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Property and Casualty Insurance - US - May 2009

This report provides an overview of the Property & Casualty insurance industry. The two major lines of Property & Casualty insurance are the focus of this report – private passenger auto insurance and homeowners/renters insurance. General trends affecting the industry are discussed, including the factors impacting growth in market share and industry profitability.

Readers of this report will learn:

  • How insurance companies are spending advertising dollars to gain more market share
  • The way the global economy is effecting consumers desire to save money
  • How recent catastrophic events have effected this portion of the insurance industry

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Consumer survey data
        • Online surveys
          • Greenfield Online
            • Experian Simmons National Consumer Studies
              • Abbreviations and terms
                • Abbreviations
                  • Terms
                  • Executive Summary

                    • Industry overview
                      • Current profitability of P&C insurers and the housing bubble
                        • Impact on Property & Casualty insurers
                          • Figure 1: Financial results for property & casualty insurers, 2006-08
                        • Effects of 2008’s Hurricanes Ike and Gustav
                          • Consumers become Smart Shoppers
                            • Agents see their role as trusted advisor
                              • Competition for premium dollars has heated up
                                • Increases in ad expenditures and messages greet the new consumer
                                • Insights and Opportunities

                                  • Key points
                                    • This may be an opportune time to promote renters insurance
                                      • Marketing to Baby Boomers presents new challenges for the industry
                                        • Young ethnic consumers display different buying habits
                                          • Advertising has become more of a force in the industry
                                            • Green initiatives may be embraced in the upcoming years
                                            • Inspire Insights

                                                • Trend: Smart Shopper
                                                  • Implications for P&C insurance
                                                    • Trend: No Middleman
                                                      • Implications for P&C Insurance
                                                      • Market Size and Forecast

                                                        • Key points
                                                          • Overview
                                                            • Figure 2: Property and casualty insurance premium written by line, direct written premium, 2007
                                                          • Auto insurance direct written premium declined in 2007
                                                            • Figure 3: Private passenger auto direct written premium at current and inflated prices, 1993-2007
                                                          • Auto insurance has become less expensive over time
                                                              • Figure 4: Average auto insurance expenditure by state, 2006
                                                            • Homeowners insurance growth in DWP has slowed considerably
                                                              • Figure 5: homeowners insurance direct written premium at current prices, 1993-2007
                                                              • Figure 6: US median home price for existing single-family homes and homeowners insurance at inflated prices, 1999-2008
                                                              • Figure 7: Average premiums homeowners and renters insurance, 2000-06
                                                            • Combined ratios of personal lines
                                                              • Figure 8: Combined ratios for personal lines, 1993-2008
                                                              • Figure 9: P&C industry combined ratio, 2001-08
                                                          • Marketing Channels

                                                            • Key points
                                                              • Direct writers vs. agents
                                                                • Figure 10: Property & casualty insurance net written premium, by channel, 2007
                                                              • More consumers are turning to the internet
                                                                • Figure 11: Online auto insurance activities, 2007-08
                                                                • Figure 12: Online auto insurance activities, 2008
                                                              • Marketing channels – consumer surveys
                                                                • Figure 13: How auto insurance was purchased, by age, May 2008
                                                                • Figure 14: How homeowners insurance was obtained, by age, September 2008
                                                                • Figure 15: How homeowners insurance was obtained, by age, September 2008
                                                                • Figure 16: How homeowners insurance was obtained, by income, September 2008
                                                                • Figure 17: How homeowners insurance was obtained, September 2008
                                                                • Figure 18: How homeowners insurance was obtained, by age and ethnicity, September 2008
                                                              • Marketing channels – agent survey
                                                                • Figure 19: Agent opinions on marketing channels, summary of top two boxes (agree, strongly agree), by gender and age, February 2009
                                                                • Figure 20: Agent opinions on marketing channels, summary of top two boxes (agree, strongly agree), by agent longevity, February 2009
                                                            • Agent Survey – Recruiting and Compensation

