just under $3,100. I couldn't wrap my brain around how this was possible, but maybe Progressive is looking at this difference as customer acquisition cost...

[gfp]

3 minutes ago, MCR said:

Speaking personally, we switched last month from Liberty Mutual to Progressive. We went from $8,700 annual premium for 3 cars (4 drivers) to just under $3,100. I couldn't wrap my brain around how this was possible, but maybe Progressive is looking at this difference as customer acquisition cost...

 

I am curious if you agreed to use PGR's "snapshot" telematics or did you opt not to?

[MCR]

21 minutes ago, gfp said:

 

I am curious if you agreed to use PGR's "snapshot" telematics or did you opt not to?

No, I did not agree to use it. Again, I was pretty shocked by the price differential. 

[Grenville]

Its mind boggling to see the sudden change in rates and the widespread nature of it all....will be interesting to know if its just business as usual policy like others have mentioned or GEICO sees something others aren't seeing yet. The other wildcard is you have one of BRK investment managers running GEICO while at the same time you have to imagine Ajit Jain is aware of what's going on at GEICO and is ok with it? 

[gfp]

One thing progressive factors in is the expected lifetime of you keeping your policy with them.  They target a 96 combined ratio but they target that over the total lifetime of the customer.  So they have names for each type of customer at PGR.  The best are the Robinsons (like your family if you were bundling multiple types of coverage with them, owns home, owns the cars, etc), next sounds like you, the "Wrights" - because you didn't mention bundling other types of insurance with your auto but you have multiple cars and multiple drivers -  and then they have "Dianes" which rent their home but have multiple insurance products and the worst (shortest life, most fickle to price changes, inconsistently insured) category are called "Sams."

 

So because a "Sam" will likely only be around a year or so, they need to price that customer to expect the 96 combined ratio right off the batt.  But for a "Wright" like your family, they can price a lot more aggressively because they are targeting that 96 combined ratio over the entirety of your (longer) expected life as a customer.

[gfp]

11 minutes ago, Grenville said:

Its mind boggling to see the sudden change in rates and the widespread nature of it all....will be interesting to know if its just business as usual policy like others have mentioned or GEICO sees something others aren't seeing yet. The other wildcard is you have one of BRK investment managers running GEICO while at the same time you have to imagine Ajit Jain is aware of what's going on at GEICO and is ok with it? 

 

I think Progressive sees this unique environment as an amazing opportunity to grow the company.  It's interesting how much of a head start GEICO gave to PGR by not really feeling like they needed to invest in Telematics for so long  (reminds me of Amazon and AWS a little bit I guess).  GEICO was profitable, growing, and had a lot of experience pricing business off the factors that were working well for it.  But PGR now has this huge advantage with decently high uptake, something like 30% of Auto customers agree to use the Snapshot, and now they have "continuous monitoring" which is huge amounts of real time data coming in that they can learn a ton from.

 

For instance, early telematics would tell them how many miles you were driving, how much time your car was parked in the garage not doing anything,  emergency braking, etc.  But now they can differentiate between the driver who is commuting to work vs the driver averaging the exact same number of miles but always on longer road trips to grandmas house.  The commuter is on more congested roads and has a much higher crash frequency than the equal number of miles on a road trip to a place farther away.  Current smartphone based telematics also know when you are looking at your phone while driving and other distracted driver statistics.

 

You also have the adverse selection issue of course, which is when the crazy drivers stay away from the Insurance company that pushes telematics, etc...

[LC]

Same happened here.

 

Safeco (Libery Mutual) quoted me $200+/month for one car.

State Farm quoted me $100/month.

 

No idea which actuaries are smoking the good stuff but i'll take some.

[MCR]

1 hour ago, gfp said:

One thing progressive factors in is the expected lifetime of you keeping your policy with them.  They target a 96 combined ratio but they target that over the total lifetime of the customer.  So they have names for each type of customer at PGR.  The best are the Robinsons (like your family if you were bundling multiple types of coverage with them, owns home, owns the cars, etc), next sounds like you, the "Wrights" - because you didn't mention bundling other types of insurance with your auto but you have multiple cars and multiple drivers -  and then they have "Dianes" which rent their home but have multiple insurance products and the worst (shortest life, most fickle to price changes, inconsistently insured) category are called "Sams."

 

So because a "Sam" will likely only be around a year or so, they need to price that customer to expect the 96 combined ratio right off the batt.  But for a "Wright" like your family, they can price a lot more aggressively because they are targeting that 96 combined ratio over the entirety of your (longer) expected life as a customer.

