Key drivers and undercurrents

To understand what fueled the increased comparison shopping activity, one needs to look no further than the impacts the pandemic has had on consumer and agent/carrier behavior.

Unemployment: According to the Bureau of Labor Statistics, job losses started in March and then plunged by historical amounts in April (over 22 million combined in March/April). Even with job gains in May and June of over 7 million, unemployment remained at 11.1% in June. Consumers facing financial uncertainty likely turned to seek ways to reduce household expenses, including the cost of car insurance.
Stay-at-home: As Americans migrated, almost overnight, to working at home starting in mid-March, many had more time available (and fewer at-work distractions) to seek ways to reduce household essential and non-essential expenses. And don't forget, like consumers, local agents staying at home were not out in the community doing what they do best: aggressively engaging with prospective customers and stimulating shopping activity.
Federal Reserve interest rate cuts: In March, the Fed twice cut interest rates by a total of 150 basis points, causing mortgage rates to decline. Consumers, in expense reduction mode, flocked to lenders, and mortgage refinancing surged starting in March. What does this have to do with auto insurance shopping? Keep reading…
Premium rebates/credits: Auto insurance carriers started issuing premium rebates/credits in early April. This unprecedented action by carriers may have caused a "consumer awakening" and "shop and save" initiative by consumers. A recent J.D. Power survey found consumers were nearly twice as likely to shop if there's a rebate or credit offer.
Carrier advertising: Broadly, ad spending is expected to drop by 13% this year. While first-half 2020 auto insurance advertising data is not yet available, we believe overall spending on traditional forms of advertising fell significantly. As live sporting events vanished, so too did the ad inventory for auto insurance companies. Furthermore, for ads that did appear, the messaging seemingly shifted as a result of the pandemic impacts (e.g., less "shop and save" and more "premium rebates/credits" and "you're not alone… We're in this together" themed advertising).

Insurance performance marketing

Performance marketers who own insurance comparison shopping websites are some of the best digital marketers around. These companies have worked tirelessly since the late 1990s to build an efficient and effective technology ecosystem that connects consumers with agents and carriers. Because local agents were sitting at home and carriers were advertising less, there has been significant excess sales capacity.

Special Reports /

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