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Canadian Home and Auto Insurance - US - May 2013

“Many consumers purchase insurance with the assumption that one insurance company is just like another, making it difficult for companies to differentiate themselves. Under these circumstances, price is an important factor in a consumer’s purchase decision, but it is not necessarily the only one, or even the most important. Quality customer service is a differentiating factor as well, especially for those customers not solely focused on price. Companies that offer the most attractive combination of price and service will be the ones who enjoy the most competitive advantage.”

– Robyn Kaiserman, Financial Services Industry Analyst

Some questions answered in this report include:

  • How will technology provide the most competitive advantage?
  • Which demographic segments offer insurers the greatest potential?
  • How can insurers best gain customers among young people?

 

The Canadian home and auto insurance market is a fragmented one and carriers are competing heavily for new customers, especially young ones. The challenges to the industry include internal ones such as getting and keeping an aging systems infrastructure up to speed and external ones in the form of a weaker-than-expected recovery, an increase in severe insurable weather events, and ever-increasing customer demands.

This report looks at the following:

  • What is happening in the property and casualty market as a result of the economy?
  • What are the demographic segments that hold the most promise for the industry?
  • What do home and auto insurance companies need to do to compete in this competitive and low-margin industry?

 

Mintel selects survey respondents so that they are proportionally balanced to the entire Canadian adult population based on the key demographics of gender, age, household income, and region. Note that Mintel’s exclusive survey was conducted online and in both English and French.

 

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Data sources
        • Abbreviations and terms
          • Abbreviations
            • Terms
              • Companies mentioned in this report
              • Executive Summary

                  • The market
                    • Figure 1: Net written premiums as a percentage of total premiums, by line, 2011
                  • Market factors
                    • Figure 2: Canadian unemployment rate, January 2011-March 2013
                  • Young population is growing
                    • Customer satisfaction is high
                      • Figure 3: Satisfaction with current auto/homeowner insurance provider, February 2013
                    • Opportunities in the industry
                      • Figure 4: Auto/homeowners insurance switching behavior, February 2013
                    • How insurance is purchased
                      • Figure 5: How purchased auto insurance, by age, February 2013
                    • Mobile technology
                      • Why people switch
                        • Figure 6: Reasons for switching auto/truck/motorcycle/homeowners/renters insurance, February 2013
                      • Customer service is important
                        • What we think
                        • Issues in the Market

                            • How will technology provide the most competitive advantage?
                              • Which demographic segments offer insurers the greatest potential?
                                • How can insurers best gain customers among young people?
                                  • Figure 7: Auto/truck/motorcycle insurance purchasing/switching behavior, February 2013
                                  • Figure 8: Homeowners/renters insurance purchasing/switching behavior, February 2013
                                  • Figure 9: Attitudes toward insurance and insurance agents, by age, February 2013
                                  • Figure 10: Reason for choosing auto provider, by age, February 2013
                              • Insights and Opportunities

                                • Key points
                                  • Upgrading technology is crucial
                                    • Quality customer service will attract and retain customers
                                      • Figure 11: Importance of claims handling ability, Any agree, February 2013
                                    • Acquisition opportunities may offer growth potential
                                      • Usage-based insurance is the future
                                        • Millennials will need insurance
                                          • Figure 12: Ownership of financial products, Millennials, February 2013
                                        • Growing Asian community
                                          • Figure 13: “Visible minority” group numbers and percentage of total population, 2006 and 2031 (proj.)
                                          • Figure 14: Percentage of immigrants to Canada by region, 2007-2011
                                          • Figure 15: Percentage with auto/truck/motorcycle or homeowners/renters insurance, by race, February 2013
                                        • Mobile apps
                                          • Figure 16: Smartphone ownership, by age, February 2013
                                          • Figure 17: Auto/truck/motorcycle and homeowners/renters insurance ownership, by age, February 2013
                                          • Figure 18: Smartphone ownership, by race, February 2013
                                          • Figure 19: Banking activities in the last year on a mobile phone, by race, December 2011-January 2012
                                        • Loyalty programs
                                          • Create value for customers who seek it
                                            • Figure 20: Reasons for switching auto/truck/motorcycle insurance, by cluster, February 2013
                                            • Figure 21: Reasons for switching homeowners/renters insurance, by cluster, February 2013
                                        • Trend Applications

                                            • Trend: Boomerang Generation
                                                • Figure 22: Financial plans for next two or three years, by age, February 2013
                                              • Trend: Edutainment
                                                • Mintel Futures: Access Anywhere
                                                • Market Size

