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Property and Casualty Insurance - US - February 2013

“In an industry as highly competitive as insurance, price—although important— is not necessarily the only important feature for the customer. What the company brings to the table in the form of customer service and ease of transaction is, for many people, at least as important as price. Companies that see the most success will be those that can best integrate components of the business that allow them to offer the most attractive combination of price and service.”

—Robyn Kaiserman, Financial Services Industry Analyst

Some questions answered in this report include:

  • Which demographics offer the greatest opportunity for the insurance industry?
  • How is technology an industry game changer?

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Table of contents

  1. Scope and Themes

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

                        • Key points
                          • Premiums continue to increase
                            • Figure 1: U.S. property & casualty premiums, 2002-11
                          • New car sales are rising
                            • Figure 2: U.S. car/light truck sales (millions), 2000-12
                          • Housing market is getting stronger
                            • Figure 3: Houses sold (Seasonally adjusted annual rate), December 2005-December 2012
                            • Figure 4: Median new home sales prices, U.S., not seasonally adjusted, November 2011-November 2012
                          • The industry is beginning to recover
                            • Figure 5: Financial results for U.S. property and casualty insurers, 2008-first half of 2012
                          • Most sales made through direct writers
                            • Figure 6: Percentage of net written premiums, by type of agent, 2011
                          • The internet is a popular way to comparison shop, but…
                            • Figure 7: Channel used for obtaining quotes, 2009, 2012
                          • Most people prefer to purchase through agents
                            • Figure 8: Preference for purchasing online or through agent, by age, October 2012
                          • Usage-based insurance is poised to explode
                            • Severe weather and natural disasters continue to be a challenge
                              • Top 10 auto mailers make up most of spending
                                • Figure 9: Percentage of direct mail spend, top 10 auto acquisition mailers, Q3 2012
                              • Top 10 homeowners mailers led by State Farm
                                • Figure 10: Top 10 homeowners acquisition spending, Q3 2012
                            • Issues in the Market

                                • Which demographics offer the greatest opportunity for the insurance industry?
                                  • How is technology an industry game changer?
                                  • Insights and Opportunities

                                    • Key points
                                      • Renters insurance offers growth
                                        • Figure 11: Homeownership rates, by age, 2005-10
                                      • Big data can help insurers gain competitive advantage
                                        • Use of technology is key
                                          • Usage-based insurance is poised to explode
                                            • Improvement in claims processing will yield benefits
                                              • Mobile capabilities
                                                • Speak to Hispanics
                                                  • Figure 12: Percentage change in population, Hispanics/White non-Hispanics, 2010-15
                                              • Trend Applications

                                                  • Trend: Cam Cam
                                                    • Industry Application
                                                      • Trend: Click and Connect
                                                        • Industry Application
                                                          • 2015 Trend: Access Anything, Anywhere
                                                            • Industry Application
                                                            • Market Size

                                                              • Key points
                                                                • The industry is beginning to recover
                                                                  • Figure 13: Financial results for U.S. property and casualty insurers, 2008-first half of 2012
                                                                • Premiums continue to increase
                                                                  • Figure 14: U.S. property & casualty premiums, 2002-11
                                                                • Auto premiums headed upward
                                                                  • Figure 15: Premiums written for auto insurance, 2003-11
                                                                • Homeowners insurance is rising steadily
                                                                  • Figure 16: Premiums written for homeowners insurance, 2003-11
                                                              • Competitive Context & SWOT Analysis

                                                                • Key points
                                                                  • Leading company strengths, weaknesses, opportunities, and threats
                                                                    • Allstate
                                                                      • State Farm
                                                                        • GEICO
                                                                          • USAA
                                                                          • Segment Performance

