16 Feb

"Insureds nicknamed Schoms switching to Progressive have saved $500 on auto insurance"

We recently switched back to Progressive for our auto insurance (and now, home insurance as well) after being with MetLife for the past 3 years. We had been with Progressive for 10 straight years in the past. But enough with the history, that's not what this blog entry is about.

Over the past many months, I have been entertained at all the ads out there from various companies claiming that customers have saved money by switching to them:


E-surance: "Customers that have switched have saved $523 on auto insurance"

Progressive: "Save over $500 on car insurance"

Allstate: "Safe Drivers Save 45% or More"

And the ever popular GEICO: "Save 15% or more on car insurance"


Seems like every company has their own statistic trying to convince you that you should switch insurers. You might be thinking, 'How on earth can each company claim to be cheaper than the other?'


"Customers who switched saved $xxx..."


Generally, who in their right mind would switch insurers knowing they would pay more than they previously were? Imagine if someone offered you two $5 bills in exchange for a $20 bill. Would you do it?

... and ARRRRRGHHHHhhhhhhhhhhhhh!!! OF COURSE the statistic is going to be hundreds. Who on earth would raise bloody hell and be all up in arms thinking that they pay $10 too much. Nobody switches to save $10... I know I wouldn't.

Now, granted, I'll give the public a little benefit of the doubt on the intention of the statistic. The intent is to get the consumer a personalized quote. How do you do that? Abusing the informative nature of advertising by slipping in a little catch-word. For instance, it's not as attractive -- as sexy -- to say

"Well, on average, our rates are not as good as Allstate, but try anyway, you never know!"

Americans don't have time to potentially save money, we need results. We need a Slap Chop because we just don't have enough time to chop with a knife. I now have enough time to play with my kids because I use a device that effectively brushes my teeth while in my sleep. We know how much time was lost brushing!

We need the sticker shock. We need big-time scoring, damn it. We need to get those iPod/Facebook-obsessed teenagers with the earphones in 24-7 listening to crappy music to pay attention. We need the 36-triple D's:

"You could save hundreds. Thousands that switched did!"

The magic catch-word "switched" -- what other word makes nearly all potential future legal issues disappear (claiming false advertising), allows such a meaningless statistic to be used publicly (limited correlation to my likelihood of seeing such savings), and yet often gets ignored in the ad by consumers because it's surrounded by nothing but good news ("customers", "save", "$$$$$$$$$$$$") The consumer leaves the commercial with the perception that Allstate (or whatever company is advertising) will automatically save them money.

So in a recent mailing, I received a seemingly-personalized letter from Travelers Insurance:

Travelers: Dan, in reviewing your driving history, we feel you may be paying too much. Drivers in your class have saved an average of $453 on your auto insurance. Call or visit our website with the quick quote ID# to see how much you'll save.

So I decided to give them a try. Heck, they seem to know I have a good driving history, which I do. They seemed to do at least a small amount of diligence. And, I like saving money too, so why not... let's do it. Same coverage amounts as my current policy. A couple more questions asked than any quote I've done before. The result? $30 short of DOUBLE... yes, DOUBLE what we are paying now.

So does this get reported within the statistic they give in the ads? Nope.

And to top it off, I can tell why McDonalds had to plaster all those "Caution: Contents may be hot" labels all over their coffee cups. Because we're getting absurdly dumber by the minute. You mean the coffee is hot? You're kidding! Because I know if the coffee was cold, I would have complained! But I didn't know it was going to be hot! (sigh) By that idiotic woman winning that case, the verdict is in -- the trend says we clearly can't think for ourselves. Need proof?

In the GEICO case, they weren't cheaper than Progressive (yet again) by a few hundred dollars. Upon hearing the final quote from the agent, I told him what I was currently paying (again, for all you with horrible short-term memory/selective readers, it was a few hundred dollars). He then said, "So... what date should we start this policy?"

"YOU'RE MORE EXPENSIVE! WHY would I want to switch?"

There are some reasons why insurance companies can be more expensive/cheaper. Some include:

  1. Underwriting - #/types of questions asked. For instance, some ask distance driven/day, others don't.
  2. Incident Forgiveness - Some go back x-years and others have incident severity tiers.
  3. Pre-pay advantages - Progressive has a discount if you pay in full
  4. Multi-insurance discount - If you have auto & home coverage, your auto rates are generally less than with only auto
  5. Area experience - Every insurance company breaks down their rates by location. One company's definition of a rate zone may be drastically different than others. Additionally, the experience for that zone could differ substantially.
  6. Loyalty discounts for staying with the insurer year over year.

So what's the gripe? The gripe is all the insurance companies wanting to grab your attention by revealing statistics that initially, without thinking, can be interpreted as nothing but good. It's just as offensive as mortgage lenders quoting an absurdly-low interest rate to get your interest, but upon inspecting the APR, finding out that there are a lot of hidden costs. Where will the honest company be, which gives the average savings amount for all quotes, not just select ones. To me, that holds more weight and will help tell me which companies to consider. Don't give me a misleading statisitc involving only certain quotes. I'll bet the savings amounts include people like Joe Blow, who has had 5 accidents in the last number of years and saved $1800 by switching (where the disparity is probably due to his old insurer jacking up the rates to get rid of him)

And to you Travelers, quit your personalized crap about good driving history, coupled with a statistic on how much "my types" have saved by switching. You've wasted my time... 15 minutes or so... and then kicking me in the nuts by giving me a quote of double what I currently pay. To me, you've actually done more damage with this approach. I'll know never to go back to you for a simple quote. But you win...you got me to open your letter. I'm the sucker. I'm the idiot...I fell for it. The consolation is that I'm more informed about which companies to consider when quote-seeking in the future.

Categories: Gripe