                                                  • Key points
                                                    • Net written premiums (NWP) increased 6.2% from 2010-2011
                                                      • Figure 23: Growth in net written premium, 1990-2011
                                                    • Claims show large increase in past decade
                                                      • Figure 24: Total P&C insurance claims, 2001-11
                                                    • Most claims are in auto line
                                                      • Figure 25: Net Claims Insured (NCI), by line of business, 2011
                                                    • Property claims up the most from 2010-2011
                                                      • Figure 26: Growth in net claims insured (NCI) by business line, 2010-11
                                                  • Competitive Context

                                                    • Key points
                                                      • Most customers are satisfied with their insurance
                                                        • Figure 27: Satisfaction with auto/truck/motorcycle insurance provider, February2013
                                                        • Figure 28: Satisfaction with homeowners/renters insurance provider, February2013
                                                      • Competition is heaviest in Ontario and Quebec
                                                        • Figure 29: Satisfaction with auto insurance provider, by province, February2013
                                                        • Figure 30: Satisfaction with homeowners/renters insurance provider, by province, February2013
                                                      • Auto insurance sold differently across the country
                                                        • Intact Group
                                                          • Aviva Group
                                                            • RSA
                                                              • TD Insurance Group
                                                                • The Co-operators Group
                                                                • Insurance Purchase Channel Preferences

                                                                  • Key points
                                                                    • Most consumers prefer to purchase insurance through agents
                                                                      • Figure 31: How purchased auto insurance, by age, February 2012
                                                                      • Figure 32: Attitudes toward insurance agents, by age, February 2013
                                                                  • Segment Performance

                                                                    • Key points
                                                                      • Personal property premiums growing fastest
                                                                        • Figure 33: Growth in net written premium (NWP), by line of business, 2007-2011
                                                                        • Figure 34: Total net written premiums by line, 2011
                                                                        • Figure 35: Net written premium as percentage of total premiums, by line, 2011
                                                                      • Auto insurance
                                                                        • Figure 36: Total auto insurance premiums, 1990-2011
                                                                    • Market Drivers

                                                                      • Key points
                                                                        • The future insurance-buying population is continuing to grow
                                                                          • Figure 37: Canadian population by generation, 2011
                                                                        • Auto sales
                                                                          • Figure 38: Historical and projected new vehicle sales, 2006-13 (proj.)
                                                                        • Housing market is “balanced”
                                                                          • Figure 39: Believe this year is a good time to purchase house, January-February 2013
                                                                          • Figure 40: Believe next year will be a good time to purchase home, January-February 2013
                                                                        • Unemployment trending down
                                                                          • Figure 41: Canadian unemployment rate, January 2011-March 2013
                                                                          • Figure 42: Number of employed people, March 2008-March 2013
                                                                        • Recession changes demographics of home buying
                                                                          • Non-mortgage debt levels remain high
                                                                            • Figure 43: Average non-mortgage consumer debt, Q4 2011-Q4 2012
                                                                          • Increase in severe weather and natural disasters
                                                                            • Figure 44: Costliest natural disasters in Canadian insurance history
                                                                        • Leading Companies

                                                                          • Key points
                                                                            • Top 10 P&C carriers comprise more than half the market
                                                                              • Figure 45: Market share of top 20 private P&C insurers, by DWP, 2011
                                                                          • Innovations and Innovators

                                                                            • Key points
                                                                              • Mobiliz
                                                                                • The Dominion
                                                                                • Marketing Strategies

                                                                                  • Key points
                                                                                    • Belairdirect is the leading home and auto mailer
                                                                                      • TD Bank increased its mailings the most
                                                                                        • Figure 46: Change in number of home and auto mailings by carrier, Q3 2012-Q4 2012
                                                                                      • Ontario received most of the home and auto mail
                                                                                        • Figure 47: Share of mail by province, Q4 2012
                                                                                      • Incentives offered by most carriers
                                                                                        • Print ads
                                                                                          • Figure 48: Intact Insurance print ad, 2013
                                                                                          • Figure 49: RBC print ad, 2012
                                                                                          • Figure 50: TD Bank print ad, 2012
                                                                                        • Emails
                                                                                          • Figure 51: 21st Century Insurance online ad, 2013
                                                                                          • Figure 52: GEICO online ad, 2013
                                                                                          • Figure 53: Allstate email ad, 2013
                                                                                        • Online
                                                                                          • Figure 54: State Farm online ad, 2013
                                                                                          • Figure 55: Farmers online ad, 2013
                                                                                        • Television ads
                                                                                          • Figure 56: Aviva television ad
                                                                                        • Co-operators
                                                                                          • Figure 57: Co-operators television ad
                                                                                      • The Consumer – Ownership of Financial Products

