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Property and Casualty Insurance - US - January 2017

"The insurance industry is competitive, as most people make their insurance choices based on price. However, technology is sparking some real innovations in the industry, and they are beginning to attract attention. Because it is easier to attract new, young customers than it is to get older ones to switch, insurers should focus not just on price but also on technological solutions that allow consumers to interact with insurers in exactly the way they want and to get exactly the type of insurance they need. This Report covers some of the challenges involved in attracting these new customers and discusses some of the innovations that are changing the way the industry works."

- Robyn Kaiserman, Senior Financial Services Analyst

This report will cover the following areas:

  • Mobile is not being used
  • Consumers need help understanding their policies
  • Few would recommend their insurance provider

Although providers are developing and promoting them, customers are not using insurance mobile apps. This is likely because there is little need to access a provider or an insurance policy immediately and any information that is needed is either more easily understood by talking to someone or read on a computer screen. While there is some need to make apps available because of consumer expectation that their provider have one, insurance companies should make sure not to have them overshadow other forms of communication, especially agents.

One of the ways insurers can encourage use of their apps is to expand the capabilities they offer beyond just providing access to policies. GEICO, for example, is testing an app that allows customers to track their car maintenance, allowing customers to enter information about their maintenance activities and to receive alerts letting them know when it’s time to get the oil changed or take care of other maintenance issues. Based on the information entered by the customer, the car is given a score and the app offers tips on how to raise the score. While these capabilities are not specifically about insurance, they may encourage customers to use their mobile devices for car-related activities and help keep the insurance-related apps top-of-mind.

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • The issues
          • Mobile is not being used
            • Figure 1: Use of mobile apps, October 2016
            • Figure 2: GEICO garage email ad, 2016
          • Consumers need help understanding their policies
            • Figure 3: Understanding of policy, by generation, October 2016
          • Few would recommend their insurance provider
            • Figure 4: Understanding of policy, by gender and age, October 2016
          • The opportunities
            • Few Millennials are confident they have the right insurance
              • Figure 5: Believe they have the right insurance, by generation, October 2016
            • Reaching Hispanics with agents
              • Figure 6: Attitudes toward insurance and insurance providers, by Hispanic origin and generation, October 2016
            • Education can be a differentiating factor
              • Figure 7: Attitudes toward insurance and insurance providers, by gender, October 2016
            • Most are satisfied with their providers, but few would recommend
              • Figure 8: Attitudes toward insurance and insurance providers, by generation, October 2016
            • Bundled products appeal to women
              • Figure 9: Factors in choice of policy, by gender, October 2016
            • What it means
            • The Market – What You Need to Know

              • Industry financials show a mixed bag
                • Unemployment is still low
                  • Continued development of self-driving cars
                    • More driving means more crashes
                      • New home sales are increasing
                      • Market Size

                        • Industry Financials
                          • Figure 10: Industry financials, H1 2015 vs H1 2016 (in billions)
                        • Premiums
                          • Figure 11: Net written premiums, 2006-15
                        • Top ten writers of P&C insurance
                          • Figure 12: Top ten writers of property and casualty insurance, by direct premiums written, 2015
                      • Market Breakdown

                        • Auto insurance industry is being challenged
                          • Figure 13: Incurred losses for auto insurance*, 2011-15, (000s)
                        • Top ten writers of private passenger auto insurance
                          • Figure 14: Top ten writers of private passenger auto insurance, by direct written premiums, 2015
                        • Homeowner premiums increase while renters premiums go down
                          • Figure 15: Average premiums for homeowners and renters, US, 2004-13
                        • Top ten writers of homeowners insurance
                          • Figure 16: Top ten writers of homeowners insurance, by direct premiums written, 2015
                      • Market Factors

                        • Unemployment is still low
                          • Figure 17: Unemployment rate, January 2012-October 2016
                        • Self-driving cars
                          • More driving, more crashes
                            • Figure 18: Number of crashes, 2005-14
                          • New home sales are increasing
                            • Figure 19: New home sales (seasonally adjusted), Sept. 2015-Sept. 2016
                        • Key Players – What You Need to Know

                          • Drones
                            • Telematics
                              • The “sharing economy” is a challenge
                                • Appealing to Millennials
                                  • Verifly – Insurance for drones
                                    • What happened to privacy concerns?
                                    • What’s Working?

