With all the news around California fires, year end earnings, and so on, I didn’t have the chance to write about Juan Andrade leaving Everest Re to take over USAA.
I’ve met Juan a number of times over the years and he is a very capable executive. However, USAA needs a lot of work. A lot of work.
So consider this a letter to Juan that I am sharing for public consumption. There are more than enough readers who know Juan and me that hopefully one of you will bring this to his attention.
A Damaged Brand
Some of you might raise an eyebrow (or even both?) at me suggesting USAA’s brand is damaged considering their long time sterling reputation in the industry and with its customers.
However, if that’s your reaction, you are living in the past. Anyone who has spent time around the company over the last decade or so can tell you the company is struggling.
I have been a customer since I was 16. From personal experience, I can report their service levels, which for so long was their strength, have collapsed.
Where you used to be highly confident you would get best in class assistance when you called, it is now more like 50/50. The knowledge level of the reps has declined, suggesting a deterioration in training practices.
The always friendly and polite customer rep is also no longer guaranteed. Hold times are far longer than they used to be. The experience is really barely different than any other financial service call center.
I can assure you this is not just personal anecdotes. I have talked to other customers in recent years as well as former employees.
There is universal agreement USAA is not what it used to be. There is really very little left that makes it special.
Outdated Product
USAA also used to be known for outstanding pricing. There was no reason to even shop as you were getting best in market prices, high service levels, and above average claims.
I have shopped in recent years. USAA is now more like middle of the pack on pricing.
But that’s not the whole story. Their product is woefully outdated and inflexible.
I won’t share every personal frustration of mine, but I will tell you they are very poor at estimating home values, their pricing for teen drivers is stuck in the 1950s, and I can’t tell you all the headaches trying to get (and keep) valuables insured.
There is nothing cutting edge about their underwriting. They don’t do telematics, have arbitrary cutoffs for maximum limits, require documentation when it often isn’t needed, and don’t require it when they probably should.
If you talk to an independent agent, they no longer are afraid of hearing you have USAA. In the past, the response would have been “yeah, good for you, I probably can’t do better than that”.
Today, it’s “I know you think they do a great job, but I promise you I can find you something better” and they usually can.
They also used to offer a lot of ancillary goodies that you couldn’t get elsewhere, such as deals on rental cars or below market quotes when buying a new car. The bank used to pay best in market interest rates.
While those deals still exist, like the insurance pricing, it has fallen from best in class to just OK.
Nine times out of ten, if I’m looking for a side benefit of being a member, Costco has a better perk than USAA.
And by the way, I hear a lot more complaints about claims than I ever used to.
What Went Wrong?
It’s pretty obvious. They lost sight of their mission to focus on growth. They kept expanding and expanding eligibility and the quality of service deteriorated along with the quality of the customer base.
USAA had 13.5M members at the end of 2023, up from 10M in 2014. Presumably, that is closer, or even over, 14M at this point.
There are 15.8M vets in the US and a little over 1M active duty, so that’s a 17M population for USAA to recruit from, which suggests they have over 80% market share.
Considering some people don’t need insurance (older vets in retirement homes, some vets are homeless, etc.), it’s probably closer to 100% share.
Of course, this isn’t correct, due to the expansion of eligibility to family of veterans. I don’t know the exact breakdown of membership, but I would guess legacy is probably over half of the total at this point.
Legacy members (as well as non-officers) obviously have a different affinity profile than those who served which dilutes the homogeneity of the underwriting pool.
Misguided Priorities
What was USAA’s rationale for growing? They are not a public company. No shareholder is demanding growth.
The customers aren’t seeking growth. They liked getting their big annual dividend checks which aren’t as big anymore.
The most likely culprit is the same one I wrote about at State Farm recently. A CEO prioritized growth for personal ego and status without considering the consequences (among them, that he would not remain as CEO).
There was a great article in the Journal recently about the scarcity of Ferrari and how it drives their profits. USAA, even in their heyday, was never Ferrari, but it was the closest thing insurance had to an exclusive club.
Unlike Ferrari, which is fiercely protective of its reputation, USAA decided to take the Ralph Lauren or Burberry route and see how much they could dilute their brand by making it too accessible until it eventually ended up in the clearance bin.
