Analysts’ projections of slower growth and smaller underwriting margins ahead for personal auto insurers started to play out ever so slightly in third-quarter results of two giant auto insurers this week.

Both Progressive and GEICO reported higher personal auto combined ratios in the third quarter and first nine months of 2025, when compared to the same periods in 2024, primarily driven by higher expenses rather than losses.

Still, the combined ratios were well below breakeven, with only Progressive’s third-quarter personal auto loss ratio coming in above 90—at 90.7.

Improving loss and loss adjustment expense ratios, aided by lower levels of catastrophe losses this year, as well as declining auto claims frequency, almost counterbalanced Progressive’s higher expense ratios for the quarter and the year-to-date. The expense ratios were lifted by an accrual for consumer refunds that will be paid out next year in the state of Florida in connection with excess profits statutes.

Specifically, for Progressive’s third-quarter 2025, the accrual added 5.5 points to Progressive’s personal auto expense ratio.

Related article: “Too Much Profit? Progressive’s Florida Results Generate Nearly $1B Q3 Charge“

At the same time, however, double-digit premium growth muted the impact of $1.3 billion in advertising costs on the third-quarter expense ratio, even though Dr. Rick and Flo had more airtime and screen time in recent months. While overall advertising costs climbed 10 percent over third-quarter 2024, the expanse ratio impact was 0.2 points lower than the impact of advertising costs in third-quarter, 2024 as a result of a 20 percent jump in earned premiums, Progressive reported in its third-quarter shareholders report.

The same wasn’t true at GEICO.

GEICO’s “efforts to attract new business have resulted in increased expenses without corresponding premium growth,” reported S&P Global Markets Intelligence in a recent analysis shared with Carrier Management (“S&P Analysis: Policy Acquisition Costs Surge at GEICO as Premium Growth Continues to Lag,” November 4, 2025). The analysis spotlighted increased advertising costs at Berkshire Hathaway’s personal auto insurer, and premium growth figures hovering around 5 percent.

(Editor’s Note: Allstate, which reported later than Progressive and GEICO, showed little expense ratio movement and much improved loss ratio. See related article, “Making Auto Insurance Affordable: Industry Executives Celebrate Florida Reforms.”)

Although GEICO’s expense ratio grew 3.2 points in the third-quarter, accounting for almost all of the combined ratio deterioration, GEICO still maintains a big expense ratio advantage over Progressive—12.8 points for GEICO vs. 25.5 points for Progressive. But GEICO’s expense ratio could rise to 14.5 by fourth-quarter 2026, the S&P GMI report says, citing consensus forecasts collected by Visible Alpha, which is part of S&P GMI.

GEICO is likely to spend more on advertising to pursue new business, the report states.

So far, even though overall underwriting expenses increased by 39.9 percent for the second straight quarter, GEICO’s expense ratio of 12.8 falls below historical norms, S&P GMI noted.

A prior analysis by Carrier Management published in May, after Berkshire Hathaway’s annual meeting, revealed that expense ratios averaged 12.3 during the five-year period ending in 2024 (2020-2024). During the prior five years (2016-2019), GEICO’s expense ratios averaged 14.9. Berkshire Vice Chair Ajit Jain attributed much of the decline to staffing cuts made in the later period, which translated into $2 billion of cost savings annually.

Related article: Staff Cuts Help Fuel GEICO Profit; Not ‘Pouring Money’ Into AI: Jain

At the time, Jain also highlighted efforts by GEICO to improve the matching of insurance rates wotj risks taken on in auto insurance policies. Those efforts show up in GEICO’s loss and LAE ratio figures, which S&P GMI reports have stayed below 75 for seven consecutive quarters.

Slow growth, however, is even translating into forecasts of rising loss and LAE ratio from S&P GMI. The snapshot from the analysis below shows that S&P GMI analysts project loss and LAE ratios up near the level of recent GEICO combined ratios in 2026—close to 80, according to the rising line on the chart below the blue bars forecasting declining underwriting gains in dollars.

“Spending on advertising…remains key to attracting new business for carriers like GEICO,” which acquire customers through the direct distribution channel. “But the more aggressive outreach has not to this point translated into faster growth in written premiums” for GEICO, the S&P GMI report says, noting that third-quarter growth of 5.0 percent lagged the 5.6 percent growth rate recorded for the first nine months, and that GEICO’s ad spend could conceivably come close to $1.9 billion for full-year 2025—roughly 35 percent higher than last year.

Referencing Progressive’s comparatively higher advertising costs, the S&P GMI report notes that despite further advertising spending this year, growth in new business at Progressive this year also pales in comparison to last year.

According to Progressive’s quarterly shareholder reports this year, the carrier spent $1.3 billion on advertising in first-quarter 2025, 86 percent more than last year’s first quarter, $1.2 billion in second-quarter 2025, 35 percent more than last year’s second quarter, and $1.3 billion in third-quarter 2025, 10 percent higher than the comparable quarter last year.

(See S&P GMI’s March 2025 analysis, “Progressive’s advertising expenditure hits record high in 2024,” for information on 2024 advertising costs for Progressive, State Farm, GEICO and Allstate.)

