In terms of deciding whether to change personal-lines insurers and which new carrier to choose, price remains the primary—but not only—factor considered by auto and homeowners’ consumers.
Indeed, when asked about their decision points when placing auto insurance for the Deloitte Research ”Voice of the Personal Lines Insurance Consumer” surveys, more than two-thirds of the 1,080 respondents said price was either extremely (54 percent) or very (28 percent) influential the last time they changed carriers. The numbers were similar among the 1,080 homeowners surveyed, although a lower share (45 percent) cited cost as extremely influential, along with 30 percent who said the price was very influential.
Interestingly, among the four age segments surveyed, those 26-34 recorded the largest percentage (71 percent) of those ranking the price of auto coverage as extremely influential but also the lowest percentage (31 percent) among homeowner respondents ranking price as important. This could perhaps be explained by the fact that having the right coverage for a home—most likely a young consumer’s biggest investment—is simply a more important consideration than price.
Another intriguing point is that while respondents cited price in retrospect as the most influential factor in their decision to change personal-lines carriers, when asked prospectively what would influence them, price did not rank nearly as high. Among auto respondents, 58 percent said price would be either extremely (27 percent) or very (31 percent) influential when they next shop for a new policy, compared to about one-third each among homeowners.
Many consumers surveyed indicated they would respond favorably to multipolicy-discount offers. Looking back, four in 10 auto respondents cited the availability of an auto/homeowners’ insurance multipolicy discount as extremely (17 percent) or very (21 percent) influential in their last decision to change carriers. Among homeowners surveyed, the influence of multipolicy discounts was even stronger, with 58 percent citing this factor as extremely (28 percent) or very (30 percent) influential the last time they changed carriers.
Many auto respondents noted that the availability of telematics—technology to monitor driving experience in return for a potential break on the price of coverage—might prompt them to change carriers. Indeed, 3 in 10 said getting a discount for installing such a device would be extremely (12 percent) or very (17 percent) influential in their next purchase decision.
However, about 30 percent said they would not agree to install such a device, while another 30 percent said they would. But about 40 percent said their answer would depend on the premium discount being offered. Nearly half of those on the fence said they would expect more than a 20 percent discount to make such electronic monitoring worth their while, while another 22 percent would want a price break of 16-20 percent. About 1 in 5 would install the device for a potential discount of 11-15 percent. Only 1 in 10 would go along for a 6-10 percent discount, and only a handful (2 percent) would agree for less than 6 percent in savings. Age is a factor here as well, with the two older segments surveyed more likely to agree to have a monitoring device installed, while younger respondents were more leery of the idea.
The amount and type of coverage offered was the second most important decision point among respondents the last time they changed carriers, but not nearly as strong a consideration as price, with only 31 percent of auto respondents citing coverage as extremely influential (compared to 54 percent on price). The same pattern held for homeowners (24 percent on coverage versus 45 percent on price).
Reputation and trust were also key factors. Three out of four auto respondents said brand name, reputation for financial strength and the insurer’s rating were important, including 1 in 5 who considered these elements extremely influential when they last changed carriers. The numbers were similar for homeowners.
Brand-name recognition was a very important decision point among both auto and homeowner respondents. About 3 in 4 bought through an exclusive agent because they represented a widely known insurer, two-thirds bought direct because they prefer to do business with a widely known insurer, and about half would be more willing to buy direct if the insurer had a widely known brand.
The importance of brand recognition and perceptions of integrity spotlight the need for more proactive reputational risk-management efforts by insurers in general and the industry as a whole.
One particular area impacting brand reputation is claim service, which was a significant decision point among both samples queried, with about 1 in 3 respondents indicating that poor claims handling was extremely or very influential in their last decision to change carriers.
In terms of which individuals influence personal-lines buyers in their purchase decisions, respondents indicated they were swayed more by recommendations from family, friends and colleagues than from an agent. However, once again age plays a big part, as younger buyers indicated they were much more heavily influenced by their family and acquaintances.
A significant percentage (41 percent) indicated that an affiliation between their bank and their auto insurer would be extremely (18 percent) or very (23 percent) influential in their decision whether to buy coverage. The numbers were similar among homeowner respondents. However, an affiliation with the respondent’s employer did not score nearly as high.
There was a split when it came to the influence of an endorsement from a group or association to which the respondent belongs. This was cited as a major factor among auto-insurance buyers, with half of the respondents noting this as either extremely (17 percent) or very (33 percent) influential. Among homeowners, however, this factor was cited by fewer than half that number—20 percent overall, and only by 8 percent as extremely influential.
About 1 in 4 among both samples said a recommendation from their auto dealer or real estate agent would be influential in their insurance-purchase decision, including about 1 in 10 who said these referrals would be extremely influential.
Interestingly, while about 1 in 5 said advertising was either extremely (9 percent) or very (14 percent) influential in deciding where to buy auto insurance, more than half said ads were not very influential (17 percent) or not at all influential (35 percent). The numbers were similar among homeowner respondents.
When asked what would be their three most preferred ways to shop for a new auto policy, “checking a website offering quotes from multiple carriers” scored the biggest response, cited by 41 percent of those surveyed, including 15 percent who said this would be their most preferred channel (respondents could choose multiple options, in order of preference). Next came an independent agent representing multiple insurers at 36 percent (also including 15 percent as most preferred), followed by agents selling exclusively for one carrier at 31 percent (although this option drew the largest percentage of the top preferred choice at 17 percent).
Among homeowner respondents, about 40 percent chose either independent or exclusive agents among their Top 3, with 1 in 5 citing either one as their first choice. Checking a website offering quotes from multiple carriers made the Top 3 among 1 in 3 respondents but was cited as the first choice by only 13 percent.
These responses indicate that while price is a critical element for personal-lines buyers, there are other factors they consider when choosing a carrier, offering insurers a variety of decision points they can leverage to differentiate themselves and thereby retain more customers and boost new business.
In my next blog, I’ll explore where insurers might go from here, based on all the survey findings I’ve presented in these blogs thus far.
(We welcome your feedback and questions throughout this series of reports. You may download the full report on “The Voice of the Personal Lines Insurance Consumer” from Deloitte Research at http://www.deloitte.com/view/en_US/us/Industries/Insurance-Financial-Services/a0f93dffd16f5310VgnVCM2000001b56f00aRCRD.htm.)