                                      • Drones
                                        • Figure 20: Reason for switching insurers, by household income, October 2016
                                      • Telematics
                                        • Figure 21: Interest in new products and services, by generation, January 2015
                                        • Figure 22: Progressive Snapshot ads, 2016
                                    • What’s Struggling?

                                      • The “sharing economy” is a challenge
                                        • Figure 23: Allstate email ad, 2015
                                    • What’s Next?

                                      • Targeting Millennials
                                        • Root – One-stop car insurance shopping
                                          • Lemonade – Peer-to-peer insurance
                                            • Meet Margo
                                              • Slice – For home sharing hosts
                                                • Verifly – Insurance for drones
                                                  • Using social media to reduce premiums – but what about privacy?
                                                    • Will auto insurers sell the data they collect?
                                                    • P&C Insurance Email Performance

                                                      • USAA is the most frequent emailer
                                                        • Figure 24: Volume of marketing emails delivered, June 1, 2016-November 30, 2016
                                                        • Figure 25: Average email read rate by select companies, June 1, 2016-November 30, 2016
                                                      • What gets read the most?
                                                        • Figure 26: USAA email: “Hurricane Matthew,” projected volume 422,000
                                                    • The Consumer – What You Need to Know

                                                      • Most consumers have at least one property and casualty policy
                                                        • Switching behaviors vary with consumer segment and type of insurance
                                                          • Price is primary switching motivator
                                                            • Most prefer to communicate via phone
                                                              • Cost is most important
                                                                • Young consumers more likely to use mobile
                                                                  • Most have positive attitude about own provider
                                                                    • Agents are important to Hispanics and parents
                                                                    • Insurance Ownership

                                                                      • Most consumers have at least one property and casualty policy
                                                                        • Figure 27: Insurance ownership, by generation, October 2016
                                                                    • Switching Behaviors

                                                                      • Auto
                                                                        • Male auto insurance owners are more likely to switch
                                                                          • Figure 28: Auto switching behavior, by gender, October 2016
                                                                        • Millennials are most likely to switch
                                                                          • Figure 29: Auto insurance switching plans, by generation, October 2016
                                                                        • Hispanic customers at risk of switching
                                                                          • Figure 30: Auto insurance switching plans, by Hispanic origin, October 2016
                                                                        • Homeowners
                                                                          • Men more likely to switch
                                                                            • Figure 31: Homeowners insurance switching plans, by gender, October 2016
                                                                          • Parents more likely to switch homeowners insurance
                                                                            • Figure 32: Homeowners insurance switching plans, by parental status, October 2016
                                                                          • Urban dwellers are switching
                                                                            • Figure 33: Homeowners insurance switching plans, by area, October 2016
                                                                          • Renters
                                                                            • Figure 34: Renters insurance switching plans, by generation, October 2016
                                                                          • Higher-income renters are switching
                                                                            • Figure 35: Renters insurance switching plans, by household income, October 2016
                                                                        • Reasons for Switching

                                                                          • Price is key
                                                                            • Figure 36: Reasons for switching, October 2016
                                                                          • Increasing prices at renewal chases older consumers away
                                                                            • Figure 37: Reasons for switching, by generation, October 2016
                                                                          • Renters insurance owners more likely to value digital capabilities
                                                                            • Figure 38: Reasons for switching, by insurance ownership, October 2016
                                                                          • Price is most important to lowest income
                                                                            • Figure 39: Reasons for switching, by household income, October 2016
                                                                          • Renters insurance owners more likely to switch for better technology
                                                                            • Figure 40: Reasons for switching, by insurance ownership, October 2016
                                                                            • Figure 41: Farmers Insurance email “Three suggested actions prior to your renewal,” projected volume 732,000
                                                                        • Communication Preferences

                                                                          • Phone is preferred
                                                                            • Figure 42: Communication preferences, October 2016
                                                                          • Personal phone contact is more important than electronic contact
                                                                            • Figure 43: Communication preferences, by attitudes toward insurance and insurance companies, October 2016
                                                                        • Factors in Provider Choice

                                                                          • Cost is most important
                                                                            • Figure 44: Factors in choice of policy, October 2016
                                                                          • Women more likely to look at cost
                                                                            • Figure 45: Factors in choice of policy, by gender, October 2016
                                                                          • Technology and accessibility more important to Hispanics than to non-Hispanics
                                                                            • Figure 46: Factors in choice of policy, by Hispanic origin, October 2016
                                                                          • Income influences choice
                                                                            • Figure 47: Factors in choice of policy, by household income, October 2016
                                                                        • Use of Mobile Apps

                                                                          • Renters insurance owners more likely to use mobile
                                                                            • Figure 48: Mobile purchase and filing behavior, by insurance ownership, October 2016
                                                                          • Men are more likely to use insurance mobile apps
                                                                            • Figure 49: Use of mobile apps, by gender, October 2016
                                                                          • Millennials most likely to access policies through mobile apps
                                                                            • Figure 50: Use of mobile apps, by generation, October 2016
                                                                          • Mobile purchasing and filing behaviors
                                                                            • Millennials are more likely than older consumers to purchase policies via mobile app
                                                                              • Figure 51: Mobile purchase and filing behavior, by generation, October 2016
                                                                            • Hispanics are more likely to buy via mobile device
                                                                              • Figure 52: Mobile purchase and filing behavior, by Hispanic origin, October 2016
                                                                            • Parents like to purchase via mobile apps
                                                                              • Figure 53: Mobile purchase and filing behavior, by parental status, October 2016
                                                                          • Attitudes toward Insurance and Insurance Companies

                                                                            • Renters insurance owners most likely to understand products
                                                                              • Figure 54: Attitudes toward insurance and insurance companies, by insurance ownership, October 2016
                                                                            • Satisfaction and trust in own provider are high
                                                                              • Figure 55: Attitude toward insurance and insurance companies, by insurance ownership, October 2016
                                                                            • Millennials are most positive about the industry
                                                                              • Figure 56: Attitudes toward insurance and insurance companies, by generation, October 2016
                                                                            • Agents are important to Hispanics
                                                                              • Figure 57: Attitudes toward insurance and insurance companies, by Hispanic origin, October 2016
                                                                            • Agents need to address parents
                                                                              • Figure 58: Attitudes toward insurance and insurance companies, by parental status, October 2016
                                                                            • Women need more education about insurance
                                                                              • Figure 59: Attitudes toward insurance and insurance companies, by gender, October 2016
                                                                            • How important is price?
                                                                              • Figure 60: Attitudes toward insurance and insurance companies, by generation, October 2016
                                                                            • Reputation is less important to lower-income consumers
                                                                              • Figure 61: Attitudes toward insurance and insurance companies, by household income, October 2016
                                                                          • Cluster Analysis

                                                                              • Figure 62: Insurance owner clusters, October 2016
                                                                            • Cluster 1: Industry Loyalists
                                                                              • Demographics
                                                                                • Characteristics
                                                                                  • Opportunity
                                                                                    • Cluster 2: Independents
                                                                                      • Demographics
                                                                                        • Characteristics
                                                                                          • Opportunity
                                                                                            • Cluster 3: Satisfied Skeptics
                                                                                              • Demographics
                                                                                                • Characteristics
                                                                                                  • Opportunity
                                                                                                    • Cluster 4: Provider Loyalists
                                                                                                      • Demographics
                                                                                                        • Characteristics
                                                                                                          • Opportunity
                                                                                                            • Cluster 5: Dissatisfied Doubters
                                                                                                              • Demographics
                                                                                                                • Characteristics
                                                                                                                  • Opportunity
                                                                                                                  • Appendix – Data Sources and Abbreviations

                                                                                                                    • Data sources
                                                                                                                      • Sales data
                                                                                                                        • Consumer survey data
                                                                                                                          • Direct marketing creative
                                                                                                                            • Email creative
                                                                                                                              • Abbreviations and terms
                                                                                                                                • Abbreviations
                                                                                                                                  • Terms

                                                                                                                                  Companies Covered

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

                                                                                                                                  Property and Casualty Insurance - US - January 2017

                                                                                                                                  US $3,995.00 (Excl.Tax)