More consumers go online to shop for life insurance

Chicago, Jan. 12, 2023 — More than four in 10 consumers go online or use an app when shopping for life insurance, according to a new TransUnion (NYSE: TRU) report. This is a significant shift as the vast majority of consumers traditionally purchase their life insurance policies through an agent.

However, this is also very much on-trend as the insurance industry undergoes an evolution toward digitalization across all segments and policy touchpoints, as detailed in TransUnion’s Insurance Trends and 2023 Outlook Report.

To help prepare insurers for what’s next, TransUnion conducted a survey of 2,907 U.S. adult consumers with active auto, homeowners, renters and/or life insurance policies during October 2022. The findings highlight consumer attitudes towards online insurance shopping, auto telematics, policy servicing, submitting claims and more.

“Across the board, we are observing consumers increasingly looking for digital experiences when it comes to engaging with insurers,” said Mark McElroy, executive vice president and head of TransUnion’s insurance business. “Importantly, we’re seeing the life insurance industry making strides to meet consumer expectations.”

One of the most important advancements in the life insurance space is that companies are streamlining what was once a very cumbersome process. Applicants had to submit to blood draws and physical exams to obtain a basic quote. Insurers can now leverage rich data sources, including medical scores and credit-based scores that expedite the underwriting process and eliminate the need for in-person home visits or invasive testing.

While this is good news for consumers already in the market, the survey found more than one third (34%) of consumers do not have a life insurance policy. The top reason given for this choice was that they don’t believe they need one—underscoring the need for insurers to make their value proposition more clear.

To this end, marketing efforts are becoming more sophisticated. Insurers are creating direct-to-consumer brands that complement and enhance agent-driven sales by providing education to consumers, using clear language to help them understand how to bundle life insurance policies with other financial products.

Mismatched supply/demand in commercial insurance digital offerings

In the commercial insurance space, TransUnion’s survey revealed that 91% of respondents would be willing to get a quote online for commercial insurance; however, only 28% have actually done so. This represents a gap in offerings from commercial insurers and a huge opportunity for companies willing to invest in a more streamlined and automated process.

In addition, TransUnion’s report found two-thirds of respondents said their rates increased — and 20% said they went up by double digits. While profitability for insurers is important, dramatic rate hikes for businesses already burdened by inflation could backfire and drive customers to shop for lower premiums.

“Rate increases are only going to carry companies so far toward profitability, and customers are increasingly at their limits,” said McElroy. “Creating opportunities to provide customers efficient quoting and underwriting, in addition to valuable coverage packages, is one of the best alternative strategies to a better bottom line.”

Personal lines plateaus in its digitalization journey

The personal lines insurance industry is facing similar challenges. With a limited ability to raise rates and a significant amount of digitalization already achieved, insurers now must fine-tune efforts to stay competitive and profitable.

One area in which insurers may want to focus resources is diversifying and optimizing their marketing spend across channels. Access to data can help marketers reach the best prospective consumers more effectively in the channels where they're most likely to respond.

After an initial surge in early 2022, telematics adoption remained almost flat throughout the year, with 60% of consumers who were offered a telematics program opting in to participate. While most reported being satisfied with their program, some did see their rates increase, which may hinder continued adoption.

“The value proposition of telematics is that consumers give up some sense of privacy or autonomy to provide insurers a demonstrably safe driving record in real-time,” said McElroy. “If they’re not seeing that translate into lower rates, or if their rates actually increase, some may not continue with the program.”

Please click here to download a full version of the TransUnion Insurance Trends and 2023 Outlook Report.

Methodology

This online consumer survey of 2,907 U.S. adults, who were 18 years of age and older, was conducted October 20-28, 2022 by TransUnion in collaboration with third-party research provider, Dynata. To ensure general population sample representativeness across United States resident demographics, the survey included quotas to balance responses to the census statistics on the dimensions of age, gender, household income, race and region. Generations are defined as follows: Gen Z, born 1995–2004; Millennials, born 1980–1994; Gen X, born 1965–1979; and Baby Boomers, born 1944–1964. These research results are unweighted and statistically significant at a 95% confidence level within ±1.82 percentage points based on calculated error margin.