AUTO RATES–The $1-Billion Lizard II

In my recent post on auto insurance titled; Agents vs. the $1-Billion Lizard, I compared the cost of paying agents to sell and service auto insurance with the advertising expense of internet providers like GEICO and Progressive.  Huge advertising expenditures, I said, were necessary for internet carriers to attract consumers to a website that only provided the opportunity for a sale.

I’m sure it surprised very few when I concluded that expenditures for agents’ amounted to far less than internet advertising, certainly less than GEICO’s new all-time high of $1-billion.  This is why I contend the agency system remains price competitive while still providing local service and one stop shopping for other coverages.

Everyone seemed on board ’til I said the following…

“… despite immense profitability, GEICO is rarely the cheapest.  Shhhh…don’t tell that to millions of shoppers so enamored with the internet they never look anywhere else–besides, the lizard is so cute, if he promises a 15% savings…it must be true!

Even those who agreed observed there’s no way to prove that GEICO is never (or is rarely) the lowest priced seller of auto insurance. I must say I wasn’t surprised that some independent agents  thought GEICO had a lower (or the lowest) price, but…I was shocked to hear them say it was because GEICO didn’t use agents!

Enter Florida’s OIR and sweet vindication…

Almost on cue the OIR announced its improved CHOICES website comparing auto rates for Florida’s largest writers. Commissioner McCarty deserves immense credit, not only for bailing me out but, for ditching the old DOI approach that compared rates of just a handful of direct writers–encouraging consumers to only call the likes of State Farm and Allstate instead of Mercury, Auto Owners, or Travelers

OIR’s new approach uses three risk configurations, two coverage options (PIP & PD or All Coverages) and 25 top writers in all sixty seven Florida counties. The permutations seem endless, so…I did not check them all.  But…those I did check, while providing the vindication mentioned above, also provided information I will certainly consider in my next auto shopping spree.

For example, I first checked the risk called “Family With Young Drivers” for Dade, Hillsborough, Duval, Collier, Orange and Okaloosa counties, for both “PIP & PD” only and again for “All Coverages“.  For either one in any of the counties I checked,  GEICO and Progressive were “never” the lowest and in fact were usually between 10th to 15th from being there.

I conducted similar comparisons for the other risk configurations of “Single Female” and “Single Married Couple”.  Again, while GEICO could occasionally be third from the lowest, it was, again, never the lowest.

In fact, the company that was almost always the lowest was Farm Bureau and often it was by   more than the mere 15% the lizard touts. USAA, Travelers, Safeco and a few others were also found to be near the lowest.

And, as competitive as the agency companies appear to be with GEICO, the CHOICES website doesn’t reflect the savings from multi-policy discounts; which can often slice another 20% off the total.

And so…I rest my case.

Now, here’s some minutia you may find interesting.

Single females living and shopping for auto insurance in Dade County will find great disparity in pricing.  The lowest was Farm Bureau (again) at $529 for all coverages.  But…the highest was Allstate P&C with a premium for only one single female with one at fault accident of $10,965 every year. Holy Mackerel!

For a “Senior Married Couple” in Dade county the lowest price for “all Coverages” was, again, Farm Bureau. However, the highest of the top writers was an internet writer that advertises “We don’t require you to have a checking account or a credit card” called “Direct General”.  Its’ price was 550% higher than Farm Bureau’s, for the same risk.

Next, for the family risk the lowest priced carrier in Dade was,  Farm Bureau (zzzz). It was second lowest in Duval county. For “all coverages” it’s $4,145 in Dade (more than twice my homeowners premium)–no wonder some people go with minimum coverage.:)

Caution: the OIR makes the point that consumers should be careful in making comparisons based only on the average data provided by its website.  I will do the same here for my readers.

None the less…I feel secure telling consumers that if they only shop on the internet for auto insurance they are, in essence, not really shopping.

The CHOICES website proves to my satisfaction that, if you want the lowest price you’ll almost always find it from one or more agency companies or an independent agent, and…

…if you want a low price, local service and the convenience of one stop shopping there’s only one place to go…the office of an independent agent!

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