ust wondering… could they maybe lie about it? Why would they give quotes of the other companies if theirs isn’t as good as the other ones? To me it just sort of seems like they are screwing themselves… Does anybody know why they do this?
That is a good question. I spent fifteen years in product management before I opened my agency, and I remember when one particular company started doing this and advertising it.
The short answer is that they do it because they think it will make people more likely to buy from them. They believe that it builds trust in them, because they show how their rates compare to other companies’ rates. Many of the people who see the comparison decide to purchase immediately instead of checking with other companies. The company did this originally as an experiment, but they continue to do it because it has worked well for them.
They cannot lie about the other companies rates, or those companies would sue them. They are not always right, but they are obligated to make their best estimate. They get the information from the Department of Insurance. All insurance companies are required to file their rating formulas with the Department of Insurance, and those filings are public records. Anybody can go to the Department of Insurance and make a copy of the rating formulas. In this case, the company uses those rating formulas to estimate their competitors’ rates. One of the big flaws is the credit models, however, because each company’s model is slightly different, and most states allow those to be listed as trade secrets and are not public records. The company that estimates its competitors’ rates has to make a guess about the credit model. (I visited the Department of Insurance often to review my competitors’ rating formulas when I was a product manager.)
So the company cannot lie about the competitors’ rates, but they can control how they present it. There is a famous book called, "How To Lie with Statistics," and another called "Lies, D—– Lies, and Statistics." The company’s personnel appear to have read both books.
First, the company is very selective about which competitors to show. They pick competitors that usually have higher rates than their own, and they ignore competitors that usually have lower rates. This selective comparison makes them look like they are better than "the market," but all it really shows is that they are better than SOME competitors.
Second, if you are referring to the company most famous for this practice, they have a larger-than-normal discount for paying the full six-month premium in advance, and they display this discounted rate. Almost all people pay in monthly installments, however, so they do not get the advertised rate. They lose the paid-in-full discount, AND that company has higher-than-normal fees charged on each installment. By showing the discounted rate without installment fees, they look more competitive than they really are. They do not lie, but they are very selective in the way they present the information.
I hope this helps.
July 29th, 2010 at 12:13 pm
Well, they are trying to act like an AGENT. You can go to an independent agent, and get quotes from 10 different companies, including Progressive, and the AGENT will give you quotes.
Progressive CANNOT give you a ‘binding quote’ or even a particularly accurate one, with another company.
So of course it’s a marketing thing. They’re trying to convince you to go with them, instead of going to a local agent, who will do the same thing, at no extra charge.
References :
July 29th, 2010 at 12:32 pm
my guess is they are trying to show that they are competitive with other companies….trying to gain your trust. when you say "quotes" are you referring to the cost of your coverage or what they would pay if you were in an accident? if i were you i would look at both these factors, just because one company is cheaper than the other doesn’t mean that you will have as good of coverage if you need to turn in a claim.
I’ve had good info about it here:
http://carquotes.imess.net
Best regards.
References :
July 29th, 2010 at 12:44 pm
Under your situation,I advise you to visit here http://www.AutoInsuranceIdeas.info/auto-insurance-free.htm to get some ideas.
References :
July 29th, 2010 at 1:16 pm
I’ve ever ment the similiar thing — still a little bit annoy,here http://www.insuranceidea.info/free-insurance.htm is the resource tha help me out.
References :
July 29th, 2010 at 1:51 pm
I bet they don’t give out quotes by Landa. They can not compete. Any company that makes the bulk of its income on commercial insurance has an unfair advantage.
Check them out. You will be shocked at the difference.
References :
http://www.landainsurance.com
July 29th, 2010 at 2:24 pm
That is a good question. I spent fifteen years in product management before I opened my agency, and I remember when one particular company started doing this and advertising it.
The short answer is that they do it because they think it will make people more likely to buy from them. They believe that it builds trust in them, because they show how their rates compare to other companies’ rates. Many of the people who see the comparison decide to purchase immediately instead of checking with other companies. The company did this originally as an experiment, but they continue to do it because it has worked well for them.
They cannot lie about the other companies rates, or those companies would sue them. They are not always right, but they are obligated to make their best estimate. They get the information from the Department of Insurance. All insurance companies are required to file their rating formulas with the Department of Insurance, and those filings are public records. Anybody can go to the Department of Insurance and make a copy of the rating formulas. In this case, the company uses those rating formulas to estimate their competitors’ rates. One of the big flaws is the credit models, however, because each company’s model is slightly different, and most states allow those to be listed as trade secrets and are not public records. The company that estimates its competitors’ rates has to make a guess about the credit model. (I visited the Department of Insurance often to review my competitors’ rating formulas when I was a product manager.)
So the company cannot lie about the competitors’ rates, but they can control how they present it. There is a famous book called, "How To Lie with Statistics," and another called "Lies, D—– Lies, and Statistics." The company’s personnel appear to have read both books.
First, the company is very selective about which competitors to show. They pick competitors that usually have higher rates than their own, and they ignore competitors that usually have lower rates. This selective comparison makes them look like they are better than "the market," but all it really shows is that they are better than SOME competitors.
Second, if you are referring to the company most famous for this practice, they have a larger-than-normal discount for paying the full six-month premium in advance, and they display this discounted rate. Almost all people pay in monthly installments, however, so they do not get the advertised rate. They lose the paid-in-full discount, AND that company has higher-than-normal fees charged on each installment. By showing the discounted rate without installment fees, they look more competitive than they really are. They do not lie, but they are very selective in the way they present the information.
I hope this helps.
References :
15 years of actuarial and product management before opening my agency
http://www.community-ins.com
July 29th, 2010 at 2:55 pm
It’s simple. A company called Nationwide owns most insurance companies.
Doesn’t matter which one you chose. All the money goes to Nationwide.
References :
landainsurance.com