                                                                                        • Key points
                                                                                            • Figure 58: Ownership of financial products, by gender, February 2013
                                                                                            • Figure 59: Ownership of financial products, by age, February 2013
                                                                                            • Figure 60: Ownership of financial products, by household income, February 2013
                                                                                            • Figure 61: Ownership of financial products, by presence of children in household, February 2013
                                                                                            • Figure 62: Ownership of financial products, by race, February 2013
                                                                                        • Insurance Provider(s)

                                                                                          • Key points
                                                                                            • Auto insurance
                                                                                              • Figure 63: Insurance carrier for auto/truck/motorcycle insurance, February 2013
                                                                                              • Figure 64: Insurance carrier for auto/truck/motorcycle insurance, by age, February 2013
                                                                                              • Figure 65: Insurance carrier for auto/truck/motorcycle insurance, by household income, February 2013
                                                                                            • Homeowners/Renters
                                                                                              • Figure 66: Insurance carrier for homeowners/renters insurance, February 2013
                                                                                              • Figure 67: Insurance carrier for homeowners/renters insurance, by age, February 2013
                                                                                          • Experience with Auto Insurance

                                                                                            • Key points
                                                                                              • Auto insurance
                                                                                                • Figure 68: Auto/truck/motorcycle insurance purchasing/switching behavior, by gender, February 2013
                                                                                                • Figure 69: Auto/truck/motorcycle insurance purchasing/switching behavior, by age, February 2013
                                                                                              • Homeowners/Renters insurance
                                                                                                • Figure 70: Homeowners/renters insurance purchasing/switching behavior, by age, February 2013
                                                                                                • Figure 71: Homeowners/renters insurance purchasing/switching behavior, by gender and age, February 2013
                                                                                            • Factors Considered in Insurance Purchase

                                                                                              • Key points
                                                                                                • Figure 72: Importance of claims service and safe driving discounts, by gender, February 2013
                                                                                                • Figure 73: Importance of claims service and safe driving discounts, by household income, February 2013
                                                                                                • Figure 74: Importance of claims service and safe driving discounts, by Marital/relationship status, February 2013
                                                                                            • Preferred Auto Insurance Purchase Channels

                                                                                              • Key points
                                                                                                  • Figure 75: How purchased auto insurance, by gender, February 2013
                                                                                                  • Figure 76: How purchased auto insurance, by age, February 2013
                                                                                                  • Figure 77: How purchased auto insurance, by gender and age, February 2013
                                                                                              • Influences on Choice of Auto Insurance Provider

                                                                                                • Key points
                                                                                                  • Word of mouth is key
                                                                                                    • Figure 78: Influences on choice of auto insurance provider, by gender, February 2013
                                                                                                    • Figure 79: Influences on choice of auto insurance provider, by age, February 2013
                                                                                                • Reasons for Switching

                                                                                                  • Key points
                                                                                                    • Auto/truck/motorcycle insurance
                                                                                                      • Figure 80: Reason for switching auto/truck/motorcycle insurance, February 2013
                                                                                                      • Figure 81: Reason for switching auto/truck/motorcycle insurance, by household income, February 2013
                                                                                                      • Figure 82: Reason for switching auto/truck/motorcycle insurance, by age, February 2013
                                                                                                    • Homeowners/renters insurance
                                                                                                      • Figure 83: Reason for switching homeowners/renters insurance, February 2013
                                                                                                      • Figure 84: Reason for switching homeowners/renters insurance, by household income, February 2013
                                                                                                  • Attitudes Toward Insurance Companies

                                                                                                    • Key points
                                                                                                        • Figure 85: Attitudes toward insurance companies and agents, by gender, February 2013
                                                                                                        • Figure 86: Attitudes toward insurance companies and agents, by age, February 2013
                                                                                                        • Figure 87: Attitudes toward insurance companies and agents, by household income, February 2013
                                                                                                        • Figure 88: Attitudes toward insurance companies and agents, by marital/relationship status, February 2013
                                                                                                    • Satisfaction with Current Insurance Carrier

