Mass. Agents Group Says GEICO Failed to Report Some At-Fault Accident Data

January 25, 2013Email ThisPrintNewslettersTweetArticleComments

The Massachusetts Association of Insurance Agents (MAIA) this week has asked the state’s Merit Rating Board and the Division of Insurance to investigate GEICO for allegedly failing to report at-fault accident data to the Merit Rating Board, in violation of Massachusetts law and regulation.

MAIA vice president of communications Donna McKenna said that the association has provided the Division of Insurance and the Merit Rating Board with evidence that GEICO has on at least one occasion failed to notify the Merit Rating Board of an at-fault accident involving one of its policyholders.

A company’s failure to report at-fault accident information to the Merit Rating Board could result in a fine of not more than $500 for each violation, according to the MAIA.

The association has requested in a formal complaint that the Division of Insurance and the Merit Rating Board investigate not only the specific case the agents association outlined but also require GEICO to provide proof that, with the exception of this case, GEICO is in complete compliance with the reporting requirements.

The MAIA noted that under

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Geico ad spending far outstrips its peers

(Reuters) – Geico, billionaire investor Warren Buffett’s auto insurer, spent far more than property insurance peers on advertising in 2011, both on an absolute basis and as a percentage of the business the company wrote, according to a new study released on Friday.

Data provider SNL Financial found Geico had spent about $994 million on advertising in 2011. That was fully 22 percent more than next-largest spender State Farm, even though State Farm’s ad spending grew at nearly three times the rate Geico’s did.

Anyone who has watched television in the United States even briefly knows the Geico brand — talking British geckos, erudite cavemen, greasy-haired announcers with mock baritones, all of them essentially running gags used to get the company’s name to stick in peoples’ heads.

Buffett likes to say the Berkshire Hathaway unit can spend so aggressively because it keeps expenses low and can therefore advertise more to increase market share. The data showed, though, just how much more aggressive Geico is willing to be.

SNL found that Geico’s ad budget represented 6.5 percent of the premiums it wrote in 2011. Among the rest of the five largest auto insurers in the country, none spent more than 4.9 percent of premiums on ads.

For the whole industry, in fact, the average is just 2.4 percent.

Over the last 20 years, Geico’s share of the market has roughly quadrupled, for which the advertising program usually gets much of the credit.

Among U.S. auto insurers, Geico has a market share of about 8.5 percent, third behind Allstate Corp’s 10.2 percent and State Farm’s 18.7 percent, according to the Insurance Information Institute.

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