How the Largest Auto Insurance Companies Made It Big

There are some big car insurance companies out there with billions of dollars written in premiums every year. You might wonder how the largest auto insurance companies made it big, and it is truly a combination of good business practices coupled with treating customers fairly. A few really memorable commercials didn’t hurt, either.

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Generally, the biggest car insurance providers are rated as such by the number of customers they have; this is generally calculated by the dollar amount of premiums written with a company. The biggest and largest can be reviewed in the latest Market Share Data released by the National Association of Insurance Commissioners.

Of course, a provider being among the biggest car insurance companies does not always mean they will have the most affordable rates for you. Yet, if they still practice those traits that made them the biggest, then they should be a top contender for your business.

They Offered Fair Rates

The almighty dollar speaks, and customers really listen. The biggest car insurance companies got so large by attracting customers with rates that were lower than what everyone else was offering.

Drivers are always on the lookout for the cheapest option, and a low price does not always mean it is the cheapest; it means it is an affordable premium for a decent amount of coverage. If you just go with the cheapest provider, you may not be getting enough coverage or you may be engaging an insurer who will not really be there for you when you need to file a claim.

The only way to know if you are getting affordable rates is to compare quotes from as many providers as possible.

Using the Internet is a great way to get quotes from the biggest insurers, from the smallest companies, and everyone in between.

Make sure to get quotes for the same amount of coverage, cautions the Massachusetts Office of Consumer Affairs and Business Regulation in their guide to shopping for auto insurance. Only then you can compare rates side-by-side to see who has the best prices for the same coverage.

They Have Great Customer Service

It is said that you can catch more flies with honey than with vinegar, and this is true concerning customers of any business. The biggest car insurance companies made sure they had a customer-contact team that understood this concept. A pleasant demeanor, politeness, and knowing customers by name are just a few factors that go into great customer service, and the biggest had it in spades.

Great customer service that helped the largest auto insurers to get that way also means keeping up that helpful demeanor once the customer needs to submit a claim for a loss. An accident, theft, or other loss is a stressful, emergency situation.

Great customer service includes walking a customer through the often-confusing filing process. It also means offering a fair settlement for the customer’s loss.

Car insurance is meant to make a driver whole again after a loss; it is not supposed to be an attempt to low-ball an offer as much as possible.

Whether the biggest insurers still offer excellent customer service is up for debate. Many might get so large that customer complaints simply fall through the cracks. An auto insurer might get so immense that it is not really able to police every agent and representative to ensure they are providing superior quality.

When that happens, the customer service level of any business can drop significantly. Customers get turned off by the lack of superior service; many turn to other companies. Then, the largest auto insurers must take swift action to reclaim losses or face losing the title of the biggest.

One way to find the current customer service standings of the largest car insurance companies is to research customer review ratings, such as those conducted by J.D. Power and Associates. Such reputable sources for reviews can let you know if a large insurance provider still offers the best customer service.

One look at the 2012 results shows a mixed bag when it comes to the ratings for the biggest auto insurance companies.

They Observe Financial Best Practices

Another factor that allowed the largest insurance companies to get so big was sound financial practices. They kept careful track of money coming in and money going out; which was quite a feat considering such observations covered billions of dollars! They used the “best practices” of business finances to ensure that their bottom lines were always in the black.

One way to view the current financial practices of the largest insurance companies is to look at financial ratings provided by ratings organizations.

Ratings organizations look at the financial data for companies, businesses, and even countries, to determine if those entities are on sound financial footing. They look at revenue, assets, losses, and a company’s overhead costs. They crunch those numbers and assign a rating so the entire world knows how stable an insurance provider’s financial outlook really is.

Ratings organizations such as Fitch Ratings, A.M. Best, and Standard & Poor’s can all be relied on to provide honest, unbiased assessments of an auto insurance provider’s financial outlook. Each uses an alphabetical ratings system, with some variations, that award an A rating for the best companies.

Financial ratings are important because an insurer provides financial support for its clients in times of need. While one driver’s claim might not make that big of a dent in a car insurance company’s finances, a weak economy or a natural disaster will generate so many claims that an insurer might find it hard to pay them all.

Many insurance companies who were on the rise to stardom collapsed during economic crisis and widespread natural disasters.

Hurricane Katrina is an example of a natural disaster that devastated Louisiana and other parts of the country while generating high amounts of claims.

It can really affect rebuilding efforts or the improvements in a shaky economy when many people cannot get to work or get the basic necessities of life because their insurance company could not pay a legitimate claim.

They Keep Their Risk Low

The largest insurers really understood the insurance game when they were climbing to the top. In order to keep claim payouts low, an insurer needs to try to cover those drivers who are really unlikely to put in a claim at all. So the biggest car insurance companies only insured the best drivers, in order to keep their risk of paying out claims low.

That is why insurers require so much information about a driver during the application process. Every aspect that they look at goes into calculating a driver’s risk of getting into an accident, based on statistics. According to the averages, those with the lowest risk of getting into an accident or suffering a loss are:

• Drivers without a history of accidents or tickets
• Women
• Married people
• Middle-age drivers
• Those who live in rural areas
• Those with good credit
• Those who drive safe cars
• Those who are well-educated

The biggest car insurance companies stuck with those drivers who fit the demographics of a safe driver. While the biggest don’t necessarily have to insure just the best drivers anymore, they do assess much higher premiums for those drivers who are statistically more likely to have an accident or suffer some other loss.

They Diversified

You can’t put all of your eggs in one basket, and the largest insurance companies survived through tough times by diversifying. Instead of relying solely on car insurance, they branched out into other lines of insurance or even other financial markets.

If you research the biggest insurers, you will see they offer an array of options. Some offer insurance for other types of vehicles, such as RVs, ATVs, and boats. Others offer home and renter’s insurance, and some might even have branched out into insurance lines such as health insurance, worker’s compensation insurance, and life insurance.

Other large companies also moved into other financial sectors, offering retirement packages, annuities, and other types of investments.

Diversifying is one way to help to weather a crisis in the economy. If the car insurance business is not lucrative for whatever reason, then another sector can hopefully pull the financial weight of the company until there is a recovery.

They Had Great Commercials

Lastly, the biggest car insurance companies got so large because they advertised–a lot. A customer can’t do business with a company if they are unaware of the existence of that company.

Geckos with British accents, cavemen, and a perky check-out girl with a retro look are all household icons because of extensive car insurance commercials on television, radio, and the Internet. The largest companies plastered their logos and messages all over the media.

Perhaps you “are in good hands” with a particular company, and that is because auto insurance companies also utilize spokesmen and women who are famous or have distinctive voices. Or, if you enjoy the “Mayhem” commercials, then you have experienced those advertisements that are funny or distinct to get your attention.

When you think of the first auto insurance company that comes to mind, it is likely a company that advertises extensively and utilized catchy cartoon figures, quirky commercials, or a recognizable spokesman to plant their logo firmly in your mind.

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