Geckos, women named Flo and good neighbor insurance salesmen are a big part of the pressure on insurance costs
November 17, 2025
Advertising costs are climbing faster than premium growth at some major auto insurers, pressuring expense ratios and underwriting margins.
Progressives ad spend soared above $1.3 billion per quarter in 2025, offset only by its strong premium growth.
GEICOs expenses rose sharply without similar premium gains, raising concerns about impacts on rates and profitability.
To hear insurance companies tell it, the natural disasters spawned by climate change are driving up their costs and forcing them to raise premiums and refuse to renew policies in some higher-risk areas. But other analysts say that surging advertising costs are as much of a problem as surging storms.
For major insurers, loss trends are improving but advertising spending is rising faster than premium growth. A recent Insurance Journal articlenotes that while both Progressive and GEICO benefited from declining auto claims in the third quarter, marketing expenses ate into revenue growth.
Progressive's third-quarter advertising expenses jumped $1.3 billion, a 10 percent increase over a year earlier, but a 20 percent jump in premium revenue helped to compensate. GEICO, on the other hand, experienced similar increased advertising and marketing expense with premium gains of only 5 percent.
S&P noted that GEICOs underwriting expenses have risen nearly 40 percent for two consecutive quarters, though its overall expense ratio still sits below long-term norms.
"Rising premiums and big profit announcements highlighta majorproblem: governmentsrequireconsumers to buyinsurance,butstatelawmakers andregulatorsdontdo enough tokeepit affordable," theConsumer Federation of America, a frequent critic of the insurance industry, noted recently.
"[Regulators]dont reject excessive premium increases, they dont aggressively fight unfair discrimination in insurance, and they dont hold insurance companies accountable for unfairly delaying and denying claims," said Michael DeLong, a research associate at CFA.
Does advertising still work?
Some industry analysts are beginning to question the heavy spending on advertising. As mass-market media outlets like newspapers and network television continue to lose audience, companies maintain and even increase their spending levelswithout evidence that higher spending is generating faster premium growth. GEICOs ad outlays for 2025 could approach $1.9 billion, roughly 35 percent above last years level, they noted.
Progressive faces a similar dynamic. Advertising spending soared in every quarter of 2025up 86 percent in Q1, 35 percent in Q2, and 10 percent in Q3 compared to the same periods in 2024yet its direct-auto quote volume fell 4 percent in the third quarter. New applications were flat in its direct business and down 5 percent in the agency channel.
Despite the slowdown, Progressive reported solid premium growth of 12.2 percent and policy growth of 15.1 percent. On the companys earnings call, CEO Tricia Griffith said the carrier will keep using advertising as a lever to grow, even in an increasingly competitive market.
This is when the fun starts, Griffith said, noting that Progressive is targeting Robinsonshouseholds that bundle auto and home policiesand sees a $230 billion opportunity there, Insurance Journal reported.
After raising rates about 55 percent between 2022 and 2024, Griffith said future increases will be more moderate, with some rate decreases already occurring in 10 states. Progressive aims to stimulate growth in 33 states identified as growth opportunities or volatile markets.
With ad spending now rising faster than new business growth for both Progressive and GEICO, analysts say the industry faces a delicate balancing act. High marketing budgets risk adding pressure to premiums and expense ratios at a time when customers are more price-sensitive and competitive shopping is increasing.
Consumers starting to notice
Financial analysts aren't the only ones taking note of rising insurance costs and shrinking availability: consumers are starting to notice too, said CFA's DeLong: "Consumers, consumer advocates, and policymakersare paying increased attention to insurance.Higher insurance premiums, insurance company misbehavior, and company withdrawals have brought a lot of attention to the insurance market,creating a spotlight thatprovidesconsumer advocates an opportunity topressforbadly neededreformsthat willimprove the current situation."
That discontent is starting to drive consumers to be more aggressive in shopping for insurance. A recent survey found that 16% of policyholders went policy-shopping in Q2 of 2024 compared with 30% in July 2025. Besides shopping for cheaper coverage, a growing number of consumers are also accepting higher deductibles, less coverage or simply dropping insurance altogether.
