Why big insurers spend billions on advertising and what you pay for it

Yes, you pay for advertising, in the same way you pay for claims handling, salaries and agent commissions: it is a cost of running the company, and over time a company's rates have to cover its costs. But it is one slice of the premium, not the main one, and it does not move your price dollar for dollar. Progressive reported advertising costs of $5.1 billion for 2025, about 6% of the premiums it earned that year, while claims and claim-handling costs took roughly two-thirds.

What matters more to a shopper is that advertising is aimed at making you request a quote. The ad has no effect on what a rating plan charges you; the quote does.

How much the biggest insurers report spending

Three of the largest auto insurers are publicly traded or part of a public company, and their annual reports to the Securities and Exchange Commission show what they spend. The figures below come from the 2025 reports, filed in February and March 2026. Other large insurers, including mutuals, may not publish comparable figures.

Sources: Progressive's 2025 annual report, which says its advertising costs were $5,133 million in 2025, $4,003 million in 2024 and $1,600 million in 2023, and that 2025 spending "exceeded the amount of advertising spend for any previous annual period"; and Allstate's 2025 annual report. Progressive's net premiums earned were $81.7 billion in 2025, $70.8 billion in 2024 and $58.7 billion in 2023.

GEICO is part of Berkshire Hathaway, which does not state a dollar advertising figure for GEICO in the annual report I reviewed. Berkshire's 2025 annual report says GEICO's expense ratio, underwriting expenses divided by premiums earned, was 12.4% in 2025, up 2.7 percentage points from 9.7% in 2024, and that the increase was driven by higher advertising and other policy acquisition expenses. GEICO's underwriting expenses were up 34.2%.

The industry as a whole turned the dial the same way. A January 2026 AM Best special report, as summarized by InsuranceNewsNet, said some insurers that had used advertising heavily to build or defend market share pulled back in 2022 and 2023, when private passenger auto results were deteriorating, and that as personal auto and homeowners results improved in 2024, advertising expenses rose 60% year over year.

The pattern is the point. Advertising is discretionary. Insurers spent less when their results were poor and far more once auto underwriting returned to profit. That timing is explained in hard and soft markets: why car insurance prices move in cycles.

Where advertising appears in an insurer's books

An insurer earns premiums, pays claims, and spends on running the business. The costs of running the business are lumped together as the underwriting expense ratio, expressed as a percentage of premium. Add the loss ratio (claims plus claim-handling costs as a percentage of premium) and you get the combined ratio. A combined ratio below 100 means the company made an underwriting profit before counting investment income. Our glossary entries on the loss ratio, expense ratio and combined ratio define each.

Progressive's 2025 results for all of its insurance operations show how the pieces add up: a loss and loss-adjustment ratio of 65.9, an underwriting expense ratio of 21.5, and a combined ratio of 87.4. The company said its expense ratio rose 1.8 points in 2025, mainly because of $1.2 billion of policyholder credits to Florida personal auto customers and a $1.1 billion rise in advertising.

Advertising is not recorded the way commissions are. Progressive says it does not defer advertising costs: they are expensed as incurred. Costs of acquiring policies, such as agent commissions, are deferred and spread over the policy period. Allstate's report likewise describes deferred acquisition costs, principally agent, employee and broker remuneration and premium taxes, that are amortized as premiums are earned, while advertising is shown on its own line. This is why advertising can jump in one quarter and show up quickly in the expense ratio.

Companies also separate the costs of winning a customer from the costs of serving one. Progressive describes a non-acquisition expense ratio that leaves out policy acquisition costs such as advertising and agency commissions, so it can see how efficiently the company operates apart from what it spends to grow. In 2025 it reported that this ratio fell 0.2 points for its personal vehicle business excluding the Florida credit, even as total advertising climbed.

Two ways to reach customers: advertising and commissions

An insurer that wants a new customer can spend on ads and make the customer come to it, or it can pay an agent to find the customer. Both are acquisition costs; they are just paid differently.

The NAIC's consumer's guide to auto insurance says the insurer, not you, usually pays the agent, often as a percentage of your premium. Allstate's report describes exclusive agents paid a monthly base commission as a percentage of eligible written premium, plus variable pay for new customer acquisition and bundling and bonuses based on profitable customer growth, and independent agents paid a base commission plus an annual profit share. See how insurance agents and brokers get paid, and why it matters to you for the full picture.

