Wall Street Investors are Leading the Drive for Lower Car Insurance Rates

You've undoubtedly seen that commercial where the married couple wake up and go downstairs to find dozens of mortgage bankers waiting in their kitchen. These guys will do anything to get the couple's business, because the internet has made the mortgage lending business highly competitive. And how do the lenders compete? By offering better service at lower rates. Car insurance is headed in this direction as well.

Publicly Traded Car Insurance Companies

You don't have to be a stock market buff to know that big car insurance companies are looking out for their shareholders. If management doesn't maximize shareholder value, investors will kick them to the curb. This means that the CEO of every publicly traded car insurance company's goal is to get his stock price up, and the only way to do that is for the company to grow.

Wall Street investors are addicted to growth. It isn't enough for a company to be profitable - it has to make more money than it did the last year. But even that isn't enough. If a company's profit goes up by 10 percent in 2006, it had better go up by at least 11 percent in 2007, or there will be some angry shareholders!

The popular conception has always been that when a car insurance company is concerned about its stock price, its customers get a raw deal. In the past this may have been true, because companies just raised rates in order to have that sales growth their shareholders need. With the increased competition of the internet, though, this doesn't work anymore. The only way to fuel growth is for car insurance companies to get more customers - and the only way for them to reel in more customers is to offer them lower rates!

More Words from the CEO - The Good, the Bad, and the Ugly for Consumers

Think this is just speculation? Well, listen to what the CEO of one of the largest car insurance companies in the United States recently told his shareholders: "There has been a power shift to the consumer. The car insurance pricing atmosphere is deflationary. We need to make sure that we don't lose customers to competitors at a price we would be comfortable with." He went on to admit that the car insurance industry has historically counted on rising premiums to fuel revenue growth, "but we're not seeing that now."

There was one bright spot for the CEO. He said indicated that customers facing renewal, so-called "captive customers," often sit back and accept whatever rates they've been paying - in fact, they're often happy that their rates aren't going up (as they have been almost every year for the past decade).

Are you one of these captive customers? Don't be. Car insurance companies are willing to compete for your business, but only if you make them. Comparison shop online with carinsurancerates.com. You just might be shocked at how much you can save with a little bit of effort.