When I hear of drastic staff reductions and reduced advertising at Geico, I think back to underwriting standards, because when insurance can't be sold at good prices, Berkshire wants to sell less of it. Put so simply you would think every insurance company runs that way, but they do not as Buffett has written about in his letters.

I see two ways the cost of insurance can get too low: the first is the one we probably experience the most - other companies want to grow, and they push the growth to their staff so much they start undercutting other insurers in price. Eventually the whole industry starts to underprice the risk.

The second way is what I suspect is happening: instead of the pricing side of insurance getting low, the cost side of insurance is getting high. I'd attribute this to a higher prevalence of distracted driving, and expensive to repair cars taking over the driving fleet. So many cars have expensive sensors built into bumpers that make the cost of repairs very high. If other car insurance companies have been keeping rates low despite these increasing costs, we may have entered a poor pricing situation in a sneakier way than normal.

If my theory is right, now might be a good time for you to consider shopping around your car insurance. Not because of bad customer service due to the reduction of numbers, but because the reduction in staff and advertising is telling us that other insurance companies are pricing insurance too low.