                                                                                                      • Key points
                                                                                                        • Auto/truck/motorcycle insurance
                                                                                                          • Figure 89: Satisfaction with current auto/truck/motorcycle insurance and insurance provider, by gender, February 2013
                                                                                                          • Figure 90: Satisfaction with current auto/truck/motorcycle insurance and insurance provider, by age, February 2013
                                                                                                          • Figure 91: Satisfaction with current auto/truck/motorcycle insurance and insurance provider, by provinces, February 2013
                                                                                                        • Homeowners/renters insurance
                                                                                                          • Figure 92: Satisfaction with current homeowners/renters insurance and insurance provider, by gender, February 2013
                                                                                                          • Figure 93: Satisfaction with current homeowners/renters insurance and insurance provider, by age, February 2013
                                                                                                          • Figure 94: Satisfaction with current homeowners/renters insurance and insurance provider, by provinces, February 2013
                                                                                                      • Attitudes about Price

                                                                                                        • Key points
                                                                                                          • Figure 95: Importance of insurance pricing for purchase, by gender, February 2013
                                                                                                          • Figure 96: Importance of insurance pricing for purchase, by age, February 2013
                                                                                                          • Figure 97: Importance of insurance pricing for purchase, by household income, February 2013
                                                                                                          • Figure 98: Importance of insurance pricing for purchase, by gender and age, February 2013
                                                                                                      • Cluster Analysis

                                                                                                          • Financially Passives
                                                                                                            • Demographics
                                                                                                              • Characteristics
                                                                                                                • Opportunity
                                                                                                                  • Service Seekers
                                                                                                                    • Demographics
                                                                                                                      • Characteristics
                                                                                                                        • Opportunity
                                                                                                                          • Savvy Shoppers
                                                                                                                            • Demographics
                                                                                                                              • Characteristics
                                                                                                                                • Opportunity
                                                                                                                                  • Frugal Switchers
                                                                                                                                    • Demographics
                                                                                                                                      • Characteristics
                                                                                                                                        • Opportunity
                                                                                                                                          • Cluster characteristics
                                                                                                                                            • Figure 99: Target clusters, February 2013
                                                                                                                                            • Figure 100: Ownership of financial products, by target clusters, February 2013
                                                                                                                                            • Figure 101: Insurance carrier for auto/truck/motorcycle insurance, by target clusters, February 2013
                                                                                                                                            • Figure 102: Insurance carrier for homeowners/renters insurance, by target clusters, February 2013
                                                                                                                                            • Figure 103: Auto insurance purchasing/switching experience, by target clusters, February 2013
                                                                                                                                            • Figure 104: Homeowners/renters insurance purchasing/switching experience, by target clusters, February 2013
                                                                                                                                            • Figure 105: Importance of factors in purchasing insurance, by target clusters, February 2013
                                                                                                                                            • Figure 106: Channels used to purchase auto insurance, by target clusters, February 2013
                                                                                                                                            • Figure 107: Influences on choice of auto insurance provider, by target cluster, February 2013
                                                                                                                                            • Figure 108: Reasons for switching auto/truck/motorcycle insurance, by target clusters, February 2013
                                                                                                                                            • Figure 109: Reasons for switching homeowners/renters insurance, by target clusters, February 2013
                                                                                                                                            • Figure 110: Attitudes toward insurance companies, by target clusters, February 2013
                                                                                                                                            • Figure 111: Satisfaction with current auto/truck/motorcycle insurance and insurance provider, by target clusters, February 2013
                                                                                                                                            • Figure 112: Satisfaction with current homeowners/renters insurance and insurance provider, by target clusters, February 2013
                                                                                                                                            • Figure 113: Importance of insurance pricing on purchase, by target clusters, February 2013
                                                                                                                                        • Appendix – Smartphone Ownership

                                                                                                                                            • Figure 114: Ownership of financial products, by gender, February 2013
                                                                                                                                            • Figure 115: Ownership of financial products, by age, February 2013
                                                                                                                                            • Figure 116: Ownership of financial products, by household income, February 2013
                                                                                                                                            • Figure 117: Ownership of financial products, by presence of children in household, February 2013
                                                                                                                                            • Figure 118: Ownership of financial products, by race, February 2013
                                                                                                                                            • Figure 119: Ownership of financial products, by target clusters, February 2013
                                                                                                                                        • Appendix – Industry Associations

                                                                                                                                          Companies Covered

                                                                                                                                          To learn more about the companies covered in this report please contact us.

                                                                                                                                          Canadian Home and Auto Insurance - US - May 2013

                                                                                                                                          £3,277.28 (Excl.Tax)