Report: Auto Insurance Premiums in Q1 Grew at Record Pace

SNL Financial recently shed a wider light on last month’s first-quarter market report on car insurers, which the firm said saw record growth in premiums and a shakeup in market share rankings in the first three months of the year.

According to the firm’s analysis of market share data, car insurers wrote a total of nearly $47.4 billion in premiums in the first quarter, a jump of nearly 4.2 percent from previous-year figures, marking the biggest increase since 2004.

Premiums rose at a faster pace of nearly 4.5 percent for the five largest auto insurers to nearly $24.2 billion, meaning more than 51 percent of the entire market’s first-quarter premiums was written by one of those car insurance companies.

According to SNL Financial, premiums benefitted from “consistent price increases across the industry” that span more than two years. Insurers hiked prices to lift investment returns dragged down by low, post-recession interest rates and a surge in disaster claims from “a string of costly catastrophes.”

State Farm remained the leader in insurance premiums by a wide margin, with about $8.4 billion in the first quarter, followed by GEICO at $4.7 billion and Allstate at $4.5 billion.

GEICO Passes Allstate in Premiums

Last month, SNL Financial had reported that GEICO had taken the second spot in premium rankings that had long belonged to Allstate.

This latest report details those premium standings in the first quarter.

GEICO had closed much of the gap in the first quarter of 2012. SNL Financial reported that the insurer’s premiums for the period were more than 9 percent higher than in the first quarter of 2011.

Allstate, however, saw a 1.6 percent drop between its first-quarter premiums in that same period.

GEICO finally overtook Allstate with another strong showing in first-quarter premiums in 2013 that was about 11.2 percent higher than the same quarter in 2012. Allstate, on the other hand, saw a smaller 2.2 percent jump in quarterly premiums.

Competition Heats Up as Insurers Make Moves

Travelers president Brian MacLean announced a major restructuring for the company in a conference call with investors Tuesday, saying the company was planning to focus on its auto insurance business by slashing hundreds of jobs and $140 million in costs.

According to MacLean, the changes are “clearly aimed at improving our strategic position” in the auto insurance market, where SNL Financial reported that Travelers has seen slippage in first-quarter premiums going back to 2011.

Travelers, according to SNL Financial, had the ninth-highest amount of written premiums in the first quarter of this year. But that amount was 5.7 percent lower than year-before premiums figures, while the first-quarter premiums in 2012 were 1.3 percent lower than in the first quarter of 2011.

Travelers was the only insurer in SNL Financial’s top 10 rankings to show two consecutive years of shrinking first-quarter premiums.

Other insurers are also making moves to gain stronger footing in the auto insurance market.

Progressive recently announced that it was licensing its usage-based insurance (UBI) technology and intellectual property to USAA, the first deal struck by the direct-to-consumer insurer behind the UBI program Snapshot.

Under the deal, USAA will be allowed to start using the technology next April.

According to SNL Financial, USAA, which offers products to members of the military and their family, is one of the “fast growers” in the first quarter, powered by a 61.4 percent increase in ad expenditures between 2010 and 2012.

This year, consumers have likely seen one result of that marketing boost in USAA’s national “Mine Was Earned” commercial campaign, which highlights the generational advantages of USAA coverage.

SNL Financial reported that USAA’s direct written premiums rose nearly 9 percent between the first quarters of 2012 and 2013.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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