Not everyone should be a USAA member. And for God’s sake, Gronk shouldn’t be a member!
Make USAA Special Again
The first thing Juan should do is tighten membership eligibility.
I won’t claim to know where to draw the line, but do a study on how profitable legacy members are or how profitable officers are vs. non-officers, or how profitable are legacy of NCOs vs. legacy of a career officer.
Whatever the answer is, there needs to be some level of exclusivity going forward if USAA is going to rehab its reputation.
I would also put on a growth freeze. Why does it matter if USAA’s PIF is flat (or even down) five years from now?
Cut ad spend way back until service levels and underwriting results improve. The ad campaign is awful anyway. Nobody will miss it.
In fact, the very first thing I would do, Juan, is fire Gronk. Nothing personal, but the ads are so cringe and the company should have a more serious spokesperson.
PS: The second thing I would do is change that awful theme song. Given how long the hold times have gotten, my ears start bleeding after the twelfth time hearing that screeching rhythm.
Anyway, as a member of the reciprocal, I can tell you I get absolutely zero benefit from the company being larger. If USAA used its larger size to improve its capabilities, that would be a different story.
But since size has only made the company worse, I vote for downsizing until service levels are better and the company starts bringing some innovation back to the market.
The very simple question to ask is “who benefits from this company being bigger”. Until there is a compelling answer to that question, growth should be off the table.
Policyholder Dividends
Juan, if you need a new metric to prioritize, there is a very simple and obvious one. The company belongs to the policyholders.
As a policyholder, I don’t care how big the management fee is up to the AIF. I care about the price of my policies and the annual dividend I get back each year.
I realize the dividend finally went up last year, but that followed four years of declines and my premium has gone up well more than the extra dividend.
To minimize the price I am charged and maximize the dividend I get, the goal should be to select the customers least likely to have a loss and price them at a discount to the competition because you have better information on their behavior.
This used to be how USAA operated, well before you joined the Board. I am not sure at what point it changed, but somewhere along the way it did.
Return USAA to its roots and prioritize underwriting results and returning those superior underwriting results to customers through lower premiums, better services, and higher dividend checks.
It’s really that simple. Once you master that, and you think you can do it at larger scale, by all means, thoughtfully expand eligibility again.
But the company hasn’t earned the right to do that. When it does, I’ll be the first to congratulate you.
Is Juan the leader to do that after the massive knock at Everest?
I’ve been a usaa member since I joined the military, and many active duty members are leaving usaa. It’s over priced, very rude customer service representatives. I’m also thinking of leaving as well.
How about they don’t pay their new CEO millions and millions of dollars to help keep down the costs being put on their LOYAL customers??? The CEO salary is absurd. I’ve been a member for 25 years and it’s definitely not the same company. Nice article.
I have been a member since 1967. I no longer have insurance with them. I have witnessed the decline since they ran their first big national ad. My reaction at the time was “oh hell no”. It has all been downhill and the slide keeps accelerating. The last CEO probably could not make it through basic training.
I have never had a claim with them in 30 years the first one I have is due to weather and no fault of mine and they have paid nothing since my loss loss on / 13/24 and I am still trying to resolve this matter.
USAA insurance rates have skyrocketed, however I assumed insurance for all companies had increased. I have been a member since 1971 and for the most part, satisfied with their services. I’ve not encountered any rudeness when corresponding and have in fact, been advised how to reduce my rates. I had considered changing companies but finding one that is comparable has been a challenge. Stuck between a rock and a hard place!
Member since 1997. I left USAA for GEICO while I was still active duty and then recently went to Progressive. And when I did one of those “search all” insurance companies, USAA was in the lower middle for pricing. I think B Cortez is right, stealing from Peter(members) to pay Paul the CEO. All kinds of other shenanigans like I just realized they don’t do paints anymore. Talk about pulling the wool over!
Member since 1997. I left USAA for GEICO while I was still active duty and then recently went to Progressive. And when I did one of those “search all” insurance companies, USAA was in the lower middle for pricing. I think B Cortez is right, stealing from Peter(members) to pay Paul the CEO. All kinds of other shenanigans like I just realized they don’t do points anymore. Talk about pulling the wool over!