                                                                            • Key points
                                                                              • Average expenditure for auto insurance starting to turn upward
                                                                                • Figure 17: Average annual auto insurance expenditures in U.S. (2010 dollars), 2001-10
                                                                                • Figure 18: Average annual expenditures for auto insurance, by state, 2008, 2010
                                                                              • Average premium for homeowners insurance is rising
                                                                                • Figure 19: Average annual premiums for homeowners insurance, 2002-10
                                                                                • Figure 20: Average annual premiums for homeowners insurance, by state, 2008, 2010
                                                                              • Average premiums for renters insurance are headed back up
                                                                                • Figure 21: Average annual premiums for renters insurance, 2002-10
                                                                            • Market Drivers

                                                                              • Key points
                                                                                • The economy is continuing to improve
                                                                                  • Figure 22: U.S. GDP Q1 2010-Q3 2012
                                                                                • Lower unemployment leads to more new households
                                                                                  • Figure 23: Unemployment rate, January 2011-December 2012
                                                                                • The population continues to grow and age
                                                                                  • Figure 24: percent change in U.S. population, by age, 2013-18
                                                                                  • Figure 25: U.S. population, by age, 2013-18
                                                                                • New car sales are rising
                                                                                  • Figure 26: U.S. car/light truck sales (millions), 2000-12
                                                                                • Housing market awakens
                                                                                  • Figure 27: New housing starts, by U.S. region, 2008-10
                                                                                  • Figure 28: Houses sold (Seasonally adjusted annual rate), December 2005, December 2012
                                                                                  • Figure 29: Existing home sales, seasonally adjusted annual rate, 1998-2012 (through November)
                                                                                  • Figure 30: Median new home sales prices, U.S., not seasonally adjusted, November 2011-November 2012
                                                                                  • Figure 31: Median existing home sales prices, U.S., not seasonally adjusted, November 2011-November 2012
                                                                                  • Figure 32: Median existing home sales prices, by region, not seasonally adjusted, November 2011-November 2012
                                                                                • Severe weather and natural disasters continue to be a challenge
                                                                                  • Figure 33: Natural disaster losses in the U.S., 2012
                                                                                • Investment growth projected to be modest
                                                                                  • Regulatory concerns
                                                                                  • Leading Companies

                                                                                    • Key points
                                                                                      • State Farm is the leader
                                                                                        • Figure 34: Top writers of property/casualty insurance by direct written premium (DWP), 2009-11
                                                                                      • State Farm leading in auto as well
                                                                                        • Figure 35: U.S. private passenger auto insurance top writers, by direct written premium (DWP), 2009-11
                                                                                        • Figure 36: Homeowners insurance top writers, by direct written premium (DWP), 2009-11
                                                                                    • Innovations and Innovators

                                                                                      • Key points
                                                                                        • Sprint offers expanded telematics capability
                                                                                          • GEICO releases a new iPad app
                                                                                            • Progressive expands “Snapshot” to non-customers
                                                                                              • State Farm forms a partnership with Ford to encourage UBI usage
                                                                                              • Marketing Channels

                                                                                                • Key points
                                                                                                  • Most sales are made through direct writers
                                                                                                    • Figure 37: Percentage of net written premiums brought in, by type of agent
                                                                                                  • Most sales are made through an agent
                                                                                                    • Figure 38: Channel used for purchase of auto insurance, October 2012
                                                                                                    • Figure 39: Preference for purchasing through agent vs. online, by age, October 2012
                                                                                                  • The internet is a popular way to comparison shop
                                                                                                    • Figure 40: Channel used for obtaining quotes, April 2012
                                                                                                    • Figure 41: Resources used for obtaining quotes online, April 2012
                                                                                                    • Figure 42: Likelihood of purchasing insurance online, June 2012
                                                                                                  • Millennials and Gen X account for most internet sales
                                                                                                    • Figure 43: Percentage purchased auto insurance online, by generation, October 2012
                                                                                                • Marketing Strategies

