Auto Insurers engage in aggressive customer courtship as shopping stagnates

Auto insurers are contending with record-low numbers of new shoppers, price competition and the ever looming Insurtech disruptors. These conditions have forced auto insurers into “aggressive customer courtship mode”, according to the J.D. Power 2018 U.S. Insurance Shopping Study.

To court customers insurers are investing forcefully in improving the shopping process and in national advertising to build their brands.

“We’re entering an era of consumer-centric insurance that will likely be marked by a surge in new digital offerings and serious efforts by insurers to improve the auto insurance shopping experience,” said Tom Super, Director of the Property and Casualty Insurance Practice at J.D. Power. “Auto insurers looking to differentiate and win new customers are making big bets with digital—such as in personalization—that meet customers’ growing expectations for improved interactions.”

Highlights from the study include:

  • Delivering an omnichannel experience is critical as 45 percent of auto insurance shoppers use multiple channels when purchasing a policy.
  • Brand reputation is the top driver of consideration, but a strong value proposition remains essential in driving quote and close rates.
  • Insurtech customer awareness still low: Just 6 percent of prospective customers indicate being aware of at least one of the following companies: Lemonade, Metromile, Trov and Sure. Less than half of shoppers who are aware of a given provider would consider doing business with them in the future.
  • Directs are winning purchase experience battle:Overall satisfaction among shoppers who purchased insurance from companies that primarily sell directly to the customer is 846 (on a 1,000-point scale). This compares with a score of 842 among shoppers who purchased insurance from companies that primarily sell through independent agents and 834 among those who bought from insurers who primarily sell through exclusive agents.

 

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