A direct writer sells to you without an agent and so spends relatively more on advertising to generate quotes. An agent-based company pays commissions for the same job. Allstate, which uses both exclusive and independent agents plus direct sales, reports amortization of deferred acquisition costs of 12.1 points of its expense ratio in 2025 and advertising of 3.6 points. Progressive reports "distribution expenses" of $10.9 billion for 2025 across its business, which its notes define as including policy acquisition costs, agent contingent commissions and advertising, or about 13.4% of net premiums earned by my calculation. For GEICO, a direct seller, the expense ratio was 12.4% in 2025 as noted above.

It would be tempting to rank the three by these ratios. Don't. The companies define and group costs differently, their product mixes differ, and GEICO's figure nets out earnings from its insurance agency. The lesson is narrower: the cost of getting customers shows up either as commissions or as advertising, and neither company escapes it.

Progressive's results by channel in 2025 make the same point. It reports personal vehicle underwriting expense ratios by channel:

In 2023 the direct channel ran the cheaper expense ratio; by 2025, after advertising surged, the direct channel was more expensive. The 2025 figures include 1.9 points (agency) and 1.7 points (direct) of expense from the Florida policyholder credit. The same report says that for 2025 about 42% of Progressive's personal auto net premiums were written through the agency channel and 58% through the direct channel, so the direct side is now the larger one. Our guide to captive agents vs independent agents vs buying direct explains how the channels differ for a shopper.

How a rate filing treats expenses

Companies do not set prices by adding up their advertising bill and dividing by customers. They file rates with the state, and a rate has to cover expected claims, expenses and a reasonable profit.

Regulators do not set the rates. The Texas Department of Insurance says it doesn't set insurance rates or premiums; companies file their rates and must provide an analysis supporting the change, which TDI's actuaries review (page last updated September 2026). Texas law requires rates to be adequate, not excessive, based on sound actuarial principles and reasonably related to all costs. "All costs" is broad, but whether a particular state lets an insurer count a particular kind of advertising or commission expense in a filed rate depends on that state's rules. The specifics are in the company's filing and the state's regulations, and your state insurance department can tell you where to look. Our guides to how car insurance rate approval works and loss ratios and rate filings: how insurers justify an increase describe the process.

What the filing does not do is reveal your personal share. Your premium comes from base rates and rating factors tied to your risk, such as your driving record and vehicle; there is no line in a quote that says "advertising: $90."

A worked example: slicing a $1,800 premium

The figures here are hypothetical, chosen to show proportions. They are not any company's results.

Say a driver pays $1,800 a year. An insurer's allocation of that premium might look like this:

The expense ratio is 21%, the loss ratio 68%, and the combined ratio 89%. If the insurer stopped advertising entirely and kept the money, profit would rise to $288 and the price would not change. If competition forced it to pass every dollar on, the premium could fall by about $90, to $1,710. In practice neither happens cleanly, because without ads the company would also write fewer new policies, and a smaller book spreads fixed costs over fewer customers.

Now add the loyalty angle. Say it costs $300 in advertising and commissions to win a new customer who stays four years at $1,800 a year. Spread evenly, the acquisition cost is $75 a year, about 4% of premium. A customer who leaves after one year makes the same acquisition cost 17% of that year's premium. That is why insurers talk about retention. See why two insurers quote the same driver very different prices for how pricing differs by company.

Why heavy advertising does not automatically raise your premium

Several things keep the link between ad spending and your price loose.

• Competition caps the price. In a market where customers can easily compare quotes, a company that raised rates to fund ads would lose the customers it just paid to attract. Progressive's report notes that consumers can easily compare prices among competitors using widely available comparative rating services and that many competitors invest heavily in advertising and marketing.
• The spending is flexible. Progressive says it plans to continue advertising to maximize growth as long as the spending is efficient, it remains on track for its profitability target and it can acquire customers at or below its target acquisition cost. Spending that is tied to a target cost per customer is a variable cost that can be cut when it stops working.
• Companies advertise most when they are profitable. Progressive's combined ratio for its underwriting operations improved from 94.9 in 2023 to 88.8 in 2024 and 87.4 in 2025, over the same period that its advertising rose from $1.6 billion to $5.1 billion. Ads grew when the company had margin to spend, not as a reason to raise rates.
• Scale spreads the cost. A very large company spreads a fixed advertising budget across a large book of policies. A small insurer with a small book has less room to do that. See how concentrated the auto insurance market is, nationally and by state.