                                                              • Agents face many recruiting challenges
                                                                • Figure 21: Agent opinions on obstacles to the recruiting and retention of insurance agents, summary of top two boxes (agree and strongly agree), by gender and age, February 2009
                                                              • Agents feel well-supported by their companies
                                                                • Figure 22: Employment status (independent contractor, independent exclusive agent, or employee), by gender and age, February 2009
                                                                • Figure 23: Percentage of business that is any type of property & casualty (P&C) insurance (personal and/or commercial lines), summary of means, by gender and age, February 2009
                                                                • Figure 24: Company(s) agent represents for property & casualty (P&C) insurance products (personal and/or commercial lines), by gender and age, February 2009
                                                                • Figure 25: Longevity of agents, by gender and age, February 2009
                                                                • Figure 26: Attitudes about whether company(s) supports agents, by gender and age, February 2009
                                                                • Figure 27: Types of incentives and support received, by gender and age, February 2009
                                                                • Figure 28: Attitudes about compensation structure(s) when compared to other companies, by gender and age, February 2009
                                                                • Figure 29: Satisfaction with compensation structure(s), by gender and age, February 2009
                                                              • Competition is a good thing
                                                                • Figure 30: Agent opinions on impact of industry developments, summary of top two boxes, (very positive effect and positive effect), by gender and age, February 2009
                                                                • Figure 31: Agent opinions on impact of industry developments, summary of top two boxes (positive effect and very positive effect), by agent longevity, February 2009
                                                              • Agents predict online marketing will be favorable for them
                                                                • Figure 32: Agent opinions on impact of future industry developments, summary of top two boxes (positive effect and very positive effect), by gender and age, February 2009
                                                                • Figure 33: Agent opinions on impact of industry developments, summary of top two boxes (positive effect and very positive effect), by agent longevity, February 2009
                                                              • Agents’ thoughts on regulation
                                                                • Figure 34: Agent opinions about state vs. federal regulation, summary of top two boxes (agree and strongly agree) by gender and age, February 2009
                                                                • Figure 35: Agent opinions about state vs. federal regulation, summary of top two boxes (agree and strongly agree) by agent longevity, February 2009
                                                            • Market Drivers

                                                              • Key points
                                                                • The U.S. population is projected to grow through 2012 and beyond
                                                                  • Figure 36: U.S. population for adults, 18+, by age segment, 2002-12
                                                                  • Figure 37: U.S. population for adults, 18+, by age segment and owners of auto or homeowners insurance, 2002-12
                                                                • Housing sales are down
                                                                  • Figure 38: New private residential housing starts, 1994-2009
                                                                  • Figure 39: New private housing starts, March 2008-March 2009
                                                                  • Figure 40: Annual existing home sales, 1993-2008
                                                                  • Figure 41: Housing inventory and months supply, 1999-2008
                                                                • Foreclosure rates are escalating.
                                                                  • Sales of autos and light trucks have also slowed considerably.
                                                                    • Figure 42: Annual auto and light truck sales, 1999-2009
                                                                  • Some have figured out ways to reduce costs for auto insurance.
                                                                    • There has been a spike in the number of catastrophes
                                                                      • Figure 43: US insured catastrophe losses, 1992-2008
                                                                  • Leading Companies

                                                                    • Key points
                                                                      • GEICO, Farmers and Allstate made substantial gains
                                                                        • Figure 44: Private passenger auto insurance top writers, by direct written premium, 2007
                                                                      • Leading homeowners insurers
                                                                        • Figure 45: Homeowners Insurance top writers, by direct written premium, 2007
                                                                    • Brand Qualities

                                                                      • Key points
                                                                        • Brand differentiation is based on positioning
                                                                        • Innovation and Innovators

                                                                          • Key points
                                                                            • Doing something green
                                                                              • Mortgage protection plans
                                                                                • Tracking teen drivers
                                                                                • Advertising and Promotion

