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Property and Casualty Insurance - US - January 2015

“Many consumers value the knowledge offered by insurance agents as well as the relationships they develop with them personally and, by extension, the insurance company they represent. Since insurance claims are only made in times of stress, companies that make customers feel they are cared for – and taken care of – stand the best chance of retaining their customers in the long term.”
– Robyn Kaiserman, Financial Services Analyst

This report answers the following questions:

  • How will the changing demographics of America affect the P&C industry?
  • How can P&C companies encourage loyalty?

The P&C (property and casualty insurance) industry is a competitive one, and providers are fighting for customers, especially young ones. Since most people don’t switch insurance providers, getting young customers is crucial to growth as they can, with attention, be counted on to be long-term customers. However, to the extent people do switch, they tend to do so because of price, so insurers have their work cut out for them. Especially in this low interest rate environment, when some insurers have had to raise their prices to make up for lost investment income, other benefits need to be promoted if insurers want to retain customers. As a result of this changing dynamic, quality customer service, convenience offered by mobile apps, and increased communication will become increasingly important as differentiating factors among companies.

This report focuses on the challenges, both internal and external, that P&C companies are tackling as they continue to recover from the trust issues that stem from the financial crisis and subsequent recession and adapt to changing customer expectations. The companies that can adapt their businesses to the new demands and build and cement trusted relationships with their customers are the ones that will fare the best in this highly – and increasingly – competitive industry.

For the purposes of this report, Mintel has used the following definitions:

  • Property and casualty insurance protects against property losses to a business, home, or car and/or against legal liability that may result from injury or damage to the property of others. The types of P&C insurance covered in this report are auto, homeowners, and renters.

 

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Table of contents

  1. Scope and Themes

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

                    • P&C premiums are still growing, albeit at a slower pace
                      • A stronger economy is helping the industry
                        • State Farm is the leader…but GEICO is growing fast
                          • The consumer
                            • Most people own some kind of P&C insurance
                              • Figure 1: Types of insurance policy owned, October 2014
                            • Millennials and Hispanics are the segments most likely to switch soon…
                              • Figure 2: Plans to switch insurance, by generations and Hispanic origin, October 2014
                            • …and they will switch for technology
                              • Figure 3: Switching behavior, by generations and Hispanic origin, October 2014
                            • Price is the biggest reason for switching
                              • Figure 4: Reason for switching, October 2014
                            • Attitudes toward insurance companies are deteriorating
                              • Figure 5: Attitudes toward insurance agents and insurance companies, October 2013, October 2014
                            • The human touch is important
                              • Figure 6: Signing up for new policy, October 2014
                            • Most consumers want more communication at renewal
                              • Figure 7: Interest in new products and services, October 2014
                            • What we think
                            • Issues and Insights

                                • How will the changing demographics of America affect the P&C industry?
                                  • Issues
                                    • Insights
                                      • How can P&C companies encourage loyalty?
                                        • Issues
                                          • Insights
                                          • Trend Application

                                              • Trend: Data Creators
                                                • Trend: The Power of One
                                                  • Trend: Return to the Experts
                                                  • Market Size and Forecast

                                                    • Key points
                                                      • Industry financials
                                                        • Figure 8: Financial results for US property and casualty insurers, 2012-first half of 2014
                                                      • Premiums continue to grow
                                                        • Figure 9: US property and casualty premiums, 2005-14 (est)
                                                      • Growth in auto premiums slows
                                                        • Figure 10: Premiums written for auto insurance, 2005-14 (est)
                                                      • Homeowners insurance continues its steady rise
                                                        • Figure 11: Premiums written for homeowners insurance, 2005-14 (est)
                                                    • Market Drivers

                                                      • Key points
                                                        • Economy is on the upswing
                                                          • Figure 12: Change in inflation-adjusted GDP at a seasonally adjusted annual rate, Q1 2009-Q3 2014
                                                        • Unemployment continues to fall
                                                          • Figure 13: Overall US unemployment rate, October 2007-14
                                                        • New car sales are strong
                                                          • Figure 14: Total US unit sales and forecast of new cars at current prices, 2009-19
                                                        • Housing is strengthening, too
                                                          • Figure 15: Housing units sold, not seasonally adjusted, 2009-13
                                                        • Climate change continues to be a challenge
                                                          • Uncertainty in the interest rate market
                                                          • Competitive Context

