From the March 5, 2012 issue of National Underwriter Property & Casualty • Subscribe!

Gaining Insight Into the Evolving Insurance Consumer

Consumers today have new ways of buying and shopping for insurance, and insurers have new ways of delivering products to their customers—but do insurers truly understand what it takes to attract and retain customers in today’s market?

Two recent studies attempt to provide insight into what consumers are looking for—but their findings differ in some key areas regarding consumer habits.

A report from Conning Research & Consulting, “Consumer Trends in Personal Lines Insurance,” says consumers today are more comfortable shopping online, and this preference is driving Personal Auto market development via growth in direct business from the Internet.

Conning says, “Online shopping has the ability to completely change an industry, altering the economics of transactions and of information gathering in ways that change traditional business relationships.”

This evolution, the study says, is changing the way insurance is purchased, causing leaders to reconsider business models and “altering the way in which insurers communicate with the market.”

But an Ernst & Young study, “Voice of the Customer: Time for Insurers to Rethink Their Relationships,” based on a survey of 5,000 consumers in the Americas, notes that insurers have to think beyond the Web. “Our research indicates that while online is an important part of the future, it is just one component of an integrated channel-management capability that is critical to growth.”

In the Americas, E&Y says 23 percent of consumers are using a range of online channels to research purchases—well under the 32 percent of consumers in Europe and 39 percent in Asia-Pacific who are using online sources. 

But E&Y contends that personal contact is still essential now and will continue to be in the future: “Customers clearly voiced a desire for both improved online access and continual personal contact when it matters.” 

Another area of debate regarding the new consumer is the importance of price. The Conning study says consumers are increasingly focused on price—and that focus has intensified in the wake of the Great Recession. While some age groups may revert to pre-recession spending habits, Conning says the focus on price could be a lasting factor for younger generations.

The E&Y study agrees that price is still a key driver for purchasing behavior overall, particularly for new business, but adds that customers take other factors into consideration as well.

Fifty-eight percent of those consumers polled by E&Y say price is the key factor in purchasing insurance, but the consumers also considered such factors as whether the brand is well-known or trustworthy (42 percent); customer service (34 percent); whether they hold another product from the same insurer (31 percent); the company’s track record or reputation (29 percent); and the company’s financial strength and stability (25 percent). 

Interestingly, the E&Y survey reached a different conclusion than the Conning report regarding young shoppers. According to E&Y, a relatively high proportion (43 percent) of consumers in the 18-34 demographic say they are more willing to pay a premium for a financially stable brand. Only 33 percent of customers in the 35-54 age bracket say the same.  

E&Y recommends that insurers pay attention to price but also focus on product flexibility, brand positioning, customer segmentation, and ease and simplicity of the sales and renewal processes. Furthermore, the firm says insurers must manage their brand online to “ensure that blogged and tweeted comments reflect their brand values.”

Both studies pointed to additional factors that challenge traditional thinking regarding insurance consumers. For example, regarding claims service, E&Y says that while “received wisdom” is that a good claims experience will drive loyalty, its research shows that excellent claims service is expected and “will not, in itself, drive loyalty or customer retention.”  However, a poor claims service is likely to drive customers away.

Conning, meanwhile, focused on the changing demographics of the insurance-buying consumer. Minority groups accounted for 83 percent of national-population growth from 2000 to 2009, the study notes.

Additionally, broken down by age, the most growth is now seen in the young and in those 65 and older—traditionally the two worst age groups for claims activity in auto insurance, Conning reports.


Resource Center

View All »

Is It Time To Step Up And Own An Agency?

Download this eBook for insight on how to determine if owning an agency is right...

Claims - The Good The Bad And The Ugly

Fraudulent claims cost the industry and the public thousands of dollars in losses. This article...

Leveraging BI for Improved Claims Performance and Results

If claims organizations do not avail themselves of the latest business intelligence (BI) tools, they...

Top 10 Legal Requirements for E-Signatures in Insurance

Want to make sure you’ve covered all your bases when adopting e-signatures? Learn how to...

Get $100 in leads with $0 down!

NetQuote's detailed, real-time leads have boosted sales for thousands of successful local agents across the...

The Growing Role of Excess & Surplus Lines in Today’s...

The excess and surplus market (E&S) provides coverage when standard insurance carriers cannot or will...

Increase Sales Conversion with this Complimentary White Paper

This whitepaper will share proven techniques - used by many of the industry's top producers...

D&O Policy Definitions: Don't Overlook These Critical Terms

Unlike other forms of insurance where standard policy language prevails, with D&O policies, even seemingly...

Environmental Risk: Lessons Learned from Willy Wonka and the Chocolate...

Whether it’s a chocolate factory or an industrial wastewater treatment facility, cleanup and impacts to...

More Data, Earlier: The Value of Incorporating Data and Analytics...

Incorporating more data earlier in claims lifecycles can help you reduce severity payments by 25%*...

PropertyCasualty360 Daily eNews

Get P&C insurance news to stay ahead of the competition in one concise format - FREE. Sign Up Now!

Advertisement. Closing in 15 seconds.