Auto insurers' spending on marketing has increased substantiallyover the past 10 years, but a report by the consulting firmMcKinsey questions whether the industry is spending too much toattract too few customers.

In a report released yesterday titled, "Beyond Price: The Riseof Customer-Centric Marketing in Insurance," the consulting groupsays that over the past 10 years, the marketing spend by U.S.personal-lines insurers rose from $1.7 billion to $5.9 billion in2011.

All of that spending, the report says, is targeted at just 30percent of auto-insurance buyers who are most price-sensitive andleast loyal.

"For a small number of individual carriers, the marketing armsrace has yielded gains in market share," the report says. "Thesewinners are likely to continue to thrive in the current marketingparadigm. But the industry as a whole is treading water; somecarriers are spending heavily for broad brand recognition and havelittle to show for it."

Based on the findings from the McKinsey Auto Insurance BuyerSurvey in June of 2012, the report says the industry retention ratewas over 90 percent in 2011.

Tanguy Catlin, principal with McKinsey, and one of the authorsof the report, says the main purpose of the study is to raise theissue with insurers and begin a conversation with executives abouttheir spending and expectations for growth.

Catlin acknowledges that the marketing spend has produced"significant value" for the top-five U.S. insurers, as these brandsare the first to come to mind among consumers when they go shoppingfor insurance.

Among those consumers who do choose to look for a new carrier,40 percent utilize digital and social media to influence theirbuying decisions, up from just 10 percent in 1998.

Catlin says instead of trying to beat the major insurers attheir own spending game, smaller carriers should concentrate theirefforts on niche opportunities.

"We strongly believe that there are other needs out in themarketplace that are not being addressed and that is a biggeropportunity for insurers," says Catlin.