If all insurance is the same, then the only thing to focus on as a buyer is price. But, clearly no one of these companies is the low price leader or people would not switch from them. This is obviously a segmented market. That is, aside from people who don’t make claims, these insurers rate the same people differently. How else could you explain the price difference that moves people in a circle between insurance companies?
Not being an insurance company exec, I can’t state with certainty that this approach is wasteful, but it certainly isn’t helpful to the potential buyer who has to do the comparison work. (Yes I know Progressive offers an online tool to help you compare, and I don’t think it is completely unbiased.)
Perhaps it would make sense for these companies to do some market segmentation to target their ads more specifically at those people most likely to save by switching to them? Sure, it is easier to just do mass advertising where hope is your strategy. But that is waste; and in today’s world, waste eventually catches up with you.
