Auto Insurance Shopology: New Study Highlights


Last year, LexisNexis Active Insights released a new report – “Insurance Shopology” – all about the way people shop for insurance. After combing through the findings, we’d like to share the highlights with you.

How’s the market? Here’s the big picture

New auto insurance customers are entering the market en masse, and insurers are seeing plenty of revenue growth year to year as a result. Yet customers at large are getting harder to retain, since online policy shopping tools have become so prolific and user-friendly.

All told, it’s a tough marketplace, in which insurers are fighting hard to get and keep the best customers.

Now for the details of the study

The LexisNexis study included more than 2,000 auto insurance customers between the ages of 25 and 70. Every one of them was the primary decision-maker for auto insurance in their household, and they had all owned a policy for at least a year.

Within that time period, some had not shopped for a new policy. Some had shopped. And some had both shopped and switched.

So, what did these participants teach us about how consumers shop for insurance?

Online shopping – we’ve created a monster!

Insurance quote comparison tools are all the rage and have been for quite some time. The competitive race has been pointed at convenience and choice, which is a compelling proposition for customers.

It’s also created a whole new challenge for insurers, who find themselves in the position of trying to hold onto customers who are newly empowered to move onto any competitor at any time. Hello, churn!

The good news, if you want to call it that, is that this challenge isn’t relegated to the few. Retention varies from one distribution channel to another; however, all carriers are feeling the pain.

So, what’s an insurer to do?

Let’s start with what we know.

All the participants in the LexisNexis study “rely on the personal touch when it comes to purchase,” the report said. That means they’re either calling the carrier on the phone or talking (in real time) to an agent. Those who shopped for new policies within the last year were a bit less reliant than those who didn’t, but the personal element was important across the board.

In addition, every participant who experienced “a life event” in the past year – including more than 60 percent of them all – said that the event they experienced affected their decision to shop for insurance. In this context, life events include “adding or removing a driver, buying or leasing a new vehicle, decreasing household income, buying a new house, getting married [or] divorced” and “moving or relocating.”

Finally, when it comes to shopping, price is the driving factor. Today’s insurance customers know what their policy covers, they know how much it costs, and they’ll move if they see a more competitive offer.

Putting these three ideas together, LexisNexis suggested that one might address the retention problem by proactively monitoring consumer data, anticipating life events, and reaching out to the customer before they start shopping in order to create the opportunities they need.

From a technology standpoint, an insurer needs direct-to-consumer sales capability to manage entire process. On that front, the Silvervine 6.0 policy administration system is ready to help. Request a demo to learn more. Also, be sure to download our Direct to Consumer Blueprint.