According to a new survey of auto and homeowner policyholders, age is the most significant factor in carrier loyalty. The new Deloitte study, "The Voice of the Personal Lines Consumer: Buyers in the driver's seat," shows that 18 to 34 year olds are more likely to change carriers and channels, do business without an intermediary and access high-tech options for sales and service than consumers who are 51 and older.
"For many insurers, achieving organic growth is almost a quest for the Holy Grail; our survey underscores the role consumer inertia plays in this challenge and offers potential solutions," says Rebecca Amoroso, vice chairman and insurance sector leader, Deloitte LLP. "Forty-five percent of homeowners and 30% of auto policyholder respondents have never switched carriers. These figures become more significant when satisfaction is considered, as more than 80% are satisfied with both price and service. With renewals remaining strong, insurers seeking growth must focus on attracting new customers — and our survey revealed younger consumers were considerably more likely to make a change."
Twenty percent of 18 to 34 year olds changed auto carriers in the prior 12 months, compared to only 10% of those 51 and older. Nearly 15% of the younger respondents signed with a new auto insurer between 12 and 24 months ago, compared to nine percent of those over 50.
Among homeowners queried, approximately 12% of the youngest demographic had changed insurers in the previous year, compared to just five percent of those 51 and older. Fifteen percent of younger consumers bought from a new carrier between 12 and 24 months ago, compared to six percent of older ones.
Sam Friedman, Deloitte's insurance research leader, adds, "Insurers can attract younger buyers by leveraging multiple touch points, including social media and mobile applications. Nearly 50% of 18 to 34 year olds purchasing auto insurance believe communication over several channels is extremely or very influential when deciding to switch carriers, versus a little more than 20% of respondents over 35. For homeowners between 18 and 34, approximately 50% say numerous touch points were influential in their decision to change carriers, compared to only 19% of those 50 and older."
Other key trends uncovered by the survey include:
- The vast majority of respondents appear to be satisfied with policy price and carrier or agent service. Eight of 10 are either very satisfied, or at least satisfied, with what they pay for auto and homeowner coverage, while 87% of auto consumers and 82% of homeowners are satisfied with the service they receive from carriers. For those who used an intermediary to buy insurance, nine of 10 are either very satisfied, or at least satisfied, with their current agent.
- While some respondents are committed to buying from an intermediary and others without, there is a significant percentage of "independents" that are open to switching from agents to a direct purchase, or vice versa, given the right circumstances and enticements. One-quarter of respondents who use agents say if the price of coverage was relatively equal, they are likely to change insurers to buy over the Internet instead. However, among those who bought direct from insurers, about one-third say they are likely to change carriers to work with an agent rather than shop and buy on their own.
- Establishing brand recognition, maintaining a positive reputation and strong ratings, as well as overcoming suspicions about the integrity of insurers and agents can play a major role in drawing prospects away from rival carriers and channels. Forty percent say they use agents because they do not trust insurers to deal with them fairly. Meanwhile 40% of those who bought direct say they do not trust agents to represent their interests objectively.
- Price remains the biggest single element the survey participants consider when purchasing personal lines insurance. However, the results also indicate that price is far from the only decision point when a prospect is determining whether to become or remain a policyholder. One-quarter of auto and 30% of homeowner insureds say that a poor claim experience was either extremely or very influential in their last decision to change carriers.