How Can Geico Beat Progressive by Almost 40%?!?!?

[nyc2phi]

Is it possible that company's like geico who went to direct online sales able to give lower rates because in case of direct sale there is no agents commission? Local agents and brokers get their leads from that insurer only if direct sale didn't happened, right? Does anyone in the marketing chain gets commissions from direct online sale on official website?

GECIO has to get their clientele some how, right? So there is an acquisition cost for them. They have to maintain and service those clients too so there is a cost to that. IA carriers for the most part rely on agents to do that for them and pay them commission.

Both have costs whether it's commission or marketing and hiring employees. Hard to say which avenue is cheaper or more profitable for the company.

GECIO does well in urban areas because they can acquire a large amount of customers with their marketing. In suburban or rural areas their cost per client goes up where as with an IA carrier the cost is relatively the same. This only one factor.

 

[timamr]

Progressive and GECIO although similar taste in clientele have different underwriting factors that determine their rates. There are too many to even list why GECIO might be so much cheaper but here are a few ideas..

1) you purchased Progressive at a time when you didn't have current insurance. Progressive and other carriers will penalize you for that. Now that you've been insured for two years and have a clean record you are more desirable to an insurance company

2) your credit or life circumstances may have changed. Credit is a big role in insurance and if it improves likely will your rate. Also if you became a homeowner, got married, getting older, or have had other life changes you may now be more desirable.

3) GECIO could be trying to buy up marketshare in your area. When an insurance company wants to grow in a particular part of the country they come in with super low rates, attract clients, then eventually raise their rates to normal levels for that territory.

My advice is to keep shopping. If GECIO is willing to come in that low you may be able to find a better carrier that is willing to do the same. GECIO doesn't follow tradition auto coverage form like the "good" carriers do which can leave you with some gaps in coverage.

Where are you located ?

I am located in north FL and yes, when I went with Progressive I had no ins.

 

[Scott Ashton]

well 1 reason is because they pay their help as low as possible which saves you money but you better know more about what your buying than the Geico rep. I refuse to call them an agent because they don't have to pass the harder 220 test in Florida. I just lost a customer with an SR22 and Geico excluded his teenage daughter with 2 at fault accidents or forgot to ask if there were any other driving age residents. Total incompetence! Usually the only time I lose to Geico is because they don't explain coverages. By removing the bodily injury off the policy they saved the customer money and a lot of times don't even tell them!

 

[LostDollar]

Did your agent also verify things like drivers' ages, driving records, miles driven to work, etc?

I had a situation a few years back where my home agent wanted my auto business and I finally agreed to a quote. The agent came back and basically said I was uninsurable. I have no idea whose driving records they got ahold of, but they were not mine-and I didn't really care because I wasn't much interested in switching.

A few years later I did need to combine coverage and I went with that agent-reasonable quotes. Last year I called Safeco for somethin-the agency would no longer take customer calls, and wound up with a noticeable increase in premium because my age in Safeco files was 5 years off. I have an opinion about what caused that ....

But the point is, the differences can go a bit further than just matching coverage types and deductible levels.