A classic mislead on the part of Allstate

The car insurance company, Allstate, is currently running an ad in which it says, “Last year GEICO customers who switched to Allstate saved an average of $473 on their car insurance.” While I paraphrased the punch line, this is the gist of their commercial.

This is a classic example of a deeply misleading ad, one true in form, but off in substance. What many manipulators of information do to succeed in deluding us is to change the context of the presentation of facts. Either that or they do not provide the appropriate context in which to evaluate information. In the above Allstate insurance case what is left out is the context that for most people to switch their insurance from GEICO to Allstate means that they need a price inducement. In this case, the average savings needed by a GEICO customer to switch to Allstate is $473. However, the ad seems to imply that simply switching to Allstate all customers save $473. Effectively, Allstate is reporting only those people for whom they saved the most money – those who had economic incentive to do so.

The proper context for the ad is: On average, every GEICO customer who switches to Allstate will save $473. But that isn’t what we get.

The fact is that insurance companies set up their pricing in such a way that they are competitive in pricing within certain actuarial groups. That competitive pricing usually means that companies are less competitive within other actuarial groups. This kind of advertising is so subtle, so manipulative and ultimately, despicable.

One thread that I would like to develop here on the blog is the evaluation of information from companies, “experts” and “news” providers. So look for more of this type of analysis is the future.

Jason