Many consumers face the frustration of rising coverage costs, but few realize that part of the problem lies in the massive amounts of money insurance companies spend on advertising. You might be paying more to fund ad campaigns than the actual coverage.
According to a 2022 report by S&P Global Market Intelligence, the top 10 insurance companies in the U.S. spent a staggering $10.1 billion on advertising in a single year. Geico led the charge, shelling out over $2 billion annually on ads, making it one of the largest ad spenders in the country across any industry. Progressive and State Farm were not far behind, spending roughly $1.95 billion and $1.27 billion, respectively.
These advertising budgets go toward creating some of the most recognizable and omnipresent campaigns on TV, radio, billboards, and digital platforms. Whether it’s Geico’s gecko, Progressive’s « Flo, » or State Farm’s « Jake, » these companies have cemented their brands in the public’s mind through relentless ad exposure. However, these seemingly light-hearted campaigns have a heavy financial cost—one that’s being passed directly to consumers through higher premiums.
But why do insurance companies spend so much on advertising? The answer lies in market share competition. Insurance is a mandatory purchase for millions of people—drivers need auto insurance, homeowners need property insurance, and everyone needs health insurance. Insurers aim to stand out from the crowd with such a captive market. However, this race to out-advertise each other creates an endless cycle of rising marketing costs, pushing premium prices higher to recoup the expense.
For example, in 2022, the average cost of car insurance in the U.S. was $1,553 per year, a figure that’s increased steadily over the last decade. Part of this increase is directly tied to the growing advertising spend. These companies aren’t merely competing for your attention—they’re paying billions to do it, and you’re left footing the bill.
Meanwhile, newer insurance models show that focusing on expensive advertising isn’t necessary to provide quality coverage. Many companies manage to lower their costs by minimizing ad budgets and focusing on customer satisfaction and technology-driven innovation. They invest in streamlined digital platforms rather than national ad campaigns to offer more competitive rates without sacrificing the quality of service.
Insurance is meant to protect us, but instead, it uses billion-dollar ad campaigns to drain oir wallets. Companies lie to us by telling us our premiums are based on our driving history, health, age, and credit score. They use these indicators to charge us hidden and extra costs. Consumers who cannot afford premiums go to companies that focus less on advertising but on protection. However, sometimes they lack the necessary resources to provide the features their clients need. If customers demand lower premiums and turn toward these infamous companies, the industry may finally shift its focus from promotion to protection.
Bobb Rousseau, PhD
Bobb Rousseau
Business Coach
Policy Consultant