Consumer Shopping for Auto Insurance Grows Online: ACT

Independent Agents can benefit if they have active Web presence

By Ron Berg

ComScore’s latest assessment of the online auto insurance landscape reflects continued growth in quoting and purchasing auto insurance online (2010 comScore Online Auto Insurance Report). Most consumers still buy off line, however, and want to deal with a person. Independent agents can continue to succeed in this new environment if they build their own online presence with an engaging website, use social media to develop “fans”, incorporate online consumer quoting coupled with rapid follow up and demonstrate they add value to the process.

It is important for independent agents to be fully aware of the trends revealed in comScore’s latest research as they develop their online strategies, and this article seeks to present those highlights.

The 58-page report covers trends regarding online quoting and purchasing, information about customer preferences, agent versus direct-channel purchasing, as well as aspects of customer self-servicing and loyalty. For this survey, comScore relied upon input from 1 million U.S.-based consumers, as well as insights from a panel of over 2,000 U.S. online consumers.

Online Quoting

Online quoting continues to be the first stop to consumers researching auto insurance. Online quoting increased 21% from the previous year’s survey to a total of 38.8 million quotes submitted online. In 2009, 54% of all consumers went online to get auto insurance quotes, and 72% have gone online to find auto insurance information at some point in their lives.

The economy continues to be a driver in shopping around for insurance. 21% of consumers reported they are “more likely” to shop around for insurance due to the economic conditions.

We see this play out online with the majority (83%) going directly to insurer websites, versus only 17% going to aggregators and online agencies (Insurance.com, NetQuote, etc.). Of the quotes done on carrier sites, the usual “direct” suspects lead the pack: GEICO (28.8% of all quotes), Progressive Direct (28%), and Esurance (13.8%).

Independent Agents (IAs) have a say in all this, as a full 22% of consumers went to a multiple-carrier agent. This is a decrease of 3% from the previous year, so the focus on improving agent website functionality becomes critical � with the inclusion of website comparative rating tools, as well as direct-to-carrier quoting links offered by carriers as agency website add-ons.

When it comes to consumer attitudes on purchasing, independent agents still have an edge.

Online Purchasing

A record 2.8 million policies were purchased online in 2009 � an increase of 22% from the previous year. For some perspective, only 700,000 policies were purchased online in 2004.

The opportunity for IAs lies with assisting the consumer in understanding his/her insurance needs. 78% of consumers are still purchasing offline, and by far the largest reason is that they want to speak with someone who can guide them. 71% listed this as their primary reason for purchasing offline. The key is making it easy for the consumer to find agents on the Web, as well as connecting the consumer to the agency via technology tools like online quoting on the agency website, live chat, online forms requesting agent call-back and using social media. Additionally, more consumers are able to sign all needed policy documents online. A full 82% reported using online tools such as electronic signature in 2009. Overall, consumers are expecting easy-to-use functionality and rapid service.

Agency carriers are producing better long term retention. 39% of all shoppers switched their auto insurance in 2009. However, State Farm and Nationwide had the highest retention of those consumers staying with their insurer five years or more. GEICO and Progressive had the lowest five-year retention. While price was the biggest driver for switching insurers (49%), having a real person with whom the insured can visit with was third at 13%, after “protecting my assets/possessions.”

Self-Servicing

Retaining customers is crucial for both agents and insurers. One of the most important aspects is payments. 55% of customers pay for their bills on a monthly basis. While a little over one-quarter of all customers pay their premiums in full up front to obtain discounts, there is a large opportunity to provide ease of use functionality to the customer who makes monthly payments, by providing this functionality through the agent’s website (as well as at the carrier’s site) � to keep the agent’s website in the forefront of the customer’s mind.

Many carriers provide eService links that can be placed on their agency’s website, allowing clients to go the agency website first and then link to the carrier’s sign in and make a payment function. In total, 34% of customers pay their bills online � either at the insurance carrier’s eService website, or by online banking.

Online Activity Varies With Age

For those shopping online for auto insurance, the biggest increases were between ages 18-24, and 25-34. All age ranges over 35 decreased.

23% of 18-24 year olds purchased their policies online in 2009, compared to only 9% for 55+.

Percentages purchasing online decreased for each range:

18-24: 23%
25-34: 21%
35-44: 18%
45-54: 15%
55+: 9%

Conversely, the percentage of those purchasing through an agent rises from 60% to 70% as age ranges increase.

Buying with or without an Agent

The top four reasons consumers give to have bought through an agent include: wanted real person to visit with or call (38%); have always used an agent (34%); wanted local agent from one company who could help with all insurance needs (26%); agent quoted best price (25%). The top four reasons consumers chose not to go through an agent in making their purchase were: more convenient to use website or 24 hour toll free number (27%); faster to purchase online or through toll free number (23%); got a quote with a toll free number and decided to purchase (23%); prefer website or toll free number (16%). Agents can employ available technology tools to offer the same convenience and speed as the direct carriers, but add on top of that the personal advice and local presence they offer.

17% of respondents indicate they purchased a policy through an affiliation with an association or a group. 31% indicated they would definitely purchase “pay-as-you-drive” insurance � more evidence that consumers are looking for discounts wherever possible.

Where are the Opportunities?

The majority of consumers are going online to research auto insurance premiums. Agent websites can attract a larger portion of those by improving site functionality with quoting and making their site easy to find with social networking and SEO (search engine optimization). 22% of those in the comScore survey went to local agents to get quotes. 26% of consumers looked online for a local agent, either on a search site or on a carrier’s website.

78% are still purchasing offline. Agents can continue to provide a crucial link in helping consumers find a great price matched with the coverage they need. While the direct giants like GEICO and Progressive Direct still get the most quotes online, the agent-based insurers have the lead in total premiums written. Consumers still put more faith in the agent-based insurers, and they also have the best retention versus direct writers.

25% of the respondents have individual auto and homeowners or renters insurance with different carriers. There is a significant opportunity here if the agent can attract more consumers to educate them on the price and flexibility advantages of writing all of their insurance needs with one carrier. And 54% said they have additional insurance policies outside of auto and homeowners, primarily life.

34% pay their bills online. Links to carriers’ eService sites placed on agency websites are one way to keep the clients in touch with agency websites. In addition, 82% of online purchasers were able to sign all policy documents online at the time of purchase, which is up from 76% in 2009. Carriers and agents should work together to offer this same eSignature capability for online forms.

While the clear trend is toward more online activity without the involvement of an agent, savvy agents can start to divert a lot of this online business by using Internet tools to duplicate the speed and convenience the direct carriers are providing. Agents can now optimize their websites with online quoting and eServicing capabilities and links, as well as attract more traffic using social networking. Including customer self-service functions on agency websites not only provides more customer preference options, but keeps the agency website in the customer’s field of view.

Ron Berg is the Senior Technology Research Specialist within the Agency Services & Technology unit of MetLife Auto & Home, based in Warwick, RI. MetLife’s web site is www.metlife.com. Ron Berg can be reached at rberg1@metlife.com. Ron produced this article for ACT. For information about ACT, please visit www.iiaba.net/act. This article reflects the views of the author and should not be construed as an official statement by ACT, nor of MetLife Auto & Home, nor should it be interpreted as MetLife Auto & Home’s endor