Consumers today have new ways of buying and shopping forinsurance, and insurers have new ways of delivering products totheir customers—but do insurers truly understand what it takes toattract and retain customers in today's market?

Two recent studies attempt toprovide insight into what consumers are looking for—but theirfindings differ in some key areas regarding consumer habits.

A report from Conning Research & Consulting, “ConsumerTrends in Personal Lines Insurance,” says consumers today are morecomfortable shopping online, and this preference is drivingPersonal Auto market development via growth in direct business fromthe Internet.

Conning says, “Online shopping has the ability to completelychange an industry, altering the economics of transactions and ofinformation gathering in ways that change traditional businessrelationships.”

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

But an Ernst & Young study, “Voice of the Customer: Time forInsurers to Rethink Their Relationships,” based on a survey of5,000 consumers in the Americas, notes that insurers have to thinkbeyond the Web. “Our research indicates that while online is animportant part of the future, it is just one component of anintegrated channel-management capability that is critical togrowth.”

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

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

Another area of debate regarding the new consumer is theimportance of price. The Conning study says consumers areincreasingly focused on price—and that focus has intensified in thewake of the Great Recession. While some age groups may revert topre-recession spending habits, Conning says the focus on pricecould be a lasting factor for younger generations.

The E&Y study agrees that price is still a key driver forpurchasing behavior overall, particularly for new business, butadds that customers take other factors into consideration aswell.

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

Interestingly, the E&Y survey reached a different conclusionthan the Conning report regarding young shoppers. According toE&Y, a relatively high proportion (43 percent) of consumers inthe 18-34 demographic say they are more willing to pay a premiumfor a financially stable brand. Only 33 percent of customers in the35-54 age bracket say the same.  

E&Y recommends that insurers pay attention to price but alsofocus on product flexibility, brand positioning, customersegmentation, and ease and simplicity of the sales and renewalprocesses. Furthermore, the firm says insurers must manage theirbrand online to “ensure that blogged and tweeted comments reflecttheir brand values.”

Both studies pointed to additional factors that challengetraditional 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 researchshows that excellent claims service is expected and “will not, initself, drive loyalty or customer retention.”  However, apoor claims service is likely to drive customers away.

Conning, meanwhile, focused on the changing demographics of theinsurance-buying consumer. Minority groups accounted for 83 percentof national-population growth from 2000 to 2009, the studynotes.

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