A Mature Industry The auto insurance business is part of the larger property and casualty (P&C) insurance industry. The P&C insurance industry is worth about $471 billion, experiencing a 2% decline in 2010. In the past year, about $40 billion worth of auto insurance premiums were purchased. Auto insurance companies are structured similarly to other property and casualty coverage providers. There are two primary types: mutual and private.
Safe Consumers About 40% of the entire P&C insurance industry is for personal policies (as opposed to commercial policies). 246 million cars are owned by Americans, and every car needs an auto insurance policy to go with it. Each state has its own auto insurance requirements that stipulate minimum coverage amounts for bodily injury and property damage.
Safe Consumers Consumers age 18 to 34 present an opportunity for auto insurance carriers to forge relationships with lifetime customers. These younger consumers are more likely to switch carriers for a savings of less than $300. Suburban and rural consumers are more likely to own cars than Americans living in metropolitan centers. Of all $1,500+ customers: 54.9% are female 27.0% are age 45-54 ; 63.0% have 3+ children
Leading Brokers & Underwriters A.M. Best’s top 10 auto insurance companies with regards to customer satisfaction are: Erie Insurance, The Hartford, State Farm, Liberty Mutual, American Family, GEICO, Nationwide, MetLife, and Automobile Club Group. Some insurance companies allow consumers to purchase directly, while others require that drivers purchase policies through an agent or broker. 39% of insurance shoppers prefer working with a local agent. 32% prefer working with carriers directly.
Shopping Around 18% of Americans who hold auto insurance are willing to change carriers to save money 44% check rates periodically to make sure they’re not missing out on good deals. 38% of insured Americans say that they are most likely to renew their current policy. 26.5% of current auto insurance customers have shopped for auto policies in the past year. 60.2% of customers that changed carriers did so because they found a better rate quote.
Trends that Drive Sales Price and value are the top two factors consumers say influence their auto insurance selection. Reliability and service (including customer service, claims processing, relationship history, and ease of doing business) follow closely. The agent relationship is more important to customers who choose captive agents (getting a 4.0 out of 5.0 on the scale of importance). Brand was the least important factor for all auto insurance consumers.
The Future of the Industry Online auto insurance shopping is likely to increase, surpassing in-person and telephone shopping. Today’s consumers are incredibly price- sensitive, so companies that focus on value and price messages will succeed throughout the recession.
Advertising Strategies Many auto insurance companies have begun to offer a standard safe-driving discounts and credits for each year they are accident free. This strategy appeals to safe drivers who feel they deserve special benefits. It is also a great feature to advertise.
Advertising Strategies Testimonials are great ways to highlight an auto insurance carrier or agency’s level of service and approachability. They are also a great addition to a company’s website, which is more important than ever. Carriers and agencies that succeed will have easy, informative websites and fast turnaround times for emailed quotes.
Advertising Strategies The world of auto insurance can be confusing. Having a website and agents that clarify the process and answer questions makes a carrier/brokerage a valuable resource to clients. Consider providing prospective customers with a glossary and an overview of how policies work and what options they can select to customize their perfect policy.
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