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| Chart of The Week | Automobile Insurance: Change in Brand Preference and Share 2021 vs 2023

The MSW TBSM tracking service measures brand preference as one component of the survey.  Using TBSM Auto Insurance category data, changes in brand preference results between 2021 and 2023 were computed for individual brands.  Our Chart of the Week displays these results for the three top players in the US Auto Insurance market: State Farm, Geico and Progressive.

In addition to this brand preference data, this week’s chart includes the change in market share (between 2021 and 2023) for each of the top competitors as computed from annual published data from the National Association of Insurance Commissioners.

  1. Between 2021 and 2023, State Farm realized gains in both brand preference and market share of over two percentage points.

  2. Similarly, Progressive also achieved increases in both brand preference and market share of around one and a half percentage points.

  3. For Geico, brand preference was flat while market share decreased close to two percentage points.

  4. Brand preference for State Farm and Progressive tracked market share very closely. This is expected given previous studies which demonstrate the close relationship between preference and market share. In fact, independent studies conducted by the Marketing Accountability Standards Board (MASB) have found that preference proved to be a better fit to sales and market share than any other standard research question examined.

  5. Geico experienced less favorable market share results than might be expected from the unchanged level of brand preference. There are two reasons for this: price and level of advertising spend.

  6. The MASB research also demonstrated that including price along with brand preference provides an even better prediction of market share. These studies demonstrated that an increase in brand preference can translate into either a gain in market share or the ability to charge a price premium at the same market share level.

  7. According to data from S&P Global, over the time period from 2018 through 2023, Geico’s rates increased substantially more than their competitors. And in 2022, the year where all insurers started making large increases in rates due to increased losses due to inflation and other post-pandemic factors, Geico increased rates much more than State Farm or Progressive:

  1. Due to the same profitability issues, automobile insurance companies also cut back on advertising spend starting in 2022. While 2023 figures are not yet available, a report from AM best showed that Geico cut back on advertising spend much more than did either State Farm or Geico:

  1. The combination of a much larger increase in rates and much larger cut back in advertising spend explain why Geico experienced a drop in market share between 2021 and 2023 despite an unchanged level of brand preference.

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