Great article! I have been a member since 2020. They initially rejected me because I was too young at the time. I used to appreciate the exclusivity of being a member, but that perk no longer exists. Now, many non-veterans and civilians have access to USAA, which seems ridiculous. Additionally, their premiums are quite expensive and the customer service quality has declined. It’s disappointing to see how much they have deteriorated.
Great article! I have been a member since 1997 and the one time I had to make a claim due to my car getting totaled, I felt very taken care of and everything was top notch, but that was also in 2014. I have noticed the change in premium costs whereas they used to be much more affordable and competitive. I used to feel privileged to be a member but I really don’t like the idea of the membership criteria being relaxed to where it seems like anyone can join and if prices are going up on top of that, well, it has me rethinking staying in what used to be the “USAA family.”
As a current employee, this article could not be more accurate! I’ve been employed with USAA since the early 2000s, and boy, have I seen changes. One of the biggest was when they started outsourcing their hiring. We call them 3Ps, or third-party reps, and they receive low wages—so naturally, they provide low-quality service. Sure, having 3Ps was acceptable to a certain extent, but as soon as USAA decided to use them to replace “blue badgers” (direct-hire employees), that’s when the company’s decline began. After reading this article, it’s more blatantly obvious than ever to its members that there has been a negative shift. I believe USAA made this decision to cut expenses wherever possible to boost profits.
The second biggest mistake was a project called “Be a Compliant Company,” introduced by the infamous CEO, Stuart Parker. Under his leadership, working at USAA became exhausting because EVERYTHING—down to how an email was classified—became a “compliance error.” Employees feared getting fired over ridiculous, made-up internal rules labeled as “compliance.” They justified it by saying it was necessary because the bank branch kept receiving fines and penalties. If that were the issue, then why have the fines and penalties continued after years of being a “compliant company”?
Additionally, after Joe Robles (the best CEO in USAA’s history and may God rest his soul) left—the company’s primary focus shifted to growing its clientele, further sacrificing its existing members. Greed became the new mission, and it still is today. As an insurance agent, we are under unprecedented pressure daily to sell policies in a cutthroat, dog-eat-dog fashion, at the expense of the ethical culture the company was once known for.
I can no longer say I’m proud to work at USAA. I’m simply staying for a specific employee benefit and to reach a personal goal. Once I achieve that goal, I fully intend to carefully select my next employer—one that actually upholds its core values, because today, USAA’s core values are nothing more than a facade.
I also no longer refer friends to work for USAA. I would never subject anyone to this environment unless they’re being hired for a “staff” role. The call center is not for the weak—it’s designed for those with a “fake it ‘til you make it” personality. However, getting a staff role is still a reasonable employment opportunity.
Lastly, I’m posting this anonymously because, as a corporate giant, they will retaliate—but it won’t be called retaliation. I would simply be terminated “in an at-will state” for failing to meet “performance metrics.”
I work at USAA as well and cannot agree with you more. We have gotten away from providing exceptional member service to BCC crap. I’m currently on a written because I forgot to say the call may be recorded. We should have technology that says it for us.
Members since 1995
USAA has gotten so bad with customer service that they actually cost us $1500 more in coat for an insurance claim because the insurance claim representative did not tell us things to prevent us from occurring more cost. The car accident was no fault and the other party involved was also insured by USAA. Very sad outcome and will definitely looking for leaving USAA
I have been a member since I was 15 or 16, I don’t remember the last time I’ve even received a dividend payment. My homeowners insurance is higher than most others, the only reason I’m still with them is because what’s included is hard for the others to compare to. I had a claim after some Storm damage, and was told I’d get my depreciation back after getting the roof repaired and never did. Then the agent quit returning my calls requesting clarification. I’ve definitely noticed a decline in the last 5-10 years! Very sad! I am one that was able to be a member due to family eligibility, almost every one served, but have also been married to veterans so would have been anyway.
I never would’ve believed USAA would be more expensive than the commercial companies, bur now they are. Last month they informed us our home insurance increased from $1700 annual to $7564. Yes we filed a wind damage claim which we paid $12000 for repairs. Claim from USAA paid $6897. They sent us a bill for $4789 pay on demand. And on top of that our Escrow increased by $600 monthly. It seem they are trying to force us out of our home in AL.
