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Auto Insurance - US - December 2009

This report explores the automobile insurance market in the US. It provides insight into the external and internal factors affecting auto insurance sales and consumption, and what they mean for future sales, promotional campaigns, and industry innovations. Specific questions that are answered in this report include, but are not limited to, the following:

  • How have market conditions led to a change in the frequency and severity of claims
  • What effect does the current downturn in the economy and high unemployment have on the insurance industry
  • How is the auto insurance market affected by current market trends, including car sales, vehicle safety, vehicle theft, and highway safety
  • Which are the leading auto insurance companies? What have they done to reach that point and what are they doing now
  • What innovations have developed in the insurance market and how do they relate to an increase in policyholders
  • What types of advertising and promotion are auto insurance companies using to target prospective buyers
  • What type of variety exists between auto insurance consumers? What are their habits and opinions regarding auto insurance

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Consumer survey data
            • Advertising creative
              • Abbreviations and terms
                • Abbreviations
                  • Terms
                  • Executive Summary

                    • $200 billion in auto premiums written in 2008
                      • Claim frequency at lowest point in decade, claim severity at record high
                        • Automobile insurance has become less expensive during past five years
                          • High unemployment may increase the number of uninsured drivers
                            • Ownership of auto insurance is nearly universal among car owners
                              • Key trends drive auto insurance market
                                • State Farm, Allstate are the nation’s two leading auto insurers
                                  • GEICO, Progressive gain with competitive prices and services
                                    • Preference between leading insurers varies among age, demographics
                                      • Pay-as-you-drive auto insurance may develop as viable business model
                                        • Consumer survey results
                                        • Insights and Opportunities

                                          • Fight against distracted driving, text messaging
                                            • Target hybrid owners to benefit from the “greening” of consumers
                                            • Inspire Insights

                                                • Trend: Corporate Partnerships
                                                  • Manufacturers and insurers get together
                                                    • Insurers can create ratings scale depending on vehicle’s gas mileage
                                                    • Market Size and Forecast

                                                      • Key points
                                                        • $200 billion in auto insurance premiums written in 2008
                                                          • Figure 1: Automobile insurance direct written premium, by line, 2008
                                                        • Average expenditure for auto insurance declines for third straight year
                                                          • Figure 2: Average expenditures for auto insurance, United States, 1997-2007
                                                        • Washington, D.C. is the most expensive state for auto insurance
                                                          • Figure 3: Average auto insurance expenditure, by state, 2006 and 2007
                                                        • Detroit leads nation in average annual auto premium cost
                                                          • Figure 4: Most expensive and least expensive cities for automobile insurance, 2008
                                                        • Claim frequency falling, claim severity rising
                                                            • Figure 5: Private passenger automobile insurance liability losses, by number of claims, 1999-2008
                                                          • Key points
                                                            • Overview
                                                                • Figure 6: Direct written auto insurance premium, by type of coverage, 2008
                                                              • Auto insurance becoming less expensive during past five years
                                                                • Figure 7: PRIVATE PASSENGER AUTO DIRECT WRITTEN PREMIUM, AT CURRENT AND INFLATED PRICES, 1993-2007
                                                              • The economic downturn may increase the number of uninsured drivers
                                                              • The Consumer—Automotive Versus Competing Segments

                                                                • Key points
                                                                  • Nearly all vehicle owners own auto insurance
                                                                    • Figure 8: Insurance segment ownership, by gender, February 2008-March 2009
                                                                  • Less affluent households are more likely to be uninsured
                                                                      • Figure 9: Insurance segment ownership, by household income, February 2008-March 2009
                                                                  • Market Drivers

                                                                    • Car sales declined in 2008
                                                                      • Figure 10: Total U.S. car unit sales, 2003-08
                                                                    • Traffic fatalities decreased 11% over the past decade to all-time low
                                                                      • Figure 11: Traffic deaths, 1999-2008
                                                                    • Vehicle theft has declined over the past decade
                                                                      • Figure 12: Motor vehicle theft in the U.S., 1998-2008
                                                                    • Alcohol-related traffic fatalities down 35% since 1985
                                                                      • Figure 13: Total traffic and alcohol-impaired crash fatalities, 1985-2008
                                                                    • Auto insurance premiums are sensitive to local trends
                                                                    • Leading Companies

