The voice of the personal lines consumer Buyers in the driver’s seat

What makes personal lines insurance buyers tick in the current business environment?

While some respondents are committed to buying with an intermediary and others without, there is a significant percentage of “independents” who are more open to switching from agents to a direct purchase (or vice versa) given the right circumstances.

Personal lines insurers are locked in a never-ending battle for market share, one which has only intensified over the past few years as auto and homeowner carriers struggled for organic growth during a down economy and depressed housing market, with premium increases reflecting the need to offset high catastrophe losses rather than any increased demand for coverage.

However, while the environment for exposure growth is looking brighter with unemployment declining, auto sales beginning to rebound, and some signs of recovery in the home-building sector, insurers face more fundamental challenges beyond the ups and downs of the macro-economy.

Indeed, most carriers are reassessing their marketing, sales, and service systems to adapt to the fast-paced evolution in consumer behavior and preferences, driven primarily by advances in web and mobile technologies. More people are living their lives in the virtual world, whether through their laptop, tablet, or smartphone, and they expect their insurers to be there with them. These consumers are surfing the web over multiple Wi-Fi-enabled devices to learn about products and services, to price-shop, and to exchange customer experiences over social media. Many are going on to ultimately buy a policy and even file their claims online.

Yet there is a sizable group of consumers who still prefer the human touch in personal lines, choosing to establish a trusted relationship with an insurance professional who can help them shop for a policy (sometimes for more than one type of coverage) as well as show them how to navigate the claims process and be their advocate in case of a loss.

As a result, fewer companies are dedicated to distributing through any one channel. Many are looking to reach prospects and more regularly communicate with policyholders over multiple platforms, both to take business away from competitors as well as improve the retention of their own customers.

The challenge is to determine what makes personal lines insurance buyers tick in this new environment. What motivates them to choose and remain with a particular carrier and channel—whether they buy through an independent or exclusive agent, or skip an intermediary entirely to deal directly with an insurer? More importantly, what might prompt a personal lines consumer to switch carriers, and perhaps channels as well?

These were some of the key questions explored by Deloitte Research in an online survey of 1,080 auto policyholders and an equal number of those with homeowner coverage conducted over the summer of 2011. Among the critical takeaways from the survey:

  • While the vast majority of respondents appear to be satisfied with the price charged and service provided by their current carriers and agents (if they use one), there are demographic factors at work that make some prospects more viable than others in terms of taking them away from the competition.
  • The same can be said when it comes to channels—while some respondents are committed to buying with an intermediary and others without, there is a significant percentage of “independents” who are more open to switching from agents to a direct purchase (or vice versa) given the right circumstances and enticements.
  • Age was by far the most significant differentiator among the various demographic factors examined in these surveys, whether in terms of the openness of younger consumers to changing carriers and channels, their willingness to do business without an intