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Innovations in the Insurance Market - US - November 2018

"The insurance industry is competitive, as most people make their insurance choices based on price. Although the industry is flush with technological innovation, consumer loyalty is yet to be significantly impacted by these developments. 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 the way they want to and get the type of insurance they need. While brands must keep an eye on the future to stay on the cutting edge of technology, they cannot lose sight of the core competencies and human connection necessary to maintain their business."
- Chris Shadle, Financial Services Analyst

This report looks at the following areas:

  • Nearly 20% of consumers would be interested in insurance from Google/Amazon
  • Insurance mobile apps are used sparingly, auto and renters are the most popular
  • Consumers don’t prioritize mobile offerings

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • Overview
          • The issues
            • Nearly 20% of consumers would be interested in insurance from Google/Amazon
              • Figure 1: Interest in purchasing insurance from a tech company, by age, August 2018
            • Insurance mobile apps are used sparingly, auto and renters are the most popular
              • Figure 2: Mobile app utilization, by insurance type, August 2018
            • Consumers don’t prioritize mobile offerings
              • Figure 3: Attitudes toward insurance mobile apps, by age, August 2018
            • The opportunities
              • More than a quarter of consumers use a fitness-tracking device, but few seniors do
                • Figure 4: Use and interest in fitness-tracking devices, by generation, August 2018
              • Millennials and Hispanics are especially engaged with health insurance apps
                • Figure 5: Health insurance mobile app utilization, by generation and Hispanic origin, August 2018
              • Parents are the most invested in home security devices
                • Figure 6: Use and interest in home security devices, by age, August 2018
              • What it means
              • The Market – What You Need to Know

                • Net premiums written are falling for life and health, on the rise for property and casualty
                  • The growing 65+ age bracket will test the limits of public health programs
                    • Unemployment numbers continue to fall
                    • Market Size

                      • Net premiums are falling for life and health, on the rise for property and casualty
                        • Figure 7: Net premiums written and percentage change for property and casualty, health, and life insurance, 2008-17
                      • Largest P&C insurers
                        • Figure 8: Top 10 writers of property and casualty insurance, by direct premiums written, 2017
                      • Largest life insurance and annuity providers
                        • Figure 9: Top 10 writers of life insurance/annuities by direct premiums written, 2017
                    • Market Factors

                      • A nation grows older
                        • Figure 10: US population, by age, 2015, 2020, 2025
                      • Unemployment numbers continue to fall
                        • Figure 11: Unemployment and underemployment, January 2007-July 2018
                      • Millennials spur uptick in homeownership, but rates are still low
                        • Figure 12: Home ownership rate for the US (not seasonally adjusted), January 2007-October 2017
                        • Figure 13: Home ownership rate, by age, 2007 versus 2017
                      • Percentage of uninsured Americans is historically low, but has potentially plateaued
                        • Figure 14: Percentage of Americans who are uninsured,* 2005-17
                      • Consumers are driving (and crashing) at levels higher than before the financial crisis
                        • Figure 15: Traffic volume trends, vehicle-distance traveled, 1993-2017
                    • Key Players – What You Need to Know

                      • Amazon takes aim at the insurance sector
                        • Innovation has not yielded lower premiums
                          • Insurers continue to invest in mobile apps, but most consumers don’t use them
                            • John Hancock will only offer policies that include digital fitness tracking
                            • In Focus: Amazon

                              • Amazon continues its push into insurance
                                • Joint healthcare venture with JPMorgan Chase, Berkshire Hathaway
                                  • Pharmaceutical Aspirations: Amazon Japan, Basic Care, PillPack Acquisition
                                    • Figure 16: Amazon Basic Care home page, October 2018
                                  • Acko, Indian Insurtech
                                    • AARP collaboration
                                      • Amazon.com/Travelers
                                      • What’s Struggling?

                                        • Innovation has not yet led to lower premiums
                                          • Consumers are struggling with the costs of healthcare
                                            • Figure 17: Attitudes about healthcare costs, by age, August 2018
                                          • Insurers continue to invest in mobile apps, but most consumers don’t use them
                                            • Figure 18: GEICO customer email, October 2018
                                        • What’s Happening and What’s Next?

