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US Insurance Purchase Decision market report

"Insurance is not a product consumers particularly like to buy, and they don’t typically switch companies once they have purchased what they need. Insurers need to find new customers where possible, often among young people or those who are entering a new lifestage. Once they get a new customer, interactions between customer and insurer will be infrequent, so it is important for insurers to find ways to develop an ongoing relationship with customers outside of transactions. Being available to customers via all channels digital and human will also be a key factor in success."
- Robyn Kaiserman, Senior Financial Services Analyst

While most consumers prefer to have their policies with the same company – and want to renew automatically – more than half also believe it is important to shop around. That means that they are amenable to switching if there is a compelling enough reason to do so. For this reason, insurers cannot assume that consumers’ preference to have all policies with one company will translate to a final decision to remain at their current company. Insurers need to be proactive at the time of renewal, reminding their customers why they remain the preferred choice.

Even among young customers, who are most likely to conduct as much business online or via mobile device as possible, online and mobile insurance tools are not used when they can be. Part of this is the reliance many consumers place on having a personal relationship with an insurance agent, making it perhaps less likely that they would use digital tools instead of calling someone they trust. Another issue with mobile apps in particular, however, is that consumers don’t need to interact with the insurance companies very often, so downloading a little-used mobile app onto their phone isn’t really necessary. To encourage consumers to download their apps, insurers need to think about ways to expand their utility so consumers want or need to use them more often, making them more useful in consumers’ day-to-day lives than just as ways to enroll in a plan or submit a claim

This Report looks at the following areas:

  • Differentiation is a challenge
  • Most prefer to use one insurance company – but still want to shop around
  • Online and mobile tools are still underused

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • The issues
          • Differentiation is a challenge
            • Figure 1: Attitudes toward insurance and insurance companies, by demographics, May 2017
          • Most prefer to use one insurance company – but still want to shop around
            • Figure 2: Attitudes toward insurance and insurance companies, May 2017
          • Online and mobile tools are still underused
            • Figure 3: Uses of online/mobile functions, by generation, May 2017
          • The opportunities
            • Hispanics need health and life insurance
              • Figure 4: Insurance ownership, by Hispanic origin, May 2017
            • Young women are especially responsive to incentives
              • Figure 5: Insurance purchase behaviors, by gender and age, May 2017
              • Figure 6: Progressive loyalty reward email, 2017
            • What it means
            • The Market – What You Need to Know

              • Premiums are growing
                • Uncertainty of health care and the ACA
                  • Continued low unemployment
                    • Car sales are going higher
                      • Homeownership among Blacks and Hispanics is lagging
                      • Market Breakdown

                        • Property and casualty premiums are increasing
                          • Figure 7: Property and casualty insurance premiums written, 2011-15
                        • Life insurance premiums jumped in 2015
                          • Figure 8: Life insurance premiums, 2011-15
                        • Total life insurance coverage is up
                          • Individual life insurance policies purchases are increasing
                            • Figure 9: individual life insurance policies purchased in US 2011-15
                        • Market Factors

                          • Uncertainty of health care and the ACA
                            • Continued low unemployment
                              • Figure 10: US unemployment rate, May 2012-May 2017
                            • Car sales are going higher
                              • Figure 11: Total US unit sales and forecast of new and used light vehicles, 2011-21
                            • Homeownership among Blacks and Hispanics is lagging
                              • Figure 12: Homeownership rates, by race and Hispanic origin, Q1 2012-Q1 2017
                          • Key Players – What You Need to Know

                            • Technology is easing the journey
                              • Industry is facing a talent shortage
                                • Mobile apps are still not popular
                                  • Artificial intelligence is growing in importance
                                    • Crowdsourcing expands to the insurance industry
                                    • What’s Working?

                                      • Technology is easing the journey
                                        • Figure 13: Important factors, by generation, May 2017
                                      • Insurers join with TrueCar to offer car buying services
                                        • Figure 14: Allstate and GEICO car buying service email ads, 2017, 2016
                                    • What’s Struggling?

                                      • Industry is facing a talent shortage
                                        • Mobile apps are still not popular
                                          • Figure 15: Mobile app usage, by type of insurance, May 2017
                                          • Figure 16: Allstate Drivewise direct mail piece, 2016
                                      • What’s Next?

