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The Insurance Purchase Decision - US - November 2015

"The insurance purchase decision has significant long-term impact on consumers’ wallets and insurers’ success. Most consumers are loyal to the insurer they pick and do not switch often, indicating that insurers need to achieve new opportunities where they can be found. Marketers who understand the factors that influence consumer attitudes about buying insurance can better ensure future success."
- Monica Staco, Category Manager - Financial Services

This report discusses the following key topics:

  • Insurance consumers are satisfied and loyal, making switching challenging 
  • Customer service trumps savings
  • More consumers going online

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

          • The issues
            • Insurance consumers are satisfied and loyal, making switching challenging
              • Figure 1: Insurance satisfaction, by type, August 2015
            • Customer service trumps savings
              • Figure 2: Insurance satisfaction, claims and premiums, August 2015
            • More consumers going online
              • Figure 3: Nontraditional insurance purchasing attitudes, August 2015
            • The opportunities
              • Young consumers seek better online and technology experiences
                • Figure 4: Insurance purchasing behaviors – Life insurance, by age, August 2015
              • Combine technology with human element
                • Embrace empowered consumers
                  • Majority of consumers want to be loyal to one brand
                    • Figure 5: Insurance satisfaction, loyalty, August 2015
                  • What it means
                  • The Market – What You Need to Know

                    • Demand for insurance products strong
                      • Market forces signal continued need for insurance
                        • Interest rate environment key for life insurers
                        • Market Breakdown

                          • Life insurance premiums rebound, led by stock-market linked products
                            • Figure 6: US life insurance premiums, 2009-14
                          • Number buying health insurance increasing
                            • Figure 7: Percent of Americans without health insurance for the entire year, 2003-13
                          • Auto and homeowners/renter insurance premiums continue to grow
                            • Figure 8: US property and casualty premiums, 2009-14
                        • Market Factors

                          • Many more insurance needs as unemployment nearing 5%
                            • Figure 9: US unemployment, September 2009-15
                          • Number of first-time home buyers increases
                            • Figure 10: Existing home sales, in millions of units, August 2014-15
                          • Auto sales on track for best year since 2000
                            • Figure 11: Total US sales and fan chart forecast of market, at current prices, 2010-20
                          • Looming interest rate decision has impact on life insurance
                          • Key Players – What You Need to Know

                            • Online growth builds demand for consumer-focused user experience
                              • Usage-based insurance threatened by privacy concerns
                                • Amazon, Google, Walmart create alternative insurance channel
                                • What’s Working?

                                  • Focusing on consumer, sites improve user experience
                                      • Figure 12: Oscar Health Insurance digital ad, 2015
                                  • What’s Struggling?

                                    • Privacy concerns keep usage-based insurance from gaining traction
                                      • Current technology offerings not enough for young consumers
                                        • Figure 13: Reasons to shop around – Life insurance, by age, August 2015
                                      • Young consumers open door to usage-based insurance opportunity
                                        • Figure 14: Insurance satisfaction, by age, August 2015
                                    • What’s Next?

                                      • Private exchanges rise following ACA
                                        • Figure 15: Public versus private exchange annual enrolment forecast, 2014-18
                                      • Selling health insurance in retail stores
                                        • Amazon, Google, Walmart threaten to enter insurance market
                                            • Figure 16: Nontraditional insurance purchasing attitudes, by race/Hispanic origin, August 2015
                                        • The Consumer – What You Need to Know

                                          • Policyholders are very satisfied with their insurer
                                            • Customer service drives satisfaction
                                              • Young consumers represent best market for new opportunity
                                                • Savings opportunities via innovation is key to new markets
                                                  • More insurance purchasing being done online
                                                    • Men and Hispanics shopping via mobile devices
                                                      • Alternate insurance channels can also target men and Hispanics
                                                      • Insurance Coverage

                                                        • Some form of insurance owned by most consumers
                                                          • Insurance coverage increases with age
                                                            • Figure 17: Type of insurance coverage – All, by age, August 2015
                                                          • High-income earners are opportunity for life insurance
                                                            • Figure 18: Type of insurance coverage – All, by household income, August 2015
                                                          • Hispanics under index on insurance ownership
                                                            • Figure 19: Type of insurance coverage – All, by race/Hispanic origin, August 2015
                                                        • Method of Purchase

                                                          • Insurance purchase experience can depend on type of insurance
                                                            • Figure 20: Nontraditional insurance purchasing attitudes, August 2015
                                                          • Customer service can impact purchasing method
                                                          • Method of Purchase – Life Insurance

                                                            • Most buy life insurance from employer or agent
                                                              • Figure 21: Insurance purchase method – Life insurance, August 2015
                                                            • Insurers can reach young men via financial advisors
                                                              • Figure 22: Insurance purchase method – Life insurance, by gender and age, August 2015
                                                            • Direct mail still effective for Black audience
                                                              • Figure 23: Insurance purchase method – Life insurance, by race/Hispanic origin, August 2015
                                                          • Method of Purchase – Health Insurance

                                                            • Nearly half receive health insurance via employer
                                                                • Figure 24: Insurance purchase method – Health insurance, August 2015
                                                              • Blacks and Hispanics seek health insurance outside employer
                                                                • Figure 25: Insurance purchase method – Health insurance, by race/Hispanic origin, August 2015
                                                            • Method of Purchase – Auto Insurance

                                                              • Online purchasing gaining traction from agents
                                                                • Figure 26: Insurance purchase method – Auto insurance, August 2015
                                                              • 25-34-year-olds buying auto insurance online
                                                                • Figure 27: Insurance purchase method – Auto insurance, by age, August 2015
                                                              • Blacks and Hispanics seek personal touch of agent
                                                                • Figure 28: Insurance purchase method – Auto insurance, by race/Hispanic origin, August 2015
                                                            • Method of Purchase – Homeowners/Renters Insurance

                                                              • Most buy homeowners insurance through agent
                                                                • Figure 29: Insurance purchase method – Homeowners/renters insurance, August 2015
                                                            • Attitude toward Method of Purchase

                                                              • Nontraditional insurers entering market
                                                                • Figure 30: Nontraditional insurance purchasing attitudes, August 2015
                                                              • Alternate insurance channels can target men
                                                                • Figure 31: Nontraditional insurance purchasing attitudes, by gender, August 2015
                                                              • Across all income groups, price still matters
                                                                • Figure 32: Nontraditional insurance purchasing attitudes, by household income, August 2015
                                                              • Hispanics twice as likely to consider mass merchandiser for insurance
                                                                • Figure 33: Nontraditional insurance purchasing attitudes, by race/Hispanic origin, August 2015
                                                              • Costs and options most important to young buyers online
                                                                • Figure 34: Insurance purchasing attitudes, by age, August 2015
                                                            • Insurance Behaviors

                                                              • Customer service is universally important
                                                                  • Figure 35: Insurance purchasing behaviors – All, August 2015
                                                              • Insurance Behaviors – Life Insurance

                                                                • Technology important to next generation of life insurance customers
                                                                  • Figure 36: Insurance purchasing behaviors – Life insurance, by age, August 2015
                                                                • Parents can be won with discounts
                                                                  • Figure 37: Insurance purchasing behaviors – Life insurance, by presence of children, August 2015
                                                              • Insurance Behaviors – Health Insurance

                                                                • Few consumers filing claims online
                                                                  • Figure 38: Insurance purchasing behaviors – Health insurance, all, August 2015
                                                                • Young consumers may switch for savings without sacrificing service
                                                                  • Figure 39: Insurance purchasing behaviors – Health, by age, August 2015
                                                                • Saving parents money and time can be effective
                                                                  • Figure 40: Insurance purchasing behaviors – Health insurance, by presence of children in the household, August 2015
                                                                • Hispanics more likely to switch for discount
                                                                  • Figure 41: Insurance purchasing behaviors – Health insurance, by race/Hispanic origin, August 2015
                                                              • Insurance Behaviors – Auto Insurance

                                                                • Consumers looking for discounts in auto insurance
                                                                  • Figure 42: Insurance purchasing behaviors – Auto insurance, all, August 2015
                                                                  • Figure 43: Progressive Insurance mail ad, 2015
                                                                  • Figure 44: Allstate Insurance email ad, 2015
                                                                • One in five Millennials buy auto insurance online
                                                                  • Figure 45: Insurance purchasing behaviors– Auto insurance, by generation, August 2015
                                                                • Insurers can save parents time with online purchasing
                                                                  • Figure 46: Insurance purchasing behaviors – Auto insurance, by presence of children, August 2015
                                                                • Hispanics more likely to interact with auto insurer online
                                                                  • Figure 47: Insurance purchasing behaviors – Auto insurance, by race/Hispanic origin, August 2015
                                                              • Insurance Behaviors – Homeowners/Renters Insurance

