We all know that car insurance is big business, but which auto insurance companies are the biggest? More importantly, how much money do they make by writing car insurance policies?
The biggest auto insurer is State Farm, which sold an astonishing $8.7 billion worth of polices in the third quarter (July, August and September) of 2013. The Insurance Journal reported that State Farm sold more than twice as many policies as its closest competitor, Allstate.
Allstate sold $4.46 billion worth of car insurance premiums to become the second largest U.S. car insurer in that period. GEICO was close behind, issuing premiums worth $4.42 billion. That’s certainly good news for Warren Buffett: GEICO is part of his Berkshire Hathaway empire.
That means State Farm is the largest U.S. car insurer, GEICO is No. 2, and Allstate is No. 3. The Insurance Journal lists GEICO in the No. 2 spot in the near future because it sold more premiums than Allstate in the 12-month period that ended on Sept. 30, 2013.
The Biggest in the Business
The Largest Car Insurers in the U.S. in the Third Quarter of 2013 were…
- State Farm Mutual Automobile Insurance
- GEICO Corp, a part of Berkshire Hathaway (NYSE: BRK.B)
- Allstate Corp (NYSE: ALL)
- Progressive Corp (NYSE: PGR)
- Liberty Mutual Corp
- Farmers Insurance Group of Companies
- USAA Insurance Group
- Nationwide Mutual Group
- Travelers Companies Inc. (NYSE: TRV)
10. American Family Mutual
State Farm has around 18.39% of the U.S. auto insurance business, according to Bankrate.com. Allstate and GEICO each have around 10% of the U.S. car insurance business, and No. 4 Progressive has around 8%.
The total value of auto insurance premiums issued in the United States in the third quarter of 2013 was $40.9 billion. That was an increase of a little over $1 billion from the same period in 2012 when the industry had $39.1 billion worth of premiums.
Eight insurers, State Farm, GEICO, Allstate, Progressive, Liberty Mutual, Farmers, USSAA, and Nationwide, issued more than $1 billion worth of auto insurance in the third quarter of 2013. That means the auto insurance industry is becoming dominated by a few gigantic companies.
Interestingly enough, direct sellers that sell policies directly to customers online and advertise heavily are seeing the fastest growth. All the spending on TV commercials, websites, and goofy spokespeople seems to be paying off for both insurers and investors.
It also goes without saying that auto insurance companies could be a great investment. If you’re looking for a stock that keeps growing in value, take a look at Berkshire Hathaway and publicly traded auto insurers such as Progressive and Allstate. You won’t be able to invest in State Farm because it is a mutual insurance company that doesn’t issue stock.