These days, the amount of premiums a car insurer has on hand isn’t the only statistic to look at. Recent car insurance market data shows that the pace of premium growth is just as important.
After all, looking at growth statistics could signal who’s likely to be “in the dust” in the near future, according to the latest commentary from financial consulting firm SNL Financial about car insurers’ premium figures in the second quarter of 2013.
The country’s 30 largest car insurers saw a 4.8 percent year-over-year jump in direct premiums written in the second quarter, building on the already strong 4.4 percent year-over-year jump for the first quarter. That top 30 now account for about 84 percent of the entire industry.
But the overall growth in premiums has “clearly benefited [some] more than others,” according to SNL.
“As a result, auto insurance market share rankings, which have remained static among the top players for years, could transform if some industry leaders are unable to match the premium growth of their higher-paced competitors,” the SNL report said.
The report also included premiums from commercial auto physical damage, according to SNL, but “the vast majority of the data discussed” was about personal auto premiums.
A Tight Race Between Allstate, GEICO
The second and third spots in the rankings have been changing hands between Allstate and GEICO this year, a contest that SNL called “the highest-profile market share race.”
According to SNL, GEICO overtook Allstate’s second-place standing in the first quarter but narrowly lost that lead “by less than 1 percent of total premiums” in the latest quarter.
“GEICO has always shown strong growth,” SNL said.
But Allstate plans to fire back at GEICO and Progressive, its most immediate competitors, through Esurance, an Internet-based auto insurer that Allstate purchased in 2011. According to Crain’s Chicago Business (Allstate is headquartered near Chicago), Allstate plans to leverage Esurance in targeting homeowners with vehicles and offer them bundled policies that consumers often value for their price and convenience.
‘The Potential to Move Up’
Of the top 30 insurers, GEICO showed the fastest year-over-year, second-quarter growth in direct written premiums, with an 11.5 percent increase. Only four other insurers in that group showed growth of more than 10 percent.
Liberty Mutual, MetLife, Auto Club and Infinity also showed more than 10 percent growth between the second quarters of 2012 and 2013.
Liberty Mutual, holder of the second quarter’s sixth-highest spot in direct written premiums, could advance in the rankings; Farmers, which is just ahead of Liberty Mutual in fifth place, was one of only six insurers in the top 30 to show a year-over-year decline in premiums.
But it’s still a horse race, according to SNL.
“Another double-digit gain by Liberty Mutual would add more than $230 million in premium, putting the company above $2.5 billion,” the report said. “To keep pace, Farmers would need to grow in excess of 2 percent, which is certainly a plausible number in the short term.”
The one other insurer in the top 10 that saw premium shrinkage was Travelers, which announced in July that it would be laying off hundreds of employees in a bid to strengthen its auto insurance profits.
And that horse race might even include another insurer, USAA, which SNL said has shown consistent quarterly growth in premiums between 6.4 percent and 8.9 percent going back to 2009; its second-quarter premiums this year grew by 8.4 percent compared to 2012.
USAA garnered stellar feedback in an auto insurance consumer survey released by Market Force Information (MFI) two weeks ago. The survey found that USAA customers are among the most satisfied, loyal and likely to recommend the insurer to friends and family.
According to the MFI, USAA has had a track record of “exceptional service.” Customers, the survey showed, were happy with insurance prices, stability and online options at USAA.
While the growth of USAA, which provides coverage to members of the military and their families, has been consistently strong, it has “slipped slightly compared to peers” like Liberty Mutual, according to SNL.
“If Liberty Mutual can sustain its improved growth, USAA will have to make another leap to keep pace,” SNL said.
MetLife Making a Play as Auto Insurer
Even MetLife is making waves in the auto insurance industry. Eric Steigerwalt, chief executive for the insurer that is typically recognized as a life insurance provider, said last month that his agents would make a push toward car coverage sales in 2014.
The public announcement may already be shaking up a market that MetLife has been making a play in for “the past few years,” SNL said in its report.
“MetLife has shown better-than-average underwriting profitability in personal auto” in that period, according to the firm. Its report showed a 10.8 percent growth in second-quarter premiums for MetLife, compared to the same period in 2012.