                                        • Artificial intelligence
                                          • Insurify
                                            • Lemonade
                                              • Crowdsourcing
                                                • Figure 17: Attitudes toward insurance and insurance companies, by generation, May 2017
                                                • Figure 18: Liberty Mutual email ad, 2017
                                              • Trov – On-demand P&C insurance on its way to the US
                                                • Figure 19: Purchase behaviors, by generation, May 2017
                                            • The Consumer – What You Need to Know

                                              • Most people have at least three types of insurance
                                                • Family and friends are the most important influence
                                                  • Agents are more important to older consumers
                                                    • Most important factor: monthly premiums
                                                      • Agents are still instrumental
                                                        • Young Hispanics prefer independent agents
                                                          • Millennials at greatest risk
                                                          • Location of Accounts

                                                            • Most people have at least three types of insurance
                                                              • Figure 20: Number of insurance types, repertoire group, May 2017
                                                              • Figure 21: Allstate bundling email ad, 2017
                                                            • Hispanics and Blacks lag in insurance ownership
                                                              • Figure 22: Type of insurance owned, by Hispanic origin and race, May 2017
                                                            • Health insurance is likely to be purchased through employer; life insurance independently
                                                              • Figure 23: Type of insurance owned, May 2017
                                                          • Source of Information

                                                            • Family and friends are the most important influence
                                                              • Figure 24: Source of information, May 2017
                                                            • Older consumers rely on agents for information
                                                              • Figure 25: Source of information, by generation, May 2017
                                                            • What do consumers remember from ads?
                                                            • Important Factors

                                                              • Monthly premiums are the most important
                                                                • Figure 26: Most important factors in insurance policy/provider, May 2017
                                                                • Figure 27: Progressive premium savings email ad, 2017
                                                              • Parents want flexibility
                                                                • Figure 28: Most important factors in policy/provider, by parental status, May 2017
                                                              • Millennials care about others’ opinions
                                                                • Figure 29: Value of consumer reviews, by generation, May 2017
                                                              • In consumers’ words: price and coverage rank high
                                                              • Agents or Technology?

                                                                • Agents are still instrumental
                                                                  • Figure 30: Purchasing channels, by type of insurance, May 2017
                                                                • Young Hispanics prefer independent agents
                                                                  • Figure 31: Attitudes toward insurance and insurance company, by Hispanic origin and generation, May 2017
                                                                • How consumers purchase insurance
                                                                  • Technology is important to younger men
                                                                    • Figure 32: Use of technology, by gender and age, May 2017
                                                                  • Motorcycle and renters insurance customers use technology
                                                                    • Figure 33: Use of technology, by type of insurance, May 2017
                                                                  • Humans vs technology
                                                                  • Switching Activity

                                                                    • Parents like to shop around
                                                                      • Figure 34: Attitudes toward insurance and insurance companies, by parental status, May 2017
                                                                    • Millennials at greatest risk
                                                                      • Figure 35: Attitudes toward insurance and insurance companies, by generation, May 2017
                                                                      • Figure 36: Allstate life insurance calculator email, 2017
                                                                  • Renewal Preferences

                                                                    • Millennials want to shop around, but still stay with same company
                                                                      • Figure 37: Renewal preferences, by generation, May 2017
                                                                      • Figure 38: Liberty Mutual Email ad, 2016
                                                                    • CHAID analysis
                                                                      • Hispanic Millennials most likely to shop around at renewal time
                                                                        • Figure 39: Renewal preferences – CHAID – Tree output, May 2017
                                                                        • Figure 40: Renewal preferences – CHAID – Table output, May 2017
                                                                    • Cluster Analysis

                                                                        • Figure 41: Insurance purchase clusters, May 2017
                                                                      • Cluster 1: Young Independents
                                                                        • Characteristics
                                                                          • Opportunity
                                                                            • Cluster 2: Disengaged Disinteresteds
                                                                              • Characteristics
                                                                                • Opportunity
                                                                                  • Cluster 3: Heavily Insureds
                                                                                    • Characteristics
                                                                                      • Opportunity
                                                                                      • Appendix – Data Sources and Abbreviations

                                                                                        • Data sources
                                                                                          • Sales data
                                                                                            • Consumer survey data
                                                                                              • Consumer qualitative research
                                                                                                • Direct marketing creative
                                                                                                  • Abbreviations
                                                                                                    • Abbreviations
                                                                                                    • Appendix – CHAID Analysis

                                                                                                      • Methodology
                                                                                                      • Appendix – The Consumer

                                                                                                          • Figure 42: Health/life insurance ownership, by generation, January 2016-March 2017
                                                                                                          • Figure 43: Type of health/life insurance owned, by generation, January 2016-March 2017
                                                                                                          • Figure 44: How obtained current medical policy, by generation, January 2016-March 2017
                                                                                                          • Figure 45: Property and vehicle insurance, by generation, January 2016-March 2017
                                                                                                          • Figure 46: How obtained homeowners or tenants insurance, by generation, January 2016-March 2017