                                                            • Key points
                                                              • State Farm is the leader
                                                                • Figure 16: 10 largest property and casualty companies, all lines of business, by direct premiums written, 2013
                                                              • Auto insurance leaders
                                                                • Figure 17: 10 largest property and casualty companies, private passenger auto insurance, by direct premiums written, 2013
                                                              • Homeowners insurance leaders
                                                                • Figure 18: 10 largest property and casualty companies, homeowners insurance, by direct premiums written, 2013
                                                            • Leading Companies

                                                              • Key points
                                                                • State Farm
                                                                  • Allstate
                                                                    • GEICO
                                                                      • Progressive
                                                                      • Innovations and Innovators

                                                                        • Key points
                                                                          • Digital proof of insurance
                                                                            • Figure 19: GEICO mobile id card email, 2014
                                                                          • Erie Insurance offers protection for ridesharing
                                                                            • State Farm has a new app to help car buyers
                                                                              • State Farm forms partnerships to help protect homeowners
                                                                                • Allstate expands its mobile app offerings
                                                                                  • Progressive partners with Zubie, a safe driving app
                                                                                    • The use of drones in the P&C industry
                                                                                    • Marketing Strategies

                                                                                      • Key points
                                                                                        • Industry ad spend is up slightly
                                                                                          • Total personal line mail volume even with 2013
                                                                                            • Figure 20: Overall personal lines mail activity, Q3 2012-Q3 2014
                                                                                            • Figure 21: Q1-Q3 2014 direct mail distribution for all P&C carriers
                                                                                          • Price versus service?
                                                                                            • Figure 22: Important factors in purchasing insurance, by generation, October 2014
                                                                                          • Humanizing insurance
                                                                                            • Progressive’s new social media campaign
                                                                                              • Theme: Life events
                                                                                                • Figure 23: GEICO “Big Savings” direct mail ad, 2014
                                                                                                • Figure 24: USAA bundling email, 2014
                                                                                              • Theme: Mobile
                                                                                                • Figure 25: Allstate mobile app direct mail ad, 2014
                                                                                                • Figure 26: GEICO mobile app direct mail ad, 2014
                                                                                              • Theme: Price
                                                                                                • Figure 27: Allstate discount direct mail ad, 2014
                                                                                                • Figure 28: Progressive price comparison mobile ad, 2014
                                                                                            • Type of Insurance Policies Owned

                                                                                              • Key points
                                                                                                • Millennials offer potential for renters insurance
                                                                                                  • Figure 29: Type of insurance policies owned, by generations, October 2014
                                                                                                • P&C ownership, except renters, rises with income
                                                                                                  • Figure 30: Type of insurance policies owned, by household income, October 2014
                                                                                                • Race plays a role in insurance ownership
                                                                                                  • Figure 31: Type of insurance policies owned, by race/Hispanic origin, October 2014
                                                                                                • Single people offer opportunity
                                                                                                  • Figure 32: Type of insurance policies owned, by marital status, October 2014
                                                                                                • Attitudes toward bundling
                                                                                                • Switching and Claims Experience

                                                                                                  • Key points
                                                                                                    • Messages targeted to women may get them to switch
                                                                                                      • Figure 33: Switching/claim filing experience, by gender, October 2014
                                                                                                    • Millennials are most at risk for switching
                                                                                                      • Figure 34: Switching/claim filing experience, by generation, October 2014
                                                                                                    • Hispanics are less loyal than non-Hispanics
                                                                                                      • Figure 35: Switching/claim filing experience, by race/Hispanic origin, October 2014
                                                                                                  • Plans to Switch Insurance

                                                                                                    • Key points
                                                                                                      • Men are more vulnerable to switching tactics than women
                                                                                                        • Figure 36: Plans to switch insurance, by gender, October 2014
                                                                                                      • Providers should target Millennials
                                                                                                        • Figure 37: Plans to switch insurance, by generations, October 2014
                                                                                                      • More Hispanics plan to switch in the future
                                                                                                        • Figure 38: Plans to switch insurance, by race/Hispanic origin, October 2014
                                                                                                    • Reasons for Switching

