Consumer Auto Insurance Shopping Study Yields Key Insights

A new U.S. consumer auto insurance shopping study provides key insights to help insurers improve their engagement strategies in order to help increase policyholder retention.

The study reveals good news for insurers – policyholders do in fact want to hear from their auto insurer, more than they are currently today, but it has to be on their own terms. And, when insurer communication is lacking, consumers can be easily tempted to shop with another carrier.

LexisNexis Risk Solutions conducted the survey of more than 2,000 U.S. auto insurance policyholders earlier this year to help insurance carriers improve their customer acquisition and retention strategies.

Participants had researched or actively shopped for auto insurance within the year. The findings reveal that the majority of consumers (74%) say they want to hear from their insurance carrier at renewal in addition to the renewal notice. In addition, more than half (57%) are open to outreach anytime during the policy term.

Despite consumers’ preferred desire for regular communication, only 46% of respondents said they were contacted by their carrier at any point during their policy term, outside of the regular renewal notice.

“With easy-to-use websites, mobile apps and always-on call centers, it’s easier than ever to shop for insurance policies, and consumers are actively taking advantage―both on and off policy cycle,” said Ian Griffin, director, product management, LexisNexis Risk Solutions. “It’s encouraging to know that customers are willing to listen, but effective outreach is a balancing act, and you need to make sure you have the right listening and communication strategies in place to avoid attrition, and ideally build customer loyalty.”

Chance To Be Proactive

There’s an opportunity for insurers to be more proactive in reaching out and engaging with policyholders across the entire policy lifecycle, but that outreach needs to be meaningful, and delivered on their terms.

Research found that most policyholders are eager to talk about pricing and discounts, but engagement shouldn’t end there. Other topics of interest to policyholders include their options for additional coverage (39%) and bundling (31%), as well as the opportunity to provide any feedback they may have (29%). This is even more apparent for millennials, as 33% wish to provide feedback.

Major life events are also critical in consumers’ shopping and decision making, and this information is crucial to carriers. In a 2019 LexisNexis study, of the 60% of respondents that had recently experienced a major life event, half claimed that the event affected their decision to shop their auto insurance.

Knowledge of consumer life changes gives carriers significant opportunities to expand coverage with current policyholders and further establishes the carrier as a trusted advisor.

Prove You Know Your Customer

The survey results underscore that it is critical to reach out to customers, but it is also important to understand your target audience’s preferences and tailor outreach accordingly. When it comes to how customers want to hear from their carriers, 90% say they prefer to be contacted by email, making it the number one platform. The second most-preferred method of contact is mobile apps (43%) among Millennials, and a phone call for Gen Xers (41%) and Baby Boomers (55%).

When it comes to cadence, nearly half (49%) of policyholders feel it’s appropriate for their carrier to contact them within two to five days of them receiving a competitor’s quote, but the majority (68%) don’t want to be pestered and feel that one contact post-quote is enough.

However, carriers who are too quiet and don’t proactively reach out to their customers are at a disadvantage as nearly half (47%) of policyholders who switched to a new carrier said their existing carrier’s failure to reach out influenced their decision to switch.

Use Easy Shopping

The LexisNexis study also confirms that consumers see how easy and convenient auto insurance shopping can be. The ease of use leads to policyholders shopping with greater frequency― 47% of survey respondents had shopped their auto insurance more than once per year and 39% had switched carriers within the past year.

“Understanding when and how policyholders are shopping can lead to a huge competitive advantage,” said Griffin. “For insurers looking to pay closer attention to their customers, LexisNexis Active Insights can help to notify when a policyholder is shopping, which then enables the carrier to proactively engage them at the right time and consequently better retain their policyholders.”

Consumers Want To Be Valued

Knowing now that consumers welcome increased contact from their insurers, the question then becomes what should carriers be communicating to ensure that the outreach to their policyholders is engaging and well received? According to the study, consumer engagement that gives policyholders a voice and emphasizes how it is valued is absolutely critical.

LexisNexis Risk Solutions recommends that carriers let their policyholders know that: 1) feedback is not only welcome, but encouraged; 2) carriers want to customize policies to best fit policyholders’ needs; and 3) carriers care about policyholders and want to do whatever possible to make policyholders happy.

Carriers who master the cadence and messaging that consumers are looking for are the ones best positioned for long-term success. So, insurers, acknowledge that your policyholders’ voices matter, and understand their communications preferences so you can tailor your outreach to meet their expectations.

This report compiled by InsuranceNewsNet staff.