Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Jan 20, 2021

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geico

As individuals, we’re always more in tune with what’s going on in our own neck of the woods.

Have you noticed that when you become interested in purchasing a particular model of car, you tend to see more of them on the road.

This holds true whether you’re looking to buy a 1980 Chevy Malibu or a 2011 Infinity G37. It just tends to be on your “radar.”

Advertisers love this. This concept means they can subliminally fill your brain with their message without coming across as annoying or desperate for you business.

And insurance professionals are all too aware of this. They have to contend with the fact that the largest insurers in the U.S. occupy what seems like 95% of all advertising space. This frequency of advertising tends to hold firm regardless of entertainment medium: television, radio and the internet. There seems to be no escape.

Here’s a challenge for you. Try to count the number of Geico, State Farm, Progressive, Allstate and Farmers Insurance ads you hear or see in one day (let’s throw in 21st Century for good measure). You’ll quickly see what we’re referring to.

That said; let’s take a look at who is spending what to convince us they are better than the next guy.

biggest advertisers

The Numbers Are In

While Warren Buffet recently detailed in a letter to Berkshire Hathaway shareholders that his company spent nearly $900 million in advertising in 2010, let’s look at the 2009 numbers (the most recent available) published by AM Best to see where the top 10 insurers stood.

Warren Buffet’s Berkshire Hathaway/GEICO came in near the $600 million dollar range, followed closely by State Farm at over $500 million. Rounding out the top three was Allstate Insurance, who appeared to spend slightly less than $500 million dollars.

Progressive at nearly $400 million, Farmers Insurance at around $350 million, and Liberty Mutual at roughly $300 million are no slouches either when it comes to throwing money at the highly competitive insurance market.

The 2010 numbers aren’t out yet, but a gambler would probably bet they’ll be significantly higher across the board, based on Warren Buffet’s shareholder letter.

What Does This Really Mean?

The fact that several billion (with a “B”) advertising dollars were spent by just a few insurance companies reveals that the insurance industry is extremely profitable and competitive.

It may also tell us that the products don’t speak for themselves. You may have noticed a never ending list of famous actors or athletes telling you they love whichever company they are pitching.

The reality is companies like State Farm, GEICO and Farmers Insurance don’t carry products that can adequately insure the people who represent them through advertising.

That alone should make you skeptical of the “not so sincere” pitches of the rich and famous for these insurers.

For example, Lebron James very likely does not insure his home(s) with State Farm. Let’s just leave it at that.

Also ask yourself if you chose Geico (or another top brand) over other similar insurance companies…and paid more, just because it’s on your radar.

Remember, it’s recommended that you compare multiple insurance quotes and shop around with an independent insurance agent to ensure you get the best coverage at the lowest price.

Related: Geico most effective advertiser.