No one who spends whenever before a television or perhaps a laptop screen has to be told the insurance market is a large spender in the realm of advertising. Based on an analysis from S&P Global Market Intelligence in June, Geico, Progressive and State Farm alone spent a combined $5.38 billion in 2022 on advertising. That’s up $570 million, or 12 %, in the previous year.
Among State Farm’s $1.17 billion in outlays was approximately $5.5 million for a 30-second spot in Super Bowl LV, featuring certainly one of its regular celebrity spokespeople, Green Bay Packers’ quarterback Aaron Rodgers. Yahoo! recently estimated that Aaron is paid $2 million to $3 million annually through the insurer. That’s at least one-tenth of the $20 million salary of State Farm President and CEO Michael Tipsord.
Various media outlets have reported that State Farm will quickly keep writing big checks to Rodgers despite a current controversy over his vaccination status and his commentary surrounding COVID-19. An argument from the nation’s largest auto insurer known as the unvaccinated and COVID-infected athlete “a great ambassador.”
“We do not support a few of the statements that he has made, but we respect his right to have his own personal point of view,” a situation Farm spokeswoman said inside a statement. “We recognize our customers, employees, agents and brand ambassadors come from all walks of life, with differing viewpoints on many issues. Our mission at State Farm is to support safer, stronger communities. Therefore, we encourage vaccinations, but respect everyone's right to make a decision according to their personal circumstances.”
The Rodgers controversy shines a spotlight around the insurance industry’s practice of spending billions on advertising, money from premiums that critics say ought to be used elsewhere.
“The insurance industry spends vast amounts of dollars of policyholder cash on sports, athletes in advertisements, and quirky commercials, when they ought to be focused more about better claims practices and reduced premiums,” said Douglas Heller, a completely independent consultant and nationally recognized insurance expert.
“With the exception of California, where strong consumer protection rules limit the advertising expenditures that can be forwarded to customers, all those ads are funded with premium dollars,” Heller told Repairer Driven News. “That's a terribly inefficient utilization of policyholder cash, since everyone has to purchase insurance whether we see the ads or not. When I hear Liberty Mutual say that ‘you pay for which you need,’ I'm confident that none of their customers need or want their ads, but they still need to pay for them.”
The California Code of Regulations states,
The following expense items shall 't be allowed for ratemaking purposes: … Institutional advertising expenses. “Institutional advertising” means advertising not targeted at obtaining business for a specific insurer and not providing consumers with information pertinent to the decision whether to purchase the insurer’s product.
“States should adopt rules that need insurer advertising budgets to be a drain on company income, not their policyholders' pockets,” Heller said.
There seems to be no end from the spending around the corner, based on AdAge magazine, which provides coverage for the advertising industry. In fact, contrary, it’s expected to accelerate, as insurers seek ways to become memorable in viewers’ eyes.
AdAge talked with top marketers and ad agency execs representing 10 leading insurers for its Feb. 21 article, “The way the Insurance Industry Got Into a $4 Billion Ad Brawl.” “What we should found is that no one plans to apply the brakes in the near future. Contrary, insurers believe the best way to stick out is to save money,” AdAge’s E.J. Schultz wrote.
“The goal would be to grab the attention of consumers who'd rather not consider insurance,” Schultz wrote. “Experts say many people only ponder policies when they have an accident, purchase a new car, move, or renew their existing agreement, which usually happens twice yearly.”