Insurance Shopology is what NexisLexis Risk Solutions calls the product. Actually, it’s not a product. Insurance Shopology is a survey of the what and why behind consumer auto insurance shopping.
While the focus is auto insurance, some of the things learned about auto insurance shopping may also apply to other lines of insurance. It applies to insurers and to agents alike.
The survey begins by acknowledging how competitive the auto insurance market has become and it explains why.
“The U.S. auto insurance marketplace has become highly competitive, with steady annual revenue growth each year from new consumers entering the market. At the same time, consumers are shopping for auto insurance more than ever before, in large part because carriers have made it easy for them to do so,” the survey introduction states. “The end result? In an insurance marketplace plagued with retention woes, it is tough for carriers to attract and retain the best customers. The leading question is: how can you step ahead of the competition in this tight and challenging market?”
And with that the analysis starts with some insights and it states that the shopping habits for auto insurance is driven not only by demographics but it is driven by behavior as well.
• Consumers consider themselves to be loyal but that doesn't necessarily apply when it comes to choosing an insurance carrier
• Price is the top reason that consumers shop
• Life events also drive shopping behavior
• Addressing incremental touchpoints can result in satisfied customers and improved retention rates
• Addressing incremental touchpoints also helps with cross selling and up-selling opportunities
The NexisLexis Risk Solutions analysts suggest taking a “proactive, data-driven approach to monitoring and anticipating key events in the lives of insureds” and say doing so can give a company an advantage and can help grow revenue.
They also point out that the retention levels for all carriers for auto insurance is just over 82% and it’s been just above that mark for the last couple of years. However, while it seems like good news the management of LexisNexis Risk Solutions wanted to know what created the insurance shopping frenzy of those switching and they wanted to know why.
This is what they learned from the over 2,000 people quizzed.
• 62% of auto policies are shopped off cycle and not within the traditional renewal window
• 40% of all auto policies were shopped in the last year
• 78% of policyholders have shopped their auto insurance in the last five years
• 16% of auto policies are shopped in the 30-days immediately after a renewal
To learn more about auto insurance shopping, LexisNexis divided people into two groups: shoppers and non-shoppers. Surprisingly — especially so in the case of the non-shoppers — it appears that shopping is a common occurrence that happens equally in the two groups.
Or put a different way, while even non-shoppers shop, just one in five in both groups combined actually switch carriers.
While both appear to look around, they have much different ways of exploring. Shoppers tend to shop around online. They are also more likely to go directly to an insurers website and are more likely to use a rating tool than non-shoppers.
The difference is 42% to 26%.
Another commonality. Whether a consumer is a shopper or a non-shopper they tend to like personal help with their purchase. They want someone on the phone who works directly with the carrier or they want an independent insurance agent.
In the case of the agent members of the PIA, we think contact with an independent agent is best.
• Shoppers want the personal touch 68% of the time
• Non-shoppers want it 83% of the time
When it comes to the actual shopping, non-shoppers who’ve shopped recently are more likely to:
• Research auto insurance in person
• Purchase through an agent
• Renew a policy immediately upon receiving notice or automatically renew
• Pay just some attention to coverage and price at the time of renewal
Shoppers are more likely to:
• Research auto insurance online
• Contact insurance companies or independent agents while doing research
• Purchase auto insurance online directly through the insurance company
• Renew the auto policy within 30-days of receiving notice of renewal
• Very closely review both coverages and price at renewal time
Another surprising conclusion of the survey is how informed people are about their policies. Most are up to speed on them and what they contain, and do their research on them before the shopping experience begins.
And 72% are very aware that they can switch carriers at any given time.
Non-shoppers are believed to be more loyal than shoppers but the survey also found that price — these days — is more important than loyalty. In fact, price is the main reason people change.
Ironically, it is also the number one reason people decide to stay with their current carrier. Of concern to carriers are the people that want to change and that are unhappy but don’t change because of price.
It is something that needs to be considered when marketing to individuals.
Even when Non-shoppers who’ve shopped recently research their insurance options, they typically do so because of price. However, for this group, other drivers that send them shopping include:
• The desire to stay informed about different prices and offerings
• Their policy is up for renewal
• Their premium is increasing
Again, what is clear from the LexisNexis survey is that people mainly leave one carrier for another because of price. This isn’t just the case for those with lower incomes. The surveyors found those making between $100,000 and $150,000 a year will switch carriers for savings of as little as $100.
Sometimes even less.
When it comes to price half of those identified as shoppers say they shop at every renewal or if they think their premium is too high. That leads us to renewals.
• Non-shoppers are more likely to renew than shoppers
• 38% of them renew with their existing carrier immediately upon receiving a renewal notice
• 27% of non-shoppers renew with little or no review of the policy
• They are more likely to renew within 30-days of receiving a renewal notice
• 70% review both price and coverage before renewing
This is a huge hint for insurers. Shoppers — says the survey — are “a highly engaged segment.” It is something LexisNexis says insurers should pay attention to and exploit in their outreach strategy.
Next up in the survey is information on whether insurers ought to appeal to loyalty. Here’s why that’s a good question:
• 50% of shoppers expect to shop again in the next year
• One in five — shoppers and non-shoppers — will switch carriers when they shop
• That said, non-shoppers are less likely to shop around
• Less likely, yes, but recent non-shoppers think an event will happen in the future that will cause them to shop
• When non-shoppers end up shopping 10% of them will change carriers
As for insurer satisfaction, both shoppers and non-shoppers seem to be pretty satisfied with their carriers.
• 80% of non-shoppers are satisfied
• 72% of shoppers are satisfied
After exploring price, LexisNexis Risk Solutions analysts looked into other things that could get consumers to change carriers. These are a few of the items:
• Adding or removing a driver
• Buying or leasing a new vehicle
• A drop in household income
• Purchase of a new house
• Getting married or divorced
• Moving or relocating
• 60% of the respondents said they’d experience a life event in the last year
• That event caused them to shop their auto insurance
• 65% expect a life event to occur in the next year or two
• In that group 60% think it will influence their decision to shop their insurance again
• 40% of non-shoppers think an upcoming life event will cause them to shop
The conclusion of the survey is this — insurance purchasing is very fluid. The more agents and carriers understand what’s happening these days, the easier it will be to retain customers.
“The U.S. auto insurance marketplace is highly competitive, with steady annual revenue growth each year from new consumers entering the market,” the report noted in its conclusion and with that it went on to ask a question.
“It can be very challenging for carriers to stay abreast of consumer shopping behavior and retain their best policyholders. With price serving as a primary insurance purchasing factor, life events presenting a potential shopping trigger and loyalty being a nebulous attribute, what is the competitive opportunity for carriers?”
That opportunity — it appears — is offering personal and “perfectly timed” outreach to meet the needs of the insured.
“Those carriers that have insights into changes within their policyholders’ lives or who know when consumers are shopping their insurance will have a leg up on the competition,” the LexisNexis analysts concluded.
Source link: LexisNexis Risk Solutions