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The money companies spend on advertising isn't just thrown away. They wouldn't be spending the money if it didn't net them a return.
Same with charity advertisement.
That argument works for like, Pringles, not something you generally are legally required to have. If they’re required to spend money on advertising just to remain competitive, that sounds like you could severely restrict all insurance company’s ability to spend on advertising and save everyone money.
It works with things you are required to have as well.
Insurance is a varied field from legal minimum insurance to something that will actually protect your family. Since it is so varied, advertising helps being people in. I know there are a couple of car insurance companies that don't advertise, but they are also very picky on who can get their insurance.
Exactly. They want to bring in exponentially more premiums than what they spend on advertising, and the new premiums are what provides the cash to pay other policy claims. It's really kind of an accepted form of Ponzi scheme. They are gambling that they will find enough people who will never need to make a claim in order to afford the few that do.
It could just be for reducing churn and keeping the status quo. It's a prisoners dilemma, if geico spends a million on advertising then they might gain some customers from say progressive. Progressive would then also also have to advertise to attract customers back so they will spend a million on advertising too, now both are spending a million to keep the status quo. If you take a step back and look at the big picture it's basically everyday people paying higher premiums that go to the advertising company, celebrity etc.
The car insurance market is pretty static, there's no opportunity to expand the market outside general population growth since everyone already has a car and has car insurance, so expansion is difficult especially since there arent many differentiating factors, so companies tend to advertise to just keep there current market share. Charity on the other hand has plenty of room for expansion, it can be as much as the disposable income of the country, if you watch an aspca ad and donate your likely to keep donating to the other causes you support, assuming you have the disposable income.
You can advertise without paying millions to people who already have millions. And forcing them to reveal the cost to consumers isn't preventing them from advertising.
This is why you should get insurance through an independent agent. There are companies you've never heard of that do auto/home/life insurance for better rates. The same is true of mortgages.
Be mindful that small agents can screw you over just like any insurance company.
Look out for yourself and ask questions
True, especially "agents" that only use one or two companies.
Eh... I'd be wary of small insurance companies. Sometimes they don't like to pay. Or at least not as fast.
Please update your post so that the entire shower thought is in the title. Rule 2.
But if they didn't spend money on those people how would you know they exist and spend your money on their policies?
Given that in most places in the US you're required to have auto and home insurance, somehow I think people would find them. Knowing that some NFL player stans for Progressive doesn't give me any information on the quality of the company.
Familiarity breeds trust. They aren't trying to sell you insurance. They are trying to get you to think of their name when you shop for insurance. They want you to see Progressive and think, "Yeah, that's a company I've heard of." If you were choosing between two brands equivalent, and you had never heard of one of them, most people will pick the one they have heard of. That's why 90% of insurance commercials are just repeating the name of the company and words like "trust" or "value".
I understand how advertising works, I'm saying that I would like to choose for myself instead of having name recognition forced into my brain cells.
I would also like to have no advertising.
this post was submitted on 13 Nov 2024
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Showerthoughts
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A "Showerthought" is a simple term used to describe the thoughts that pop into your head while you're doing everyday things like taking a shower, driving, or just daydreaming. The most popular seem to be lighthearted, clever little truths, hidden in daily life.
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