                                          • Credit Karma launches car insurance product
                                            • Root Insurance plans to lower auto premiums by only insuring good drivers
                                              • Health IQ rewards healthy behavior with lower premiums
                                                • Prudential adds life insurance to baby registries
                                                  • John Hancock will only offer policies that include digital fitness tracking
                                                  • The Consumer – What You Need to Know

                                                    • Health and auto insurance are the most commonly owned policies
                                                      • Insurance mobile apps are used sparingly, with auto and renters the most popular
                                                        • Millennials and Hispanics are especially engaged with health insurance apps
                                                          • More than a quarter of consumers use a fitness-tracking device, but few seniors do
                                                            • Parents are the most invested in home security devices
                                                              • Nearly one third of consumers prize innovation over premium costs
                                                              • Insurance Type Ownership

                                                                • Health and auto insurance are the most commonly owned policies
                                                                  • Figure 19: Insurance ownership, August 2018
                                                                • Minority populations are less likely to own insurance
                                                                  • Figure 20: Insurance ownership, by race and ethnicity, August 2018
                                                              • Insurance and Mobile Apps

                                                                • Auto and renters policies drive the most mobile usage
                                                                  • Figure 21: Mobile app utilization, by insurance type, August 2018
                                                                • Millennials and Hispanics are especially engaged with health insurance apps
                                                                  • Figure 22: Health insurance mobile app utilization, by generation and Hispanic origin, August 2018
                                                                • Consumers want apps that let them handle claims, pay premiums, and make policy changes
                                                                  • Figure 23: Interest in insurance mobile app features, August 2018
                                                                • Many older consumers simply aren’t engaged, or interested, in mobile
                                                                  • Figure 24: Lack of interest in insurance mobile app features, by age, August 2018
                                                                  • Figure 25: Blue Cross Blue Shield customer email, August 2018
                                                                • Consumers don’t prioritize mobile offerings
                                                                  • Figure 26: Attitudes toward insurance mobile apps, by age, August 2018
                                                              • Insurance Tech Devices

                                                                • Fitness-tracking and smart-home devices pique consumer interest the most
                                                                  • Figure 27: Interest in tech devices, August 2018
                                                                • More than a quarter of consumers use a fitness-tracking device, but few seniors do
                                                                  • Figure 28: Use and interest in fitness-tracking devices, by generation, August 2018
                                                                • Parents are the most invested in home security devices
                                                                  • Figure 29: Use and interest in home security devices, by age, August 2018
                                                                • Younger consumers are the most interested in tracking their sleep
                                                                  • Figure 30: Use and interest in sleep monitoring device, by age, August 2018
                                                              • Interest in Insurance Innovations

                                                                • Two out of five consumers would use a fitness tracker if incentivized
                                                                  • Figure 31: Incentivized use of fitness tracker, by age, August 2018
                                                                • Men are more interested in one-off policies and mobile offerings
                                                                  • Figure 32: Interest in single-item policies and importance of mobile offerings, by gender, August 2018
                                                                • Nearly 20% of consumers would be interested in insurance from Google/Amazon
                                                                  • Figure 33: Interest in purchasing insurance from a tech company, by age, August 2018
                                                              • Attitudes toward the Insurance Industry

                                                                • Consumers are sold on home security
                                                                  • Figure 34: Belief in efficacy of home security devices, by generation, August 2018
                                                                • Nearly one third of consumers prize innovation over premium costs
                                                                  • Figure 35: Preference for innovation over lower premiums, by gender, race, and ethnicity, August 2018
                                                                • Younger consumers more likely to trust insurance companies
                                                                  • Figure 36: Trust in insurance companies, by generation, August 2018
                                                                • Comparison sites are useful, but consumers see insurers as the best source of information
                                                                  • Figure 37: Usefulness of online comparison sites, by age, August 2018
                                                                  • Figure 38: Policygenius mobile advertisement, August 2018
                                                              • Appendix – Data Sources and Abbreviations

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

                                                                        Innovations in the Insurance Market - US - November 2018

                                                                        £3,435.47 (Excl.Tax)