This distinction is somewhat ironic given that Geico, based in Chevy Chase, Maryland, has tirelessly advertised over the decades how 15 minutes can save drivers 15% or more on insurance. But Geico, like other auto insurers, is struggling to keep up with rapidly rising claims costs.
The spike is also notable given that Geico has already hiked rates twice in less than a year, both at 6% clips.
Including the three rate increases, drivers of Geico Casualty, the unit insuring most long-term customers, will have seen their premiums increase by $470 per year, or $39 per month, when they next renew. The 17% increase takes effect Aug. 19, according to the filing.
New customers, insured by Geico Secure, will see their premiums increase by $508 per year on average with the 34% increase. This amounts to $42 per month.
Geico was already losing ground in Illinois before this dramatic increase. Over nearly three years, the company’s auto policies in the state fell 5% to 381,437 from 403,136, according to Insurance Department filings. Geico is the fourth largest auto insurer in the state. The top three are State Farm, based in Bloomington, Allstate, based in Northbrook, and Progressive, based in suburban Cleveland.
Geico’s move also coincides with pressure on the industry from state senators to provide more relief to drivers after insurers collected outsized profits in 2020 and early 2021, when rush hour effectively ended due to COVID. Despite industry objections, state regulators recently disclosed the profitability of all auto insurers from 2019 to 2021.
Earnings for Geico Casualty in Illinois in 2020 and the first quarter of 2021 totaled $87 million, or a profit margin of 15%. In the last three quarters of 2021, profit narrowed to $15 million, or a margin of 5%.
Meanwhile, pricing new customers in Illinois has clearly been a struggle for Geico. Geico Secure, to which all new customers have been assigned since mid-2020, lost $25 million insuring Illinois drivers in 2021. That was on just $106 million in premiums.
Geico does not provide press contacts, so it is not possible to request comments.
The downfall of the company, perhaps best known for the ubiquitous TV lizard, is striking considering its success over the past 25 years. He grew from a small car insurer to the second largest in the nation as an early adopter of direct Internet sales, which allowed Geico to offer insurance at cheaper rates than incumbents sold through agents. like State Farm and Allstate.
Over the past several years, Allstate has taken steps to be more competitive by aggressively engaging in the direct sales channel. Allstate policies are charged 7% less for customers who sign up online or by phone rather than with an Allstate agent.
While Geico is the most aggressive rate hiker so far, Allstate, Progressive and, to a lesser extent, State Farm have all done the same this year. Allstate imposed a 12% increase on average earlier this year, and Progressive raised prices between 8% and 10%. State Farm also increased its rates by 8%.