Even though advertising spending is still increasing, albeit at a decreasing rate in Q3, S&P GMI also noted that Progressive’s direct auto quote volume in the quarter dropped 4 percent.

According to Progressive’s shareholder report, new applications were flat for direct business and down 5 percent for agency business, while renewal business applications jumped roughly 20 percent in both channels, “primarily driven by the significant new business application growth experienced in our personal vehicle products in prior periods.”

Progressive’s Growth Push Continues

While Progressive’s premium growth of 12.2 percent and policy growth of 15.1 percent are nothing to sneeze at, analysts on an earnings conference call this week repeatedly returned to these metrics in questioning executives about the impacts of competition and go-forward plans.

“Our operating goal is to continue to grow as fast as we can, and advertising is a great lever to reach that goal,” Chief Executive Officer Tricia Griffith said, responding to an analyst who referenced a deceleration in the growth rate of policies in force and questioned whether there’s a level of ad spend that needs to be maintained to grow in a competitive market.

Reminding analysts of Progressive’s exceptionally strong growth in third-quarter 2024, which built up a large base of policies off of which they are making comparisons, Griffith happily acknowledged the level of competition. “Yes, the competitive environment has gotten stronger, which we knew would happen. That’s why we got out in advance of rates to capture all the growth that we did when we did.”

“This is when the fun starts,” she said. “Competition is great. It’s great for customers,” and Progressive will continue to find ways to grow, she said, noting that a particular target is a group that the company refers to as “Robinsons,” families that bundle auto and home insurance.

“That market is about a $230 billion addressable market, and we have a low percentage of that share. So, there’s a lot of opportunity” to grow, she said.

Rate increases won’t be a significant factor in premium growth, she suggested, noting that Progressive increased rates by roughly 55 percent between 2022 and 2024. While rate increases will continue, they will be “on a much more moderate level because we’re in such a different position,” she said.

Later in the call, answering an analyst who asked for more specifics on pricing, Griffith reported that Progressive decreased rates in 10 states in the quarter, while increasing rates in six others. “We’re very surgical on channel, product and state. But we do want to grow,” she said, noting that reducing rates for both growth and retention is a possibility.

“We just want to make sure because of the competitive environment that we get something for that….You don’t want to reduce your margins and not get growth,” she said.

Referring to a “new business readiness” framework that drives decisions, she noted that assessments of rate level adequacy, regulatory environments, market conditions, and product opportunities factor into growth targets. Currently, she said there are 33 states where Progressive wants to spur on growth—20 are specifically referred to as “growth states,” while 13 are more volatile.

At several points during the call, Griffith and Chief Financial Officer John Sauerland noted a strong desire to continue to grow in Florida, Progressive’s largest market and a state in which Progressive is currently the leading provider of personal auto insurance. Residential property is not being targeted in Florida,

Related article: “Making Auto Insurance Affordable: Industry Executives Celebrate Florida Reforms.”

With auto insurance customers in many states facing fewer significant rate increases, and with rate decreases available in the market, an analyst wondered about the level of shopping activity and the impact on Progressive.

“All customers are going to shop including ours,” Griffith said, adding that Progressive has a cancel preservation team to review policies with these customers to help them find affordable options.

“If you shop, and you end up leaving us, we believe that is just adverse selection because we believe we have the most current up-to-date price…. Our models are constantly changing and [we’re] revising them to make them more specific to rate versus risk.”

“If you end up leaving, we believe that we have more data than wherever that customer is going to in terms of profitability”

Earlier in the call, Patrick Callahan, President of Personal Lines, described ongoing product model updates, explaining that each new model primarily involves matching rate to risk better than the prior one.

“Insurance is a scale game. We have more segmented or finite data than virtually all competitors in market. So that data enables us to solve what predicts and fits losses more precisely or more accurately than others can,” he said. He also noted that new product versions can include differentiating coverages. As an example, personal auto product model 8.9 added Progressive a mechanical breakdown coverage that supplements a new car warranty, and model 9.0 is introducing embedded renters insurance coverage as part of the Progressive auto policy.

“We recognize that renters insurance is a potential gateway product for us in the property space, and we want to make sure that we are attracting multiline customers early in their insurance buying journey,” he said, alluding to the goal of attracting Robinsons.

Responding to an analyst who asked about decelerating policy count growth the analyst witnessed at GEICO, Progressive, Allstate and other brand name insurers—and more specifically about where the churning policies are moving, Griffith asserted that Progressive is the likely destination.

“There have been competitors that were all captive and now have access to a nonstandard and independent agent channel. There are competitors that were only direct that are trying to get into the agency channel. We’ve always been broad. So. that’s really the beautiful part about our growth and trajectory,” she said, referring to the idea of being where customers are.

“Much of that growth comes to us… And we’ll continue to grow….”

“As we compare ourselves to the best year in the history of Progressive, … we’re pragmatic about the fact that we still grew PIFs [policies in force by] 4.2 million,” compared to last year. That “is substantial, especially at the margins that we have. That gives us the opportunity to continue to spur on growth, especially with our efficiency around our media spend,” she said.