                                                                                                  • Key points
                                                                                                    • Price no longer as important a differentiating factor
                                                                                                      • Industry ad spend is up
                                                                                                        • Total personal line mail volume down in 2012
                                                                                                          • Figure 44: Overall personal lines mail activity, Q4 2010-Q3 2012
                                                                                                        • GEICO is biggest P&C mailer
                                                                                                          • Figure 45: Estimated mail volumes of top four P&C mailers, Q3 2011-Q3 2012
                                                                                                        • Top 10 auto mailers make up 90% of spend
                                                                                                          • Figure 46: Percentage of total direct mail spend, top 10 auto acquisition mailers, Q3 2012
                                                                                                        • Top 10 homeowners mailers led by State Farm
                                                                                                          • Figure 47: Top 10 homeowners insurance acquisition spending, Q3 2012
                                                                                                        • Direct Mail
                                                                                                          • Figure 48: USAA direct mail ad, December 2012
                                                                                                          • Figure 49: Farmers direct mail ad, 2013
                                                                                                          • Figure 50: Allstate direct mail ad, December 2012
                                                                                                        • Hispanic marketing
                                                                                                          • Figure 51: State Farm bilingual direct mail ad, April 2012
                                                                                                          • Figure 52: Farmers direct mail ad, September 2012
                                                                                                        • Print
                                                                                                          • Figure 53: The Hartford print ad, December 2012
                                                                                                          • Figure 54: Progressive print ad, September 2012
                                                                                                          • Figure 55: Liberty Mutual print ad, May 2012
                                                                                                        • Email
                                                                                                          • Figure 56: Progressive email ad, November 2012
                                                                                                          • Figure 57: American family email ad, August 2012
                                                                                                        • Online
                                                                                                          • Figure 58: Farmers online ad, December 2012
                                                                                                          • Figure 59: Travelers online ad, May-July 2012
                                                                                                          • Figure 60: Nationwide online ad, July-December 2012
                                                                                                        • Television
                                                                                                        • Social Media—Property and Casualty Insurance

                                                                                                          • Key points
                                                                                                            • Key social media metrics
                                                                                                              • Figure 61: Key brand metrics, property and casualty insurance, January 2013
                                                                                                            • Market overview
                                                                                                              • Brand usage and awareness
                                                                                                                • Figure 62: Usage and awareness of selected property and casualty insurance brands, November 2012
                                                                                                              • Interaction with brands
                                                                                                                • Figure 63: Interaction with selected property and casualty brands, November 2012
                                                                                                              • Online conversations
                                                                                                                • Figure 64: Selected twitter mentions surrounding GEICO brand, January 6, 2013
                                                                                                                • Figure 65: Percentage of consumer conversation by selected property and casualty insurance brands, Dec. 15, 2012-Jan. 14, 2013
                                                                                                                • Figure 66: Online mentions, selected property and casualty insurance brands, percentage of total daily mentions, by day, December 15, 2012-January 14, 2013
                                                                                                              • Where are people talking about property and casualty insurance brands?
                                                                                                                • Figure 67: Mentions by page type, selected property and casualty insurance brands, Dec. 15, 2012-Jan. 14, 2013
                                                                                                              • What are people talking about?
                                                                                                                • Figure 68: Mentions by type of conversation, selected property and casualty insurance brands, Dec. 15, 2012- Jan. 14, 2013
                                                                                                                • Figure 69: Major areas of discussion surrounding property and casualty insurance brands, percentage of daily mentions, by day, Dec. 15, 2012-Jan. 14, 2013
                                                                                                                • Figure 70: Major areas of discussion surrounding property and casualty insurance brands, by page type, Dec. 15, 2012-Jan. 14, 2013
                                                                                                              • Brand analysis
                                                                                                                • State Farm
                                                                                                                  • Figure 71: State Farm key social media metrics, January 2013
                                                                                                                • Key online campaigns
                                                                                                                  • What we think
                                                                                                                    • GEICO
                                                                                                                      • Figure 72: GEICO key social media metrics, January 2013
                                                                                                                    • Key online campaigns
                                                                                                                      • What we think
                                                                                                                        • Allstate
                                                                                                                          • Figure 73: Allstate key social media metrics, January 2013
                                                                                                                        • Key online campaigns
                                                                                                                          • What we think
                                                                                                                            • Progressive
                                                                                                                              • Figure 74: Progressive key social media metrics, January 2013
                                                                                                                            • Key online campaigns
                                                                                                                              • What we think
                                                                                                                                • Farmers
                                                                                                                                  • Figure 75: Farmers key social media metrics, January 2013
                                                                                                                                • Key online campaigns
                                                                                                                                  • What we think
                                                                                                                                    • Liberty Mutual
                                                                                                                                      • Figure 76: Liberty Mutual key social media metrics, January 2013
                                                                                                                                    • Key online campaigns
                                                                                                                                      • What we think
                                                                                                                                        • Nationwide
                                                                                                                                          • Figure 77: Nationwide key social media metrics, January 2013
                                                                                                                                        • Key online campaigns
                                                                                                                                          • What we think
                                                                                                                                          • The Consumer—Experience with Insurance