                                                                      • Key points
                                                                        • State Farm, Allstate leaders in automotive insurance
                                                                          • Figure 14: Top 10 writers of private passenger automobile insurance, by direct premiums written, 2008
                                                                        • State Farm Insurance
                                                                          • Allstate Insurance
                                                                            • GEICO
                                                                              • Progressive Insurance
                                                                              • The Consumer—What Companies They Prefer

                                                                                • Key points
                                                                                  • State Farm is leading auto insurer, Allstate second
                                                                                    • Figure 15: Automobile insurance provider, by gender, February 2008-March 2009
                                                                                  • Allstate, Progressive perform well among 18-24 year olds
                                                                                      • Figure 16: Automobile insurance provider, by age, February 2008-March 2009
                                                                                    • State Farm leads among Midwestern and Southern respondents
                                                                                      • Figure 17: Automobile insurance provider, by region, February 2008-March 2009
                                                                                  • Innovation and Innovators

                                                                                    • Pay-as-you-drive auto insurance becoming attractive alternative model
                                                                                      • iPhone apps put auto insurance service in users’ pocket
                                                                                        • Social media build relationships between insurer, insured
                                                                                        • Advertising and Promotion

                                                                                          • Insurers using characters to show humor, promote message
                                                                                            • Figure 18: GEICO ad, 2008
                                                                                            • Figure 19: GEICO ad, 2008
                                                                                            • Figure 20: Progressive ad, 2008
                                                                                            • Figure 21: Travelers Insurance Group ad, 2009
                                                                                          • State Farm ad targets younger, ethnic audience
                                                                                            • Figure 22: State Farm ad, 2008
                                                                                          • Allstate ad challenges competing insurers on savings
                                                                                            • Figure 23: Allstate ad, 2008
                                                                                        • Who Has Auto Insurance?

                                                                                          • Key points
                                                                                            • Majority of respondent drivers have auto insurance
                                                                                              • Figure 24: Ownership of auto insurance, by gender, September 2009
                                                                                            • Young drivers are more likely to be uninsured
                                                                                              • Figure 25: Ownership of auto insurance, by age, September 2009
                                                                                            • Less affluent households are more likely to be uninsured
                                                                                                • Figure 26: Ownership of auto insurance, by household income, September 2009
                                                                                            • Who Purchases Auto Insurance?

                                                                                              • Key points
                                                                                                • Auto insurance decisions slant toward men
                                                                                                  • Figure 27: Involvement of auto insurance purchase, by gender, September 2009
                                                                                                • Insurance for young drivers likely purchased by parents
                                                                                                    • Figure 28: Involvement of auto insurance purchase, by age, September 2009
                                                                                                • How Are Auto Insurance Policies Chosen?

                                                                                                  • Key points
                                                                                                    • Consumers show loyalty to their auto insurer
                                                                                                        • Figure 29: Auto insurance purchase behavior, by gender, September 2009
                                                                                                      • Young drivers, new adults practice comparison shopping
                                                                                                        • Figure 30: Auto insurance purchase behavior, by age, September 2009
                                                                                                    • How Do Consumers Compare Auto Insurance Quotes?

                                                                                                      • Key points
                                                                                                        • Majority of respondents compared online
                                                                                                            • Figure 31: Auto insurance quote comparison behavior, by gender, September 2009
                                                                                                          • Decreased online usage among older drivers
                                                                                                              • Figure 32: Auto insurance quote comparison behavior, by age, September 2009
                                                                                                            • Affluent drivers may look for policy add-ons
                                                                                                                • Figure 33: Auto insurance quote comparison behavior, by household income, September 2009
                                                                                                            • How Many Vehicles Households Insure

                                                                                                              • Key points
                                                                                                                • Single-car households most common
                                                                                                                  • Figure 34: Vehicles per policy, by gender, September 2009
                                                                                                                • Young respondents likely insure one car, middle age likely insure multiple cars
                                                                                                                  • Figure 35: Vehicles per policy, by age, September 2009
                                                                                                                • Number of insured vehicles increases with household income
                                                                                                                    • Figure 36: Vehicles per policy, by household income, September 2009
                                                                                                                • What Consumers Pay For Auto Insurance

                                                                                                                  • Key points
                                                                                                                    • A third of respondents pay $499 or less for automotive insurance
                                                                                                                        • Figure 37: Auto policy cost per vehicle, by gender, September 2009
                                                                                                                      • Respondents aged 45-54 most likely to have paid $499 or less
                                                                                                                          • Figure 38: Auto policy cost per vehicle, by age, September 2009
                                                                                                                        • More affluent households pay more for auto insurance
                                                                                                                            • Figure 39: Auto policy cost per vehicle, by household income, September 2009
                                                                                                                          • Auto insurance costing $1,000-1,400 greater in the Northeast
                                                                                                                              • Figure 40: Auto policy cost per vehicle, by region, September 2009
                                                                                                                          • Number of Drivers on Automotive Policy