                                                                                                      • Key points
                                                                                                        • Most people switch to save money
                                                                                                          • Figure 39: Reasons for switching, by type of insurance, October 2014
                                                                                                        • Auto insurance
                                                                                                          • Older customers have been loyal customers
                                                                                                            • Figure 40: Reasons for switching – Auto insurance, by gender and age, October 2014
                                                                                                          • Homeowners
                                                                                                            • Figure 41: Reasons for switching – Homeowners insurance, by age, October 2014
                                                                                                          • Renters
                                                                                                            • Figure 42: Reason for switching – Renters insurance, by age, October 2014
                                                                                                        • Signing Up for a New Policy

                                                                                                          • Key points
                                                                                                            • Independent agents are still a major sales channel
                                                                                                              • Figure 43: Method used to sign up for new policy, by policy type October 2014
                                                                                                            • Auto: Women are more likely to use agents
                                                                                                              • Figure 44: Method used to sign up for new policy – Auto insurance, by gender, October 2014
                                                                                                            • Auto: Millennials use aggregators more than those aged 35+
                                                                                                              • Figure 45: Method used to sign up for new policy – Auto insurance, by age, October 2014
                                                                                                            • Homeowners: Agents are important, but more purchase directly
                                                                                                              • Figure 46: Method used to sign up for new policy – Homeowners insurance, by gender and age, October 2014
                                                                                                            • Homeowners: High income households prefer to buy directly
                                                                                                              • Figure 47: Method used to sign up for new policy – Homeowners insurance, by household income, October 2014
                                                                                                            • Renters: Most purchase directly
                                                                                                              • Figure 48: Method used to sign up for new policy – Renters insurance, by gender, October 2014
                                                                                                          • Future Purchasing Intentions

                                                                                                            • Key points
                                                                                                              • Auto and homeowners insurance owners prefer to purchase through agents
                                                                                                                • Figure 49: Purchasing/switching behavior, by type of insurance policies owned, October 2014
                                                                                                              • More plan to buy future policies online
                                                                                                                • Figure 50: Purchasing/switching behavior, by gender, October 2014
                                                                                                              • Millennials are most likely to switch for better electronic capabilities
                                                                                                                • Figure 51: Purchasing/switching behavior, by generations, October 2014
                                                                                                              • Lack of interest in mobile apps is a challenge
                                                                                                              • Communication Preferences

                                                                                                                • Key points
                                                                                                                  • Most are not satisfied with frequency of communication
                                                                                                                    • Figure 52: Communication preferences, by type of insurance policies owned, October 2014
                                                                                                                  • Satisfaction with communication from insurers is higher among women
                                                                                                                    • Figure 53: Communication preferences, by gender, October 2014
                                                                                                                  • Young people are especially dissatisfied
                                                                                                                    • Figure 54: Purchase/switching behavior, by generations, October 2014
                                                                                                                • Attitudes toward Companies and Agents

                                                                                                                  • Key points
                                                                                                                    • Insurance companies are struggling with trust issues
                                                                                                                      • Figure 55: Attitudes toward insurance companies/agents, by gender and age, October 2014
                                                                                                                    • Millennials think agents are the best source of information
                                                                                                                      • Figure 56: Attitudes toward insurance companies/agents, by generations, October 2014
                                                                                                                    • Consumers have mixed feelings about agents and insurance companies
                                                                                                                      • Figure 57: Attitudes toward insurance agents and insurance companies, October 2013, October 2014
                                                                                                                  • Interest in New Products and Services

                                                                                                                    • Key points
                                                                                                                      • Communication at renewal time is of most interest
                                                                                                                        • Figure 58: Interest in new products and services, by type of insurance policies owned, October 2014
                                                                                                                      • Many are interested in apps that are already available
                                                                                                                        • Figure 59: Interest in new products and services, by generation, October 2014
                                                                                                                      • Hispanics are most likely to be interested in mobile apps
                                                                                                                        • Figure 60: Interest in new products and services, by race/Hispanic origin, October 2014
                                                                                                                    • Appendix – Other Useful Consumer Tables