I was with USAA from 2006-2020. They raised my insurance from $88 pm to $126 pm. Not because I had a claim but because I lived around Nashville and the chances of a claim were more. I’m happier than I ever was at USAA with Navy Federal
This article is so accurate. I’ve been a member for 39 years, and the service level has gotten so poor that I’m now shopping for new insurance and banking. I’ve already moved most of my banking over to Navy Federal. I’ve concluded that the folks who handle banking technical issues are completely incompetent. The hours I’ve wasted trying to get a problem fixed for months cannot be replaced, and the problem still exists. This has convinced me it’s time to move my money and insurance needs elsewhere. They are also discriminatory in their underwriting. I was told because I’m over 60 and divorced, my premiums are higher. Go figure 39 years with zero at fault accidents and divorcing the bum who was the one drinking and driving with claims, and my premiums are going up. What rocket scientist thought that was a good idea? Buh bye!
I have been with USAA SINCE 1977 and like other responders have seen my auto and housing insurance premiums increase year after year despite only one claim (auto) which was not my fault. I had to fight for even a minimal reimbursement for my totaled auto. Although I drive less than 2,000 miles a year in my 2005 Chrysler Town & Co. I pay $188/month – absurd! The only way I can afford household insurance is to carry only enough to cover my small mortgage but which leaves me woefully under insured. Further, despite enduring significant damages from the last 3 hurricanes, I made no claims for fear of being cancelled or priced out due to increasing fees. Even so my deductible has increased almost 3 fold and monthly premiums have nearly doubled. Loyalty is not rewarded. At least most of my customers service interactions have been courteous although not always well informed.
My husband and I have been members for 48 years. We have both auto and homeowners insurance. We’ve rarely had claims, and when we did the customer service was outstanding. In 2023 we experienced a horrific hail storm, and wound up with over $40k in claims. The service was awful…agents out of the office and not returning phone calls, adjusters miscalculating due to not paying depreciation until you submitted a signed contract to have the repairs done (took my accounting skills and four phone calls to prove the adjuster was shorting us over $5k). We did finally collect our money. Then comes 2024, when we started a home addition. Called to see how we covered the addition during construction. Received four different answers from four different agents and supervisors. After writing a letter and calling their customer resolution department, I spoke with a 20+ year agent who gave me the correct answer, and he actually referred my situation to some CEO resolution department which contacted me to discuss the issue. We are furious that they are wasting millions to advertise, and are only still with them is because between our annual dividend and senior bonus, the rates are still less than what my son-in-law can find us (he owns an independent insurance company).
As a 15 year employee I agree with you 100%. They have gone downhill. I work in the Mortgage department as a loan officer and the new leader ship is absolutely heartless. They do not care if you are sick They want that badge swiped. Half of my department is on write ups due to something. We used to have a fun family atmosphere it’s now dreadfully awful. We are micro managed to the 10th power.
I applied for a loan and unfortunately the company turned out to be a scammer. They deposited a check into my account and threatened me to return what I thought was cash. I called USAA in real time during this situation they locked my account. However they cleared this fraudulent check instantly no hold. Held me accountable and deducted $1000 from my account. I explained it was my rent and medication money. I am Domestic Violence Survivor of a Whit Collar Service Member, I have anxiety and panic disorder. Contacted office of CEO pleading for help after 1 month just yesterday I was informed that they will not credit my account. Here I am in an eviction process and not able to purchase my medication. My letter to Juan Andrade never reached him. USAA failed me they didn’t hold that check when they should have like they hold any check I deposit for 10 days…nobody cares in that company. I don’t believe they have a fair due process. I’ll be at the courthouse contesting an eviction and explaining why USAA didn’t credit my $1000 back into my account. Hopefully the Judge will have more compassion and understand the fear of survivors of domestic violence and how we react in moments of crisis. USAA you failed me .
Horrible claims service! Had a water damage claim. Submitted what was requested, and now they are stating denial due to misrepresentation. They stated I said something which was never said to them. Now, I have to hire an attorney to appeal their decision for me. Absolutely unbelievable! Stay away from USAA, to say they have lost their mission is a complete understatement!