                                                                                                                            • Key points
                                                                                                                              • Half of policies owned by respondent drivers list two drivers
                                                                                                                                • Figure 41: Number of drivers on auto policy, by gender, September 2009
                                                                                                                              • Middle-aged respondents likely to have multiple drivers on policy
                                                                                                                                • Figure 42: Number of drivers on auto policy, by age, September 2009
                                                                                                                              • Lowest-income households earning >$25K likely to list one driver
                                                                                                                                • Figure 43: Number of drivers on auto policy, by household income, September 2009
                                                                                                                            • Number of Claims Consumers File Each Year

                                                                                                                              • Key points
                                                                                                                                • More than half of respondent drivers never file automotive insurance claims
                                                                                                                                    • Figure 44: Auto claim filing frequency, by gender, September 2009
                                                                                                                                  • Young drivers aged 18-24 least likely to have filed automotive claims
                                                                                                                                      • Figure 45: Auto claim filing frequency, by age, September 2009
                                                                                                                                    • More than half of households earning $100K+ file automotive claims
                                                                                                                                        • Figure 46: Auto claim filing frequency, by household income, September 2009
                                                                                                                                    • Race and Hispanic Origin

                                                                                                                                      • Key points
                                                                                                                                        • Black and Hispanic respondents somewhat less likely to own auto insurance
                                                                                                                                          • Figure 47: Insurance segment ownership, by race/Hispanic origin, February 2008-March 2009
                                                                                                                                        • Allstate leads among Hispanics, State Farm far outpaces among whites
                                                                                                                                            • Figure 48: Automobile insurance provider, by race/Hispanic origin, February 2008-March 2009
                                                                                                                                          • Auto insurance owned across race groups
                                                                                                                                            • Figure 49: Ownership of auto insurance, by race/Hispanic origin, September 2009
                                                                                                                                          • Black respondents most likely involved in purchase of auto insurance
                                                                                                                                            • Figure 50: Involvement of auto insurance purchase, by race/Hispanic origin, September 2009
                                                                                                                                          • Hispanics more likely to switch insurers, comparison shop
                                                                                                                                            • Figure 51: Auto insurance purchase behavior, by race/Hispanic origin, September 2009
                                                                                                                                          • More than half of Hispanics, blacks use online to shop for insurance
                                                                                                                                            • Figure 52: Auto insurance quote comparison behavior, by race/Hispanic origin, September 2009
                                                                                                                                          • Hispanics list few cars despite larger families
                                                                                                                                            • Figure 53: Vehicles per policy, by race/Hispanic origin, September 2009
                                                                                                                                          • Fewer drivers listed on Hispanic policies
                                                                                                                                            • Figure 54: Number of drivers on auto policy, by race/Hispanic origin, September 2009
                                                                                                                                        • Cluster Analysis

                                                                                                                                            • Quoteless Claimers
                                                                                                                                              • Characteristics:
                                                                                                                                                • Opportunity:
                                                                                                                                                  • Online Checkers
                                                                                                                                                    • Characteristics:
                                                                                                                                                      • Opportunity:
                                                                                                                                                        • Insurance Loyalists
                                                                                                                                                          • Characteristics:
                                                                                                                                                            • Opportunity:
                                                                                                                                                              • Characteristic tables:
                                                                                                                                                                • Figure 55: Auto insurance clusters, September 2009
                                                                                                                                                                • Figure 56: Attitudes regarding auto insurance, by auto insurance clusters, September 2009
                                                                                                                                                                • Figure 57: How quotes are checked, by auto insurance clusters, September 2009
                                                                                                                                                                • Figure 58: Number of vehicles on automotive policies, by auto insurance clusters, September 2009
                                                                                                                                                                • Figure 59: Annual cost of automotive policies per vehicle, by auto insurance clusters, September 2009
                                                                                                                                                                • Figure 60: Number of drivers on auto insurance policy, by auto insurance clusters, September 2009
                                                                                                                                                                • Figure 61: Claims filed, by auto insurance clusters, September 2009
                                                                                                                                                              • Demographic tables:
                                                                                                                                                                • Figure 62: Auto insurance clusters, by gender, September 2009
                                                                                                                                                                • Figure 63: Auto insurance clusters, by age, September 2009
                                                                                                                                                                • Figure 64: Auto insurance clusters, by household income, September 2009
                                                                                                                                                                • Figure 65: Auto insurance clusters, by race, September 2009
                                                                                                                                                                • Figure 66: Auto insurance clusters, by Hispanic origin, September 2009
                                                                                                                                                              • Cluster methodology:
                                                                                                                                                              • Appendix: Other Useful Consumer Tables

