Analysts have predicted a slowdown in growth and narrower underwriting margins for personal auto insurers in the coming quarters. This forecast began to materialise in the third-quarter results of two major auto insurers, Progressive and GEICO.Both companies reported higher personal auto combined ratios for Q3 and the first nine months of 2025, compared to the same periods in 2024. The increase was primarily due to higher expenses rather than increased losses. Despite the rise, the combined ratios remained well below the break-even point, with only Progressive’s Q3 personal auto loss ratio exceeding 90 at 90.7.
Progressive’s results were bolstered by improving loss and loss adjustment expense (LAE) ratios, driven by fewer catastrophe losses and a drop in auto claims frequency. However, higher expense ratios for the quarter and year-to-date were largely the result of an accrual for consumer refunds, which will be paid out in Florida next year under excess profits statutes. This accrual added 5.5 points to Progressive’s personal auto expense ratio for Q3.
Despite these higher expenses, Progressive’s robust double-digit premium growth helped mitigate the impact of its $1.3 billion advertising spend on the Q3 expense ratio. Advertising costs rose by 10% compared to Q3 2024, but the impact was softened by a 20% increase in earned premiums.
Meanwhile, GEICO’s efforts to attract new business have led to increased expenses without a matching rise in premiums. The insurer’s expense ratio grew by 3.2 points in Q3, which accounted for most of the deterioration in its combined ratio. However, GEICO still enjoys a significant advantage over Progressive in terms of expense ratios—12.8 points versus 25.5 points. GEICO’s expense ratio could rise to 14.5 points by Q4 2026, according to analysts.
GEICO’s advertising spend is expected to continue to rise as it seeks to boost new business, despite a relatively modest premium growth rate of 5% for Q3. S&P Global Markets Intelligence highlighted that GEICO’s underwriting expenses surged by nearly 40% for the second consecutive quarter, but its expense ratio of 12.8% remains below historical averages.
In contrast, Progressive’s advertising costs have also been climbing. The company spent $1.3 billion on advertising in Q3 2025, which represents a 10% increase compared to the same period last year. Yet, despite this, Progressive saw a 4% decrease in direct auto quote volume in Q3. New applications for direct business remained flat, while agency business applications fell by 5%. However, renewal business applications rose by 20% in both channels, largely due to the significant new business growth in prior periods.
Progressive’s Growth Plans Continue
Progressive has maintained strong premium growth of 12.2% and policy growth of 15.1%. However, analysts raised concerns during the earnings call about the impacts of increased competition and the firm’s long-term strategy for sustaining growth. CEO Tricia Griffith remained optimistic, stating that the company’s focus would remain on maximising growth and using advertising as a key tool to achieve this.
Griffith acknowledged the growing competitive landscape, noting that Progressive had taken preemptive action by adjusting rates in advance to capitalise on earlier growth. However, she emphasised that the company would continue to find ways to grow, particularly by targeting a segment of customers referred to as “Robinsons”—families who bundle auto and home insurance. This market represents a $230 billion opportunity, with Progressive currently holding a small share.
Although rate increases won’t be a major driver for future premium growth, Griffith suggested that Progressive would continue to raise rates, but in a more moderate manner, reflecting their stronger position. She also highlighted Progressive’s targeted pricing strategies, mentioning that the company had lowered rates in 10 states during Q3 while increasing rates in six others.
Griffith stressed that Progressive would continue to focus on product innovation and customer retention, pointing to new product offerings, such as a mechanical breakdown coverage for new cars and embedded renters insurance for auto policies, as examples of how the company is differentiating itself in the market.
At the same time, the company is expanding its reach, with a particular emphasis on growing its market share in Florida, Progressive’s largest market, where it is already the leading provider of personal auto insurance.
Despite a competitive market, Griffith expressed confidence in Progressive’s ability to retain and grow its customer base, saying that the company’s focus on data-driven pricing and its ability to match rates to risks would continue to set it apart from competitors. She added that new business, particularly from competitors with newly expanded distribution channels, would likely continue to flow toward Progressive, citing the company’s broad distribution network and diverse product offerings as key advantages.
As Progressive moves into the final quarter of 2025, the company remains focused on its growth trajectory, leveraging advertising and pricing strategies to capture more market share while navigating the challenges of an increasingly competitive auto insurance landscape.