                                                                                                                                            • Key points
                                                                                                                                              • Ownership of insurance
                                                                                                                                                  • Figure 78: Experience with insurance, by age, October 2012
                                                                                                                                                  • Figure 79: Experience with insurance, by household income, October 2012
                                                                                                                                                  • Figure 80: Experience with insurance, by race/Hispanic origin, October 2012
                                                                                                                                              • Insurance Carrier—Market Share

                                                                                                                                                • Key points
                                                                                                                                                    • Figure 81: Insurance provider for auto/homeowners/renters, any usage, by household income, October 2012
                                                                                                                                                    • Figure 82: Insurance provider for auto/homeowners/renters, any usage, by race/Hispanic origin, October 2012
                                                                                                                                                    • Figure 83: Insurance provider for auto/homeowners/renters, any usage, by generation, October 2012
                                                                                                                                                    • Figure 84: Insurance provider for auto insurance, by generation, October 2012
                                                                                                                                                    • Figure 85: Insurance provider for homeowners/renters, by generation, October 2012
                                                                                                                                                • How Auto Insurance is Purchased

                                                                                                                                                  • Key points
                                                                                                                                                      • Figure 86: Channels used for auto insurance purchase, by gender, October 2012
                                                                                                                                                      • Figure 87: Channels used for auto insurance purchase, by gender and age, October 2012
                                                                                                                                                      • Figure 88: Channels used for auto insurance purchase, by race/Hispanic origin, October 2012
                                                                                                                                                  • Reasons for Switching Insurance Companies

                                                                                                                                                    • Key points
                                                                                                                                                      • Figure 89: Reason for switching auto insurance providers, by generation, October 2012
                                                                                                                                                  • Attitudes about Insurance Companies and Agents

                                                                                                                                                    • Key points
                                                                                                                                                        • Figure 90: Attitudes about insurance companies and insurance agents, by gender, October 2012
                                                                                                                                                        • Figure 91: Attitudes about insurance companies and insurance agents, by age, October 2012
                                                                                                                                                        • Figure 92: Attitudes about insurance companies and insurance agents, by gender and age, October 2012
                                                                                                                                                        • Figure 93: Attitudes about insurance companies and insurance agents, by household income, October 2012
                                                                                                                                                        • Figure 94: Attitudes about insurance companies and insurance agents, by race/Hispanic origin, October 2012
                                                                                                                                                        • Figure 95: Attitudes about insurance companies and insurance agents, by experience with insurance, October 2012
                                                                                                                                                    • Shopping Behavior and Satisfaction

