• Advertising costs are climbing faster than premium growth at some major auto insurers, pressuring expense ratios and underwriting margins.
• Progressive’s ad spend soared above $1.3 billion per quarter in 2025, offset only by its strong premium growth.
• GEICO’s 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 article notes 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 GEICO’s 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 highlight a major problem: governments require consumers to buy insurance, but state lawmakers and regulators don’t do enough to keep it affordable,” the Consumer Federation of America, a frequent critic of the insurance industry, noted recently.
“[Regulators] don’t reject excessive premium increases, they don’t aggressively fight unfair discrimination in insurance, and they don’t 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 levels without evidence that higher spending is generating faster premium growth. GEICO’s ad outlays for 2025 could approach $1.9 billion, roughly 35 percent above last year’s level, they noted.
Progressive faces a similar dynamic. Advertising spending soared in every quarter of 2025—up 86 percent in Q1, 35 percent in Q2, and 10 percent in Q3 compared to the same periods in 2024—yet 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 company’s 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 “Robinsons”—households that bundle auto and home policies—and 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 policymakers are 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 that provides consumer advocates an opportunity to press for badly needed reforms that will improve 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.