Personal lines auto insurer marketing experts are gaining increasing power within their organizations, according to new investment bank report.

Members of the marketing departments at personal insurers are now probably “strolling the halls with a swagger” wrote Morgan Stanley property-casualty analyst William Wilt in a note to investors.

To make his case, Mr. Wilt noted that auto insurers Geico and Allstate have substantially increased advertising spending, according to Advertising Age's report of 2006 first half spending.

Allstate's measured media spending increased 47 percent compared to the same period last year, and the Northbrook, Ill.-based company jumped to No. 30 from No. 56 on the list of Top 200 Brands.

“Importantly, the company narrowed the gap that separated it from Geico last year,” Mr. Wilt wrote. The Berkshire Hathaway subsidiary at number 22 was the top spender among auto insurers.

Financial services advertising spending overall increased 13.9 percent for the year, according to survey.

“We continue to believe there is a direct-to-consumer model of reaching customers that is slowly, or not so slowly, enveloping the industry,” he wrote.

Among the straws in the wind indicating the power of advertising, Mr. Wilt wrote, is data showing Allstate gaining market share in the preferred market while non-advertiser Safeco is losing in the same arena.

“Progressive and Geico are thought to compete for policyholders with similar profiles and it is interesting that Progressive's growth rate fell in 2004 when Geico's advertising spending increased more than 50 percent,” Mr. Wilt wrote.

Putting loss cost trends on the backburner may not be the wisest investment advice. “But virtually every data point we have reviewed this year suggest to us the process of sorting the winners from the losers among personal insurers involves looking to scale, sophistication, distribution, brand and advertising volume and effectiveness,” he wrote.

Special Reports /

Auto Marketers Reign Supreme

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