This is not an argument that ads are free. In the long run, an insurer that spends heavily and does not gain customers will have to recover that cost in rates or accept a lower profit, and ads that fail to grow the book are a drag on the whole company. An independent agent's commission, a direct writer's ad budget and a captive agent's salary all come from the same premium dollars.

What an ad that claims savings has to be based on

Savings claims are the most checkable part of an insurance ad. The standards come from several places, and none is a promise that your quote will be lower.

• The reasonable-basis rule. The Federal Trade Commission's policy statement on advertising substantiation, dated November 23, 1984, says advertisers must have a reasonable basis for their claims before they are disseminated. Insurance is regulated mainly by the states, and each has its own unfair trade practice and advertising rules, so the exact rule for an insurance ad depends on where it runs.
• State guidance on savings claims. In a 2004 opinion, the New York Department of Financial Services said a guarantee that every customer will save money is misleading because it cannot be guaranteed that every insured can save, while advertising the potential for savings in general language is acceptable. It also found that a testimonial citing a dollar amount saved was misleading when it did not say whether the saving came from a change in coverage. That was a staff opinion about a local agent's ad, and it is not a nationwide rule.
• Industry self-review. In May 2013, the National Advertising Division of BBB National Programs reviewed Progressive's comparative TV ads and recommended that it stop presenting certain discounts in a comparison with a fictional competitor, while finding two stand-alone claims substantiated with recommended revisions. Progressive said it would consider the recommendations. That kind of review is voluntary, but it shows how closely competitors police one another's claims.

Typical wording to read carefully: "customers who switched saved an average of..." describes people who chose to switch, who are more likely to have found a better price than a random driver, not what you will save. "You could save" is a possibility, not a statement of your price. A comparison to "other insurers" depends on which insurers and which drivers were compared.

How to test an ad's claim in 20 minutes

1. Get a real quote from the advertised company with your actual driver, vehicle and mileage data.
2. Enter your current coverage limits, deductibles and add-ons so the policies match.
3. Note any assumptions in the quote, such as a driving-app discount, autopay or a bundle.
4. Get at least two more quotes from other companies, including one that sells through an independent agent.
5. Compare on the car insurance quote comparison worksheet, not on the headline price.
6. Check financial strength, complaints and claims handling before you pick the cheapest, as our guide on how to compare car insurance quotes apples to apples explains.

Questions to ask when an ad prompts you to switch

• "What coverages and limits does the advertised price assume?"
• "Is this price a quote based on my own record, or an average?"
• "Which discounts are included, and what must I do to keep them at renewal?"
• "Is the price for a six-month or twelve-month term?"
• "What will the price do at my first renewal?"

Common questions

Do I pay more because my insurer advertises so much?

Not necessarily. Advertising is one cost among many, it varies with the company's growth targets, and competition limits how far it can raise rates. Compare quotes rather than assuming that a heavy advertiser costs more or less.

Are agent-based insurers cheaper because they advertise less?

Not as a rule. They pay commissions instead of, or alongside, advertising. Progressive's 2023 to 2025 figures show the direct channel's expense ratio moving from below to above the agency channel's as ad spending rose.

Why did insurers advertise so much after rates went up?

Because underwriting results recovered. AM Best's January 2026 report says advertising fell in 2022 and 2023 when results were poor and rose 60% in 2024 as they improved.

Should I trust the "save hundreds" number in an ad?

Treat it as a reason to get a quote, not as a prediction. Savings figures usually describe people who chose to switch, and your own price depends on your record, vehicle, location and the coverage you pick. Our article on why your phone rings after a car insurance quote explains how quote requests can lead to follow-up calls.

Where can I see an insurer's expense figures?

Public companies file annual reports with the SEC, and insurers file statutory financial statements with state regulators. Mutual companies and private companies may publish less, and your state regulator can point you to what is available.

Key takeaways

• Advertising is a real cost, but in the largest insurers' latest reports it is a single-digit share of premium; Progressive's $5.1 billion in 2025 was about 6.3% of premiums earned.
• Acquisition costs come as ads, commissions or both, so direct and agent-based insurers each carry them; neither avoids the cost.
• Insurers spend more on ads when underwriting is profitable and cut back when it is not, which is why spending jumped in 2024 and 2025.
• A savings claim in an ad is a possibility, not your price; test it with a real quote and matching coverage.
• Rates are filed with the state and based on your risk, not on a line item for advertising.