                                                                                                                      • Type of insurance policies owned
                                                                                                                        • Figure 61: Type of insurance policies owned, by gender, October 2014
                                                                                                                        • Figure 62: Type of insurance policies owned, by age, October 2014
                                                                                                                        • Figure 63: Type of insurance policies owned, by gender and age, October 2014
                                                                                                                      • Switching and claims experience
                                                                                                                        • Figure 64: Switching/claim filing experience, by age, October 2014
                                                                                                                        • Figure 65: Switching/claim filing experience, by household income, October 2014
                                                                                                                      • Plans to switch insurance
                                                                                                                        • Figure 66: Plans to switch insurance, by age, October 2014
                                                                                                                      • Reason for switching
                                                                                                                        • Auto insurance
                                                                                                                          • Figure 67: Reason for switching – Auto insurance, by gender, October 2014
                                                                                                                          • Figure 68: Reason for switching – Auto insurance, by age, October 2014
                                                                                                                          • Figure 69: Reason for switching – Auto insurance, by household income, October 2014
                                                                                                                        • Homeowners
                                                                                                                          • Figure 70: Reason for switching – Homeowners insurance, by gender, October 2014
                                                                                                                          • Figure 71: Reason for switching – Homeowners insurance, by household income, October 2014
                                                                                                                        • Renters
                                                                                                                          • Figure 72: Reason for switching – Renters insurance, by gender, October 2014
                                                                                                                        • Signing up for a new policy
                                                                                                                          • Auto
                                                                                                                            • Figure 73: Method used to sign up for new policy – Auto insurance, by gender and age, October 2014
                                                                                                                            • Figure 74: Method used to sign up for new policy – Auto insurance, by household income, October 2014
                                                                                                                            • Figure 75: Method used to sign up for new policy – Auto insurance, by generations, October 2014
                                                                                                                          • Homeowners
                                                                                                                            • Figure 76: Method used to sign up for new policy – Homeowners insurance, by gender, October 2014
                                                                                                                            • Figure 77: Method used to sign up for new policy – Homeowners insurance, by age, October 2014
                                                                                                                            • Figure 78: Method used to sign up for new policy – Homeowners insurance, by generations, October 2014
                                                                                                                          • Renters
                                                                                                                            • Figure 79: Method used to sign up for new policy – Renters insurance, by age, October 2014
                                                                                                                            • Figure 80: Method used to sign up for new policy – Renters insurance, by household income, October 2014
                                                                                                                            • Figure 81: Method used to sign up for new policy – Renters insurance, by race, October 2014
                                                                                                                          • Future purchasing intentions
                                                                                                                            • Figure 82: Purchasing/switching behavior, by age, October 2014
                                                                                                                            • Figure 83: Purchasing/switching behavior, by household income, October 2014
                                                                                                                          • Communication preferences
                                                                                                                            • Figure 84: Communication preferences, by age, October 2014
                                                                                                                            • Figure 85: Communication preferences, by household income, October 2014
                                                                                                                          • Attitude toward insurance companies/agents
                                                                                                                            • Figure 86: Agreement with attitude toward insurance companies/agents, by gender, October 2014
                                                                                                                            • Figure 87: Agreement with attitude toward insurance companies/agents, by age, October 2014
                                                                                                                            • Figure 88: Agreement with attitude toward insurance companies/agents, by household income, October 2014
                                                                                                                          • Interest in new products and services
                                                                                                                            • Figure 89: Interest in new products and services, by gender, October 2014
                                                                                                                            • Figure 90: Interest in new products and services, by household income, October 2014
                                                                                                                        • Appendix – Trade Associations

                                                                                                                          Companies Covered

                                                                                                                          • Allstate Corporation (The)
                                                                                                                          • State Farm Insurance Companies
                                                                                                                          • The Progressive Corporation

                                                                                                                          Property and Casualty Insurance - US - January 2015

                                                                                                                          £3,199.84 (Excl.Tax)