If you’ve felt a pinch when it comes to your car insurance premiums, you’re not alone. Prices have gone up 7% over the last 12 months ending in May, according to the Bureau of Labor Statistics (BLS). That’s on top of a hike of 17.4% in 2023.
While many drivers search for ways to keep up with rising costs, some insurance company executives are taking home massive pay packages. For example, USAA’s outgoing CEO, Wayne Peacock, received nearly $10 million in compensation in 2024, an 18.4% increase from the previous year.
That may seem unfair to drivers, but there is little to no direct correlation between executive pay and insurance premiums. Despite this, consumer advocates are calling on state regulators to do more.
- The CEOs of the 10 largest insurance companies received more than $138 million combined in publicly reported compensation in 2023, according to the Consumer Federation of America.
- Executives at Nationwide, Progressive, Travelers and USAA all received pay raises in 2023, but CEOs at other carriers saw their reported compensation decrease from 2022 to 2023.
- USAA’s outgoing CEO, Wayne Peacock, saw his compensation increase by 68% from 2022 to 2023, the most of any insurance company executive.
What we know about executive compensation in the insurance industry
In the midst of rising car insurance rates, some CEO pay has been rising, too, according to the Consumer Federation of America (CFA).
“Insurance CEOs are raking in the dough” as consumers pay steep premiums, said Michael DeLong, a research and advocacy associate for the CFA, in a 2024 press release.
For instance, USAA’s Wayne Peacock brought home a reported $8.1 million in compensation in 2023, according to the CFA. That was a 68% increase over his previous year’s reported compensation. However, Peacock’s pay was still about 64% less than the $22.5 million that Travelers CEO Alan Schnitzer brought home in 2023. His pay was 194 times more than the salary of the average Travelers employee, according to Insurance Business magazine.
CEOs typically have a “pay-for-performance” compensation model that rewards them for guiding the company to certain benchmarks of success and profitability. Their compensation can include salary as well as incentives, bonuses, stock options and other types of pay, as well as group insurance, paid time off and retirement plans. They may also receive perks the average employee does not, such as a security detail, company vehicle or private plane access.
According to the CFA, the following CEOs received more than $138 million combined in publicly reported compensation in 2023. The table below compares those figures to 2022.
| Insurer | CEO | 2023 reported compensation | 2022 Reported compensation | Change YOY |
|---|---|---|---|---|
| Allstate | Thomas J. Wilson | $16,516,626.00 | $18,902,127.00 | -12.62% |
| American Family | William Westrate | $3,832,995.00 | $6,772,864.00 | -43.40% |
| Berkshire Hathaway (GEICO) | Todd A. Combs | $10,000,000.00 | $13,600,000.00 | -26.47% |
| Farmers | Raul Vargas | $3,352,972.00 | $7,980,763.00* | -57.98% |
| Liberty Mutual | Timothy M. Sweeney | $10,346,284.00 | $15,399,763.00** | -32.82% |
| Nationwide | Kirt A. Walker | $11,418,123.00 | $10,964,625.00 | 4.14% |
| Progressive | Susan Patricia Griffith*** | $15,636,618.00 | $14,462,961.00 | 8.12% |
| State Farm | Michael L. Tipsord | $17,612,056.33 | $24,410,986.38 | -27.85% |
| Travelers | Alan D. Schnitzer | $22,572,740.00 | $20,772,397.00 | 8.66% |
| USAA | Steven Wayne Peacock | $8,118,816.00 | $4,820,530.00 | 68.45% |
Source: Consumer Federation of America
*Raul Vargas took over as CEO in 2023. The 2022 compensation for the previous CEO, Jeffrey J. Dailey, is listed here.
**Compensation for the previous CEO, David Long, is listed here.
*** Griffith’s compensation data comes from SEC filings.
Is there a connection between CEO pay and your insurance rate?
The connection between CEO pay and your insurance rate isn’t so cut-and-dried. CEO pay typically represents less than 0.3% of premium revenue across major insurers, says Sean Malloy, founder and managing partner of Malloy Law Offices in the Washington, D.C. area.
“When analyzing premium distribution for insurance clients, we consistently find that executive compensation averages between $0.86 to $1.42 per policy per year,” Malloy says. That figure is a fraction of the average premium increase that drivers experienced in 2024, he says.
