Best's Review

AM BEST'S MONTHLY INSURANCE MAGAZINE



The Last Word
Where’d the Gecko Go? Auto Insurance Advertising Sees Dip

Advertising spending is down in the U.S. auto insurance industry, with three companies expressly saying they are cutting back.
  • Anthony Bellano
  • October 2022

After an increase from 2020 to 2021, money U.S. auto insurers spent on advertising was down across the market for the first six months of 2022, according to the England-based data analytics company Kantar.

Auto insurance companies spent a total of $3.1 billion on advertising in 2021, compared to $2.9 billion the year before. But for the first half of 2022, spending was down, to $1.4 billion, compared to $1.7 billion the year before.

Liberty Mutual is among the companies that have cut back on buying advertising. The company spent $202.3 million for the first half of 2022, compared to $219.2 million for the same period last year. This doesn't mean LiMu Emu will be leaving everyone's TV screens, but it does mean certain markets will see less of him and Doug, the stars of a Liberty Mutual ad campaign that launched in 2019. Liberty Mutual is the sixth-largest insurer, according to Best's Rankings of the Top 25 U.S. Private Passenger Auto Writers based on 2021 direct premiums written.

Related: Geico Closes California Agencies, Limits 2.18 Million Policyholders to Digital Interaction

Liberty Mutual President and incoming Chief Executive Officer Timothy Sweeney said in the company's second quarter earnings call that they are still “chasing loss trend with rate” in some lines, notably personal lines and especially personal auto.

Liberty Mutual spent $478 million on advertising in 2021, when it recorded $769 million in net income. In the second quarter of 2022, it recorded a $343 million attributable net loss.

In addition to reducing rates, Global Retail Markets President Jim MacPhee said in the call that Liberty Mutual is working daily with regulators as a “multitude of headwinds,” including inflation, auto severity and weather losses, impact insurers.

Glenn Shapiro, outgoing president of property-liability at Allstate Insurance Co., said in an earnings call that his company is looking at which markets are profitable and incentivizing agents to work those markets.

Related: Best’s Market Segment Report: Myriad Factors Unsettling the US Private Passenger Auto Insurance Market

Through the first six months of 2022, Allstate, the fourth-largest U.S. private passenger insurer per Best's Rankings, has spent $264.5 million on advertising, compared to $309.6 million through the first half of last year. It spent $521.4 million for all of 2021, compared to $325.2 million in 2020.

In the second quarter, Allstate reported a $1.04 billion net loss applicable to common shareholders, a year after the company recorded a $1.6 billion net income.

Advertising spending by Geico—whose name has become synonymous with ad campaigns featuring cavemen and its trademark gecko—was $319.9 million through the first six months of the year, compared to $539.4 million for the same period last year, according to Kantar.

As a result, its expense ratio dropped 2.7 percentage points for the period, parent company Berkshire Hathaway said in its second quarter earnings call. Berkshire Hathaway is ranked No. 2 according to Best's Rankings of U.S. private passenger insurers.

For the quarter, Geico swung to a $487 million pretax underwriting loss from $626 million of earnings in 2021, when Berkshire Hathaway spent $951.7 million on advertising for its auto insurance for the year.

That number was up slightly from $949.2 million for the same period in 2020.


Anthony Bellano is an associate editor. He can be reached at anthony.bellano@ambest.com.



There’s So Much to Cover—Don’t Miss the Latest

Get more news stories like this delivered to your inbox by signing up for our article spotlights.

Subscribe

Back to Home