                                                                                                                                                                • Automotive insurance providers and household income
                                                                                                                                                                  • Figure 67: Automobile insurance provider, by household income, February 2008-March 2009
                                                                                                                                                                • Automotive insurance ownership and household income
                                                                                                                                                                  • Figure 68: Ownership of auto insurance, by household income, September 2009
                                                                                                                                                                • Automotive insurance purchase behavior and household income
                                                                                                                                                                  • Figure 69: Auto insurance purchase behavior, by household income, September 2009
                                                                                                                                                                • Automotive insurance policy cost and race
                                                                                                                                                                  • Figure 70: Auto policy cost per vehicle, by race/Hispanic origin, September 2009
                                                                                                                                                              • Appendix: Trade Associations

                                                                                                                                                                Companies Covered

                                                                                                                                                                • AAA
                                                                                                                                                                • AIG Group (American International Group Inc)
                                                                                                                                                                • Alliance Of Automobile Manufacturers, Inc.
                                                                                                                                                                • Allstate Corporation (The)
                                                                                                                                                                • American Family Insurance Group
                                                                                                                                                                • American Honda Motor Co., Inc.
                                                                                                                                                                • American Insurance Association
                                                                                                                                                                • Apple, Inc
                                                                                                                                                                • Association of Latino Professionals in Finance and Accounting
                                                                                                                                                                • Automotive Aftermarket Industry Association
                                                                                                                                                                • Automotive Industry Action Group (AIAG)
                                                                                                                                                                • Berkshire Hathaway Inc
                                                                                                                                                                • BMW of North America, LLC
                                                                                                                                                                • Chrysler LLC
                                                                                                                                                                • Daimler AG
                                                                                                                                                                • Facebook, Inc.
                                                                                                                                                                • Farmers Group, Inc.
                                                                                                                                                                • Ford Motor Company (USA)
                                                                                                                                                                • General Motors Corporation
                                                                                                                                                                • Government Employees Insurance Company
                                                                                                                                                                • Greenfield Online
                                                                                                                                                                • Groupe Danone
                                                                                                                                                                • Insurance Information Institute Inc.
                                                                                                                                                                • Insurance Institute for Highway Safety/Highway Loss Data Institute
                                                                                                                                                                • J.D. Power and Associates
                                                                                                                                                                • Jaguar Cars North America
                                                                                                                                                                • JPMorgan Chase & Co
                                                                                                                                                                • Liberty Mutual Holding Company Inc.
                                                                                                                                                                • LinkedIn
                                                                                                                                                                • Mazda North American Operations
                                                                                                                                                                • Mercedes-Benz USA
                                                                                                                                                                • MetLife, Inc. (Metropolitan Life Insurance Company)
                                                                                                                                                                • Mitsubishi Motors North America, Inc.
                                                                                                                                                                • National Association of Insurance Commissioners (NAIC)
                                                                                                                                                                • National Automobile Dealers Association (NADA)
                                                                                                                                                                • National Highway Traffic Safety Association (NHTSA)
                                                                                                                                                                • Nationwide Mutual Insurance Company
                                                                                                                                                                • Porsche Cars North America, Inc.
                                                                                                                                                                • Safeco Corporation
                                                                                                                                                                • SAM's Club
                                                                                                                                                                • State Farm Insurance Companies
                                                                                                                                                                • The Hartford Financial Services Group, Inc.
                                                                                                                                                                • The Martin Agency, Inc.
                                                                                                                                                                • The Progressive Corporation
                                                                                                                                                                • Toyota Motor Sales, U.S.A., Inc.
                                                                                                                                                                • Twitter, Inc.
                                                                                                                                                                • U.S. Bureau of Labor Statistics
                                                                                                                                                                • U.S. Department of Transportation
                                                                                                                                                                • Unilever USA
                                                                                                                                                                • USAA
                                                                                                                                                                • YouTube, Inc.
                                                                                                                                                                • Zurich Financial Services

                                                                                                                                                                Auto Insurance - US - December 2009

                                                                                                                                                                £3,199.84 (Excl.Tax)