                                                                • Half of women value customer service
                                                                  • Figure 48: Insurance purchasing behaviors – Homeowners/renters insurance, by gender, August 2015
                                                                  • Figure 49: Insurance purchasing behaviors – Homeowners/renters insurance, by generation, August 2015
                                                              • Reasons to Shop for New Insurance Policy

                                                                • Reasons for a new life insurance
                                                                  • High premiums causing consumers to shop around
                                                                    • Figure 50: Reasons to shop around – Life insurance, all, August 2015
                                                                  • New life events key opportunity to engage with younger consumers
                                                                    • Figure 51: Reasons to shop around – Life insurance, by age, August 2015
                                                                • Reasons to Shop for New Insurance – Health Insurance

                                                                  • Premiums on minds of all
                                                                    • Figure 52: Reasons to shop around – Health insurance, by household income, August 2015
                                                                  • New technology and discounts can attract young consumers
                                                                    • Figure 53: Reasons to shop around – Health, by age, August 2015
                                                                  • Hispanics having children present opportunity
                                                                    • Figure 54: Reasons to shop around – Health, by race/Hispanic origin, August 2015
                                                                • Reasons to Shop for New Insurance – Auto Insurance

                                                                  • Customer service is a challenge for auto insurers
                                                                    • Figure 55: Reasons to shop around – Auto, all, August 2015
                                                                  • Gen Xers most influenced by customer service
                                                                    • Figure 56: Reasons to shop around – Auto, by generation, August 2015
                                                                  • Hispanics less concerned about customer service
                                                                    • Figure 57: Reasons to shop around – Auto, by generation, August 2015
                                                                • Homeowners Insurance

                                                                  • Similar to auto insurance
                                                                    • Figure 58: Reasons to shop around – Homeowners/renters, all, August 2015
                                                                  • Higher income earners more influenced by poor customer service
                                                                    • Figure 59: Reasons to shop around – Homeowners/renters, by household income, August 2015
                                                                • Insurance Purchase Attitudes

                                                                  • Access to research and discounts makes agents valuable
                                                                    • Figure 60: Insurance purchasing attitudes, by method of purchase, August 2015
                                                                  • Agents provide personal touch
                                                                    • Figure 61: Insurance purchasing attitudes, August 2015
                                                                  • Affluent like efficiency of agents
                                                                    • Figure 62: Insurance purchasing attitudes, by household income, August 2015
                                                                  • Men shopping via mobile devices
                                                                    • Figure 63: Insurance purchasing attitudes, by gender, August 2015
                                                                  • Hispanics shopping via mobile devices are open to digital ads
                                                                    • Figure 64: Insurance purchasing attitudes, by race/Hispanic origin, August 2015
                                                                  • Opportunity to reach young dads via mobile
                                                                    • Figure 65: Insurance purchase attitudes – CHAID – Tree output, August 2015
                                                                    • Figure 66: Insurance purchase attitudes – CHAID – Table output, August 2015
                                                                • Insurance Satisfaction

                                                                  • Policyholders very satisfied overall
                                                                      • Figure 67: Insurance satisfaction, by type, August 2015
                                                                    • Customer service can trump savings
                                                                      • Figure 68: Insurance satisfaction, claims and premiums, August 2015
                                                                    • Majority of consumers want to be loyal to one brand
                                                                      • Figure 69: Insurance satisfaction, loyalty, August 2015
                                                                  • Appendix – Data Sources and Abbreviations

                                                                    • Data sources
                                                                      • Sales data
                                                                        • Consumer survey data
                                                                          • Consumer qualitative research
                                                                            • Abbreviations and terms
                                                                              • Abbreviations
                                                                              • Appendix – CHAID Analysis

                                                                                • Methodology
                                                                                • Appendix – Consumer Table

                                                                                    • Figure 70: Insurance satisfaction, by type, August 2015

                                                                                Companies Covered

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                                                                                The Insurance Purchase Decision - US - November 2015

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