                                                                                                                                                      • Key points
                                                                                                                                                        • Auto/homeowners/other P&C Insurance—shopping preferences
                                                                                                                                                          • Figure 96: Insurance shopping preferences, any usage, by gender and age, October 2012
                                                                                                                                                          • Figure 97: Insurance shopping preferences, any usage, by income, October 2012
                                                                                                                                                        • Auto Insurance—shopping behavior and satisfaction
                                                                                                                                                          • Figure 98: Satisfaction with auto insurance provider and shopping behavior, by gender and age, October 2012
                                                                                                                                                          • Figure 99: Satisfaction with auto insurance and shopping behavior, by income, October 2012
                                                                                                                                                        • Homeowners/renters insurance
                                                                                                                                                          • Figure 100: Satisfaction with homeowners/renters insurance and shopping behavior, by gender and age, October 2012
                                                                                                                                                          • Figure 101: Satisfaction with homeowners/renters insurance and shopping behavior, by income, October 2012
                                                                                                                                                        • Shopping preferences and satisfaction by brand
                                                                                                                                                          • Figure 102: Shopping/satisfaction by top brands, any usage, October 2012
                                                                                                                                                          • Figure 103: Shopping/satisfaction by top brands, auto insurance providers, October 2012
                                                                                                                                                          • Figure 104: Shopping/satisfaction by top brands, homeowners/renters insurance providers, October 2012
                                                                                                                                                      • Cluster Analysis

                                                                                                                                                          • Frugal Skeptics
                                                                                                                                                            • Demographics
                                                                                                                                                              • Characteristics
                                                                                                                                                                • Opportunity
                                                                                                                                                                  • Satisfied Loyalists
                                                                                                                                                                    • Demographics
                                                                                                                                                                      • Characteristics
                                                                                                                                                                        • Opportunity
                                                                                                                                                                          • Service Switchers
                                                                                                                                                                            • Demographics
                                                                                                                                                                              • Characteristics
                                                                                                                                                                                • Opportunity
                                                                                                                                                                                  • Quality Seekers
                                                                                                                                                                                    • Characteristics
                                                                                                                                                                                      • Opportunity
                                                                                                                                                                                        • Figure 105: Target clusters, October 2012
                                                                                                                                                                                        • Figure 106: Experience with insurance, by target clusters, October 2012
                                                                                                                                                                                        • Figure 107: Insurance carrier for auto/homeowners/renters, any usage, by target clusters, October 2012
                                                                                                                                                                                        • Figure 108: Insurance carrier for auto/homeowners/renters, any usage, by target clusters, October 2012
                                                                                                                                                                                        • Figure 109: Insurance carrier for auto/homeowners/renters, any usage, by target clusters, October 2012
                                                                                                                                                                                        • Figure 110: Channels used to purchase auto insurance, by target clusters, October 2012
                                                                                                                                                                                        • Figure 111: Attitudes about insurance companies and insurance agents, by target clusters, October 2012
                                                                                                                                                                                        • Figure 112: Insurance shopping behavior and satisfaction, by target clusters, October 2012
                                                                                                                                                                                        • Figure 113: Target clusters, by demographic, October 2012
                                                                                                                                                                                      • Methodology
                                                                                                                                                                                          • Figure 114: Key Drivers of switching behavior for auto insurance, January 2013
                                                                                                                                                                                      • Appendix: Brand Usage and Awareness

                                                                                                                                                                                          • Figure 115: All brands usage and awareness, November 2012
                                                                                                                                                                                          • Figure 116: Farmers Insurance, usage and awareness, by demographics, November 2012
                                                                                                                                                                                          • Figure 117: State farm usage and awareness, by demographics, November 2012
                                                                                                                                                                                          • Figure 118: Allstate usage and awareness, by demographics, November 2012
                                                                                                                                                                                          • Figure 119: Progressive usage and awareness, by demographics, November 2012
                                                                                                                                                                                          • Figure 120: GEICO usage and awareness, by demographics, November 2012
                                                                                                                                                                                          • Figure 121: Nationwide usage and awareness, by demographics, November 2012
                                                                                                                                                                                          • Figure 122: Liberty mutual usage and awareness, by demographics, November 2012
                                                                                                                                                                                      • Appendix: Social Media and Property and Casualty Insurance