That's interesting...didn't know about the 96 combined ratio target. We are definitely Wrights...this is interesting background.

[rogermunibond]

Geico Underwriting

 

1Q2022 $178M loss

2Q2022 $487M loss

3Q2022 $759M loss

 

PGR Underwriting

 

1Q2022 $439M

2Q2022 $458M

3Q2022 $0.7M loss

 

Seems like Geico might have reduced underwriting quality?

 

 

[rogermunibond]

State Farm with an auto underwriting loss of $4.57 billion in 3Q 2022.  Worst quarter in 21 years.

 

https://www.wglt.org/local-news/2023-01-04/analyst-says-a-volatile-year-for-insurance-may-delay-state-farms-fall-as-the-nations-top-auto-insurer

[Grenville]

Wow! Those are crazy numbers, I didn't realize the trend in Geico underwriting! Even crazier is Statefarms auto underwriting loss, it's multiples of Geico's. Impressive on progressive's end as long as they are reserving properly. 

 

The telematics front is interesting. I have so far shied away from having something track my driving habits for the sake of privacy and the intrusion on the way I drive. It does make me wonder how much it would affect my underlying premium. 

[gfp]

Yeah, GEICO has been getting steadily worse.  State Farm's headline number for Q3 looks to have had about a billion dollars worth of net adverse development from prior periods to hit that $4.57B number.  As a shareholder of Progressive it makes me nervous - but they are a very well run company and I do think they know what they are doing. At $50 Billion it was an easy decision for me but at $78 Billion it worries me.  I think I will channel my inner dealraker and do nothing.

[pricingpower]

Allstate had a recent investor presentation on reserve development that was good, logically medical costs are much slower to become clear than the property portion.  I keep getting surprised by how hard the state regulators push back on pricing changes in some states when the costs are already apparent.  It will be helpful to progressive and geico that others are recognizing they are underpricing, hopefully the days of not growing policy count will come to an end.

[Spekulatius]

I am with Quincy mutual and a “Robinson” in Progressive Lingo. I have seen rate rises, but nothing too crazy. I like the Mutual insurers and have been using them for a while. They don’t have telematics or any of the fancy stuff at all.

 

I ran a comparison and could save some bucks going with Liberty Mutual, but according to my broker, their claim experience is worse than with Quincy , so I stayed away from them.

[mjm]

2 hours ago, Spekulatius said:

I am with Quincy mutual and a “Robinson” in Progressive Lingo. I have seen rate rises, but nothing too crazy. I like the Mutual insurers and have been using them for a while. They don’t have telematics or any of the fancy stuff at all.

 

I ran a comparison and could save some bucks going with Liberty Mutual, but according to my broker, their claim experience is worse than with Quincy , so I stayed away from them.

Curious  as to what you think on SAFT and Plymouth Rock as carriers?  

[Spekulatius]

9 hours ago, mjm said:

Curious  as to what you think on SAFT and Plymouth Rock as carriers?  

I looked at SAFT as a stock and heard they are middle of the road so to speak from a customer perspective. The insurance agency I work with carries Plymouth Rock, but for some reason, they don’t recommend them for me.

 

For insurance, I simply go with an insurance agency and let them figure it out. I got the agency recommendation from my realtor when you bights the house.  I checked the Google rating and they were good, so I went along and so far my experience has been good. Inhavent had any claims though.

 

1) I bundle all my insurance needs with one insurance co (told that to my agency but they tend to do so anyways.). That‘s car (2 soon to be 3) our home and umbrella.

2) I use relatively high deductible ($1K if it makes sense for premiums)

3) from time to time, I run a control with another broker. Last one was with a guy who had Liberty Mutual and the prelim quote for the  homeowners  looked much lower. I simple sent them a pdf of my current insurance package and then let them firgure it out. When it was all said and done, the package from Liberty Mutual came out a bit lower but not much. So I stick with my current package.

 

When I lived in Long Island, I had a different broker and they put our package with Narrangasset Bay insurance. I checked the rate was much lower than Geico could offer for car.

 

In California I was with Western Mutual and later with Mercury. Mercury in particular gave us an awesome deal for the bundle.

Edited January 16, 2023 by Spekulatius

[changegonnacome]

11 hours ago, Spekulatius said:

I ran a comparison and could save some bucks going with Liberty Mutual, but according to my broker, their claim experience is worse than with Quincy , so I stayed away from them.

 

What broker you using Spek think you said up thread your East Coast?