GEICO passed Allstate in the third quarter of 2013 to become the second-largest car insurer in the U.S., according to a new SNL Financial report that called the switch a “major shift” in the marketplace among the nation’s top auto insurance companies.
State Farm remained the top personal auto insurer in the U.S., with $8.72 billion in direct written premiums during the third quarter.
A Tight Race Between Allstate, GEICO in Previous Quarters of 2013
SNL said in the report that GEICO was “knocking on its competitor’s door” in the second quarter of the year, with $4.42 billion in direct written premiums against Allstate’s $4.46 billion.
That door opened in the third quarter, and GEICO walked through with $4.89 billion in premiums, compared with Allstate’s $4.65 billion.
In fact, a report from SNL on car insurance premiums in the first quarter showed GEICO had passed Allstate as the second-largest auto insurer for that period, when the gap was a tighter $4.72 billion to $4.53 billion.
But GEICO’s third-quarter figures showed that the car insurer had, for the first time, surpassed Allstate when looking at performance for the past 12 months, with $18.11 billion in direct written premiums going back a year, compared to Allstate’s $17.97 billion over that same period, according to the SNL Financial report’s authors, Matt Blumenfeld and Raisa Luis.
In SNL Financial’s second-quarter report, Allstate held only a “very narrow edge” on GEICO in prior 12-month figures for direct written premiums, $17.79 billion compared to $17.62 billion.
After ‘Shift,’ Expectations of New Ads, ‘Different Magnitude of Growth’
SNL Financial spotlighted Allstate and GEICO in October as “the highest-profile market share race.” The long-running, tight margin between the two companies made the shift in rankings during the third quarter somewhat unsurprising.
“GEICO’s ascension to the second spot was expected,” said SNL.
The financial services firm’s report also said that Meyer Shields, an analyst for Keefe Bruyette & Woods, had predicted the switch occurring “by late 2013 or early 2014” and now foresees GEICO starting a marketing campaign that takes advantage of previous advertisements in which the car insurer “frequently referenced its third-place position.”
Shields said that “GEICO will be sure to tout its new position,” according to the report.
A summer report from SNL showed that GEICO outspent all other auto insurers in advertising expenditures in 2012.
SNL said in its latest premiums report that Allstate would not “directly comment on the [third-quarter] shift,” instead providing a statement in which the car insurer said its “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.
According to SNL, Allstate’s direct written premiums among all personal insurance lines from second quarter of 2012 through the second quarter of 2013 was $7 billion higher that GEICO in that period.
According to SNL, Shields said that 2013 has shown Allstate reestablishing a “growth mode” as the car insurer seeks its way back to premium levels last seen in late 2009. Months ago, Crain’s Chicago Business reported the development of an Allstate business model that includes heavier promotion of insurance bundling between homeowners and car insurance policies.
However, according to SNL, Shields said that “even if Allstate reignites growth, I think we’re talking a different magnitude of growth.”