                                                                                                                                                                                          • Figure 123: Activities conducted on social media, November 2012
                                                                                                                                                                                          • Figure 124: Farmers—Activities conducted on social media, by demographics, November 2012
                                                                                                                                                                                          • Figure 125: Farmers—Activities conducted on social media, by demographics, November 2012
                                                                                                                                                                                          • Figure 126: State farm —Activities conducted on social media, by demographics, November 2012
                                                                                                                                                                                          • Figure 127: State farm—Activities conducted on social media, by demographics, November 2012
                                                                                                                                                                                          • Figure 128: Allstate—Activities conducted on social media, by demographics, November 2012
                                                                                                                                                                                          • Figure 129: Allstate—Activities conducted on social media, by demographics, November 2012
                                                                                                                                                                                          • Figure 130: Progressive—Activities conducted on social media, by demographics, November 2012
                                                                                                                                                                                          • Figure 131: Progressive—Activities conducted on social media, by demographics, November 2012
                                                                                                                                                                                          • Figure 132: GEICO—Activities conducted on social media, by demographics, November 2012
                                                                                                                                                                                          • Figure 133: GEICO—Activities conducted on social media, by demographics, November 2012
                                                                                                                                                                                          • Figure 134: Nationwide—Activities conducted on social media, by demographics, November 2012
                                                                                                                                                                                          • Figure 135: Nationwide—Activities conducted on social media, by demographics, November 2012
                                                                                                                                                                                          • Figure 136: Liberty Mutual—Activities conducted on social media, by demographics, November 2012
                                                                                                                                                                                          • Figure 137: Liberty Mutual—Activities conducted on social media, by demographics, November 2012
                                                                                                                                                                                          • Figure 138: Percentage of consumer conversation by selected property and casualty insurance brands, Dec. 15, 2012-Jan. 14, 2013
                                                                                                                                                                                          • Figure 139: Online mentions, selected property and casualty insurance brands, percentage of total daily mentions, by day, Dec. 15, 2012-Jan. 14, 2013
                                                                                                                                                                                          • Figure 140: Mentions by page type, selected property and casualty insurance brands, Dec. 15, 2012-Jan. 14, 2013
                                                                                                                                                                                          • Figure 141: Mentions by type of conversation, selected property and casualty insurance brands, Dec.15, 2012- Jan. 14, 2013
                                                                                                                                                                                          • Figure 142: Major areas of discussion surrounding property and casualty insurance brands, percentage of daily mentions, by day, Dec. 15, 2012-Jan. 14, 2013
                                                                                                                                                                                          • Figure 143: Major areas of discussion surrounding property and casualty insurance brands, by page type, Dec. 15, 2012-Jan. 14, 2013
                                                                                                                                                                                      • Appendix: Trade Associations

                                                                                                                                                                                        • American Insurance Association (AIA)
                                                                                                                                                                                          • American Risk and Insurance Association (ARIA)
                                                                                                                                                                                            • Chartered Property Casualty Underwriter Society (CPCUS)
                                                                                                                                                                                              • Independent Insurance Agents & Brokers of America Inc. (IIABA)
                                                                                                                                                                                                • Insurance Information Institute (III)
                                                                                                                                                                                                  • National Association of Mutual Insurance Companies (NAMIC)
                                                                                                                                                                                                    • Property Casualty Insurers Association of America (PCI)

                                                                                                                                                                                                    Companies Covered

                                                                                                                                                                                                    • Allstate Corporation (The)
                                                                                                                                                                                                    • American Family Insurance Group
                                                                                                                                                                                                    • Berkshire Hathaway Inc
                                                                                                                                                                                                    • Chubb Group of Insurance Companies
                                                                                                                                                                                                    • Homeowners Friendly Society
                                                                                                                                                                                                    • Liberty Mutual Holding Company Inc.
                                                                                                                                                                                                    • National Association of Insurance Commissioners (NAIC)
                                                                                                                                                                                                    • State Farm Insurance Companies
                                                                                                                                                                                                    • USAA
                                                                                                                                                                                                    • Zurich Financial Services

                                                                                                                                                                                                    Property and Casualty Insurance - US - February 2013

                                                                                                                                                                                                    £3,277.28 (Excl.Tax)