Allstate remains ahead of Geico in auto insurance market

Allstate auto insurance Geico

Allstate Geico auto insuranceGap between Allstate and Geico begins to narrow

Allstate remains the second largest company in the U.S. in terms of auto insurance, but the company may soon lose its position to competitor Geico. Over the past year, the auto insurance sector has seen some volatility due to the frequency of natural disasters and the prevalence of insurance fraud. Despite this volatility, however, several auto insurance companies, such as Allstate and Geico, have managed to generate strong profits. The gap that once separated the two companies is beginning to narrow as Geico comes out of 2012 with a great deal of momentum.

Geico is catching up to its competitor

Allstate has reported more than $17 billion in auto insurance premiums in 2012. Geico, which has traditionally been significantly behind its competitor in past years, reported premiums of more than $16.70 billion. According to analysis from SNL Financial, only $730 million separate the two companies in terms of auto insurance profits and both companies are showing aggression when it comes to ensuring their profitability.

Allstate shows more caution in some markets

For Allstate, aggression is somewhat subjective. The insurer has adopted more caution underwriting practices in markets that are prone to natural disasters in order to avoid loss. The insurer has also considered pulling out of these risky markets in order to remain one of the auto insurance industry’s most profitable companies. Geico, however, has been eager to pick up the slack in markets that Allstate has chosen to show caution in. The insurer has managed to sell more policies in these markets as consumers seek to fill voids left by Allstate.

Acquisition of Esurance solidifies Allstate’s position, for now

Geico would have surpassed Allstate in the U.S. auto insurance market if it were not for Allstate’s acquisition of Esurance in 2011. Esurance became a very prominent part of Allstate’s business in 2012, when it introduced a new auto insurance product that allowed drivers to save on their premiums if they drove less and exhibited safe driving habits. Geico has a similar initiative, but has proven somewhat less successful than that developed by Esurance.

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