Car insurance companies use several factors when setting your insurance rates, but executive pay isn’t one of them. Your rate is affected by more personal factors such as your age, location, driving history, credit-based insurance score and claims history.
Calls for transparency and accountability in the industry
Insurance is a highly regulated industry, but executive pay is not. Insurance companies are regulated at the state level, and in most cases must seek approval for rate increases. However, regulators don’t typically scrutinize their administrative spending, including executive pay.
California is one exception. The state’s Department of Insurance caps the maximum allowable compensation for a company’s top five executives. Compensation above that level is included in a formula that effectively lowers the rate an insurer is allowed to charge California drivers. The CFA recommends that rule be adopted nationwide and states it would save customers millions of dollars.
Consumer watchdog groups and advocacy organizations say that regulators should crack down on insurers and request more transparency.
“If times are so tight that they really need to raise rates and squeeze consumers, why are they paying their executives so much?” DeLong writes on the ConsumerFed.org website.
Why insurance premiums are rising for consumers
Car insurance premiums have been rising steadily for the past several years for a number of reasons, including:
- Inflation. In 2024, the Consumer Price Index rose 2.9%, according to the BLS. Rising prices affected the price of new cars as well as what it costs to repair or replace a damaged vehicle.
- Extreme weather. An increasing number of weather-related disasters is affecting the number of claims as well as insurer payouts. In 2023, there were a record 28 weather and climate disasters, causing damage in excess of $92 billion, according to Climate.gov.
- Poor driving. Data from LexisNexis shows a 4% increase in traffic violations from 2022 to 2023. This includes speeding, DUIs and distracted driving.
- Increased litigation. Claims have become more costly for insurers in part due to soaring litigation costs, according to the Insurance Information Institute, noting that the number of million-dollar payouts has increased, particularly from 2022 to 2023
Compared to the previous year, rate increases slowed in most states in 2024, according to data from S&P Global. The data analytics company noted that GEICO lowered rates in 20 states, although it raised them in 16 others. GEICO had the smallest overall rate increase, at 2.8%. Progressive also lowered rates in some states but boosted them in others, for an overall increase of 2.9%.
The car insurance companies with the steepest premium increases are Allstate, at 10.5%, Liberty Mutual, at 10.9% and American Family Insurance, at 13%.
What drivers can do about rising costs
Drivers who are struggling to afford their car insurance premiums can take steps to secure better rates.
- Shop around. Some car insurance companies are lowering rates in select states, including GEICO, Progressive and State Farm. If your rates have skyrocketed, it’s time to compare quotes from at least three other insurers to see how much you might be able to save.
- Talk to your insurer. You may be able to negotiate a better rate if your credit history, driving habits, or living arrangements have changed.
- Reconsider your policy’s features. You should always carry enough insurance to protect you financially in the event something goes wrong. But it’s a good idea to review your coverage and deductibles regularly to make sure they’re still appropriate for your needs.
- Look for discounts. You might be able to lower your rates by bundling your auto policy with homeowners or renters insurance, for example. Talk with your agent to see if you qualify for other discounts you don’t have currently.
Final thoughts
Drivers can’t do much to change their insurance company CEO’s compensation package. But there are ways to lower your auto insurance premiums. If you feel your premiums are too high, review your coverage and shop around for quotes. Stay informed about changes to the industry – including executive pay – and feel empowered to address questions about your premiums with your agent or carrier representative.
FAQs
Why are insurance companies allowed to raise rates so often?
Insurance companies say costs have been rising due to inflation, worsening natural disasters, and other factors. As a result, many have been hiking their premiums to keep up while still staying compliant with state laws banning excessive rate increases.
Can state regulators cap executive compensation?
Yes, some state regulators can and have capped executive pay: In California, the state Department of Insurance limits the maximum allowable executive compensation that companies can include when setting their rates.
Sources
- U.S. Bureau of Labor Statistics. “Consumer expenditures: BLS Reports.” Accessed June 2025.
- Consumer Federation of America. “While Consumers Struggle to Afford Insurance Coverage, Insurance CEOs Rake in Millions.” Accessed June 2025.
- III.org. “Legal System Abuse: State of the Risk.” Accessed June 2025.
- Legal Information Institute. “Cal. Code Regs. Tit. 10, § 2644.10 – Excluded Expenses | State Regulations.” Accessed June 2025.
- Climate.gov. “2023: A historic year of U.S. billion-dollar weather and climate disasters.” Accessed June 2025.
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