                                                                                  • Key points
                                                                                    • Overview
                                                                                      • Figure 46: Total advertising expenditures of the P&C insurance industry, 1999-2007
                                                                                    • Television advertising
                                                                                      • State Farm Insurance
                                                                                        • Figure 47: State Farm Auto Insurance television ad, Girl turns into young woman while waiting to see if she can borrow dad’s car, 2009
                                                                                      • Allstate Insurance
                                                                                        • Figure 48: Allstate television ad, in a recession, 2009
                                                                                      • GEICO Insurance
                                                                                        • Figure 49: GEICO television ad, small gecko is shown standing on a desk, 2008
                                                                                        • Figure 50: GEICO television ad, stack of money with eyes; he’ll be here waiting, 2009
                                                                                        • Figure 51: GEICO television ad, cavemen bikers see billboard at bar, 2008
                                                                                      • Viral videos
                                                                                        • Progressive Insurance
                                                                                          • Progressive
                                                                                            • Figure 52: Progressive Auto Insurance television ad, wife doesn’t know about husband’s toys, 2008
                                                                                            • Figure 53: Progressive Motorcycle Insurance television ad, more like a 900 V twin, 2009
                                                                                          • Hartford/AARP
                                                                                            • Figure 54: Hartford Auto Insurance television ad, people accomplish activities in various autos, 2009
                                                                                          • Liberty Mutual
                                                                                            • Doing the right thing
                                                                                              • Figure 55: Liberty Mutual television ad, man goes outside to see wrecked car, 2008
                                                                                            • Direct mail and print ads
                                                                                              • Competitors of State Farm in Florida
                                                                                                • Figure 56: AAA direct mail ad, 2008
                                                                                                • Figure 57: Poe Agency Direct mail ad, 2008
                                                                                                • Figure 58: People’s Trust Insurance Company direct mail ad, 2008
                                                                                              • The price wars
                                                                                                • Figure 59: Allstate print ad, 2008
                                                                                                • Figure 60: Allstate direct mail ad, 2008
                                                                                                • Figure 61: Countrywide Insurance direct mail ad, 2008
                                                                                                • Figure 62: Nationwide Mutual Insurance Direct Mail Ad, 2008
                                                                                                • Figure 63: GEICO print ad, 2009
                                                                                              • Mortgage Protection Plans
                                                                                                • Figure 64: American Bankers Insurance Company of Florida direct mail ad, 2008
                                                                                                • Figure 65: Balboa Insurance direct mail ad, 2008
                                                                                              • Going green
                                                                                                • Figure 66: AAA direct mail ad 2007
                                                                                                • Figure 67: Allstate direct mail ad 2007
                                                                                            • The Consumer – Ownership and Company Market Share

                                                                                                • Incidence of property & casualty insurance ownership
                                                                                                    • Figure 68: Purchase incidence of property and casualty insurance, by age, September 2008
                                                                                                    • Figure 69: Purchase incidence of property and casualty insurance, by income, September 2008
                                                                                                    • Figure 70: Purchase incidence of property and casualty insurance, by race/ethnicity, September 2008
                                                                                                    • Figure 71: Purchase incidence of property and casualty insurance, by age, September 2008
                                                                                                    • Figure 72: Purchase incidence of property and casualty insurance, by income, September 2008
                                                                                                    • Figure 73: Purchase incidence of property and casualty insurance, by ethnicity, September 2008
                                                                                                    • Figure 74: Ownership of property and casualty insurance, by age and ethnicity, September 2008
                                                                                                  • Market share for automotive insurance
                                                                                                      • Figure 75: Brand of automotive insurance owned, by age, September 2008
                                                                                                      • Figure 76: Brand of automotive insurance owned, by income, September 2008
                                                                                                    • Allstate leads State Farm among Asians and Hispanics for auto
                                                                                                        • Figure 77: Brand of automotive insurance owned, race/ethnicity, September 2008
                                                                                                        • Figure 78: Brand of automotive insurance owned, by age and ethnicity, September 2008
                                                                                                      • State Farm has a solid lead in homeowners insurance
                                                                                                          • Figure 79: Brand of homeowners insurance owned, by age, September 2008
                                                                                                          • Figure 80: Brand of homeowners insurance owned, by income, September 2008
                                                                                                        • Preferences by race/ethnicity
                                                                                                            • Figure 81: Brand of homeowners insurance owned, race and ethnicity, September 2008
                                                                                                            • Figure 82: Brand of homeowners insurance, by age and ethnicity, September 2008
                                                                                                          • Dollar value of policies
                                                                                                            • Figure 83: Average dollar value of homeowners and automotive insurance, September 2008
                                                                                                        • Cluster Analysis – Agent Survey

                                                                                                            • Preservers
                                                                                                              • Who they are
                                                                                                                • Opportunity
                                                                                                                  • Continuers
                                                                                                                    • Who they are
                                                                                                                      • Opportunity
                                                                                                                        • Cluster characteristics
                                                                                                                          • Figure 84: P&C insurance clusters, February 2009
                                                                                                                          • Figure 85: Agent opinions about future developments in the industry, summary of top two boxes (agree and strongly agree) by clusters, February 2009
                                                                                                                          • Figure 86: Agent opinions about current developments in the industry, summary of means (5 point scale with 5=will strongly impact the business), by clusters, February 2009
                                                                                                                          • Figure 87: Agent opinions about future developments in the industry, summary of means (5 point scale with 5=will strongly impact the business), by clusters
                                                                                                                          • Figure 88: Agent opinions about the biggest disadvantages to being an agent, summary of means (5 point scale, 5= strongly agree), by clusters, February 2009
                                                                                                                          • Figure 89: Agent opinion about whether their insurance company(s) does enough to support them, summary of top two boxes (agree and strongly agree), by clusters, February 2009
                                                                                                                          • Figure 90: Type of incentives and support offered, summary of top two boxes (agree and strongly agree), by clusters, February 2009
                                                                                                                          • Figure 91: percentage of business that is any type of property & casualty (P&C) insurance (personal and/or commercial lines), summary of means, by clusters, February 2009
                                                                                                                          • Figure 92: Longevity of agents, by clusters, February 2009
                                                                                                                          • Figure 93: Company for which agent sells insurance (personal and/or commercial lines), by clusters, February 2009
                                                                                                                        • Cluster demographics
                                                                                                                          • Figure 94: P&C insurance clusters, by gender, February 2009
                                                                                                                          • Figure 95: P&C insurance clusters, by employee or independent status, February 2009
                                                                                                                        • Cluster methodology
                                                                                                                        • Appendix: Trade Associations

                                                                                                                          Companies Covered

                                                                                                                          • AAA
                                                                                                                          • AIG Group (American International Group Inc)
                                                                                                                          • Allstate Corporation (The)
                                                                                                                          • Ally Financial Inc.
                                                                                                                          • Amazon North America
                                                                                                                          • American Family Insurance Group
                                                                                                                          • American Insurance Association
                                                                                                                          • American Risk and Insurance Association (ARIA)
                                                                                                                          • Bank of America Corporation
                                                                                                                          • Bear Stearns
                                                                                                                          • Berkshire Hathaway Inc
                                                                                                                          • Chartered Property Casualty Underwriter Society (CPCU)
                                                                                                                          • Chubb Group of Insurance Companies
                                                                                                                          • Citigroup Inc.
                                                                                                                          • CNA Insurance Group
                                                                                                                          • Countrywide Financial Corporation
                                                                                                                          • Erie Insurance Group
                                                                                                                          • Fannie Mae
                                                                                                                          • Farmers Group, Inc.
                                                                                                                          • Federal Reserve System
                                                                                                                          • Government Employees Insurance Company
                                                                                                                          • Greenfield Online
                                                                                                                          • Horizon Media Inc.
                                                                                                                          • Independent Insurance Agents & Brokers of America, Inc.
                                                                                                                          • Insurance Information Institute Inc.
                                                                                                                          • JPMorgan Invest LLC (BrownCo)
                                                                                                                          • Lehman Brothers Holdings Inc.
                                                                                                                          • Liberty Mutual Holding Company Inc.
                                                                                                                          • Merrill Lynch & Co. Inc
                                                                                                                          • MetLife, Inc. (Metropolitan Life Insurance Company)
                                                                                                                          • Morgan Stanley
                                                                                                                          • National Association for Stock Car Auto Racing (NASCAR)
                                                                                                                          • National Association of Insurance Commissioners (NAIC)
                                                                                                                          • National Association Of Mutual Insurance Companies
                                                                                                                          • National Association of Realtors (NAR)
                                                                                                                          • Nationwide Mutual Insurance Company
                                                                                                                          • Property Casualty Insurers Association of America (PCI)
                                                                                                                          • Prudential Financial, Inc
                                                                                                                          • Safeco Corporation
                                                                                                                          • State Farm Insurance Companies
                                                                                                                          • The Hartford Financial Services Group, Inc.
                                                                                                                          • The Progressive Corporation
                                                                                                                          • Toyota Motor Corporation USA
                                                                                                                          • U.S. Bureau of Labor Statistics
                                                                                                                          • US Department of Commerce
                                                                                                                          • USA Today
                                                                                                                          • USAA
                                                                                                                          • Wachovia Corporation
                                                                                                                          • Washington Mutual Inc
                                                                                                                          • Washington Post Company (The)
                                                                                                                          • Wells Fargo & Company
                                                                                                                          • YouTube, Inc.
                                                                                                                          • Zurich Financial Services

                                                                                                                          Property and Casualty Insurance - US - May 2009

                                                                                                                          £3,174.67 (Excl.Tax)