Insurance company ratings agency A.M. Best Co. says it isincreasingly looking at auto insurers' distribution managementpractices when rating.

“Companies that can demonstrate defensible and sustainablecompetitive advantages—such as control over distribution, multipledistribution channels, low-cost structure, and the effectiveutilization of technology—are likely to be viewed favorable from arating perspective,” A.M. Best states in a special report on the U.S. auto insurance market.

Clearly, the use of technology plays a large role in aninsurer’s grasp of and flexibility to adapt to themarket.

Insurers are using technology to distribute auto productsdirectly and through multiple channels, as well as to strengthensingular distribution channels, according to A.M. Best.

The ratings agency notes consumers are increasingly at leastusing the Internet to shop and gather information about theauto-insurance purchase. Moreover, policies purchased online haverisen steadily since 2004.

“The direct channel’s rise has been driven by aggressivemarketing, competitive pricing, user-friendly online tools andinnovative technologies, all of which can be funded with money onceearmarked for agent commissions,” says A.M. Best.

In terms of market share, the top 10 private passenger autowriters haven’t changed in a decade but the share by the toptwo—State Farm (19.3 percent) and Allstate (10.7 percent)—hasdeclined.

However, the order of the top 10 carriers has changed since2002. Berkshire Hathaway’s Geico moved from 6 to 3. Progressive’srank of 4 remained unchanged but its market share improved to 8.4percent in 2012 from 5.8 percent in 2002.

The market share of the top 10 carriers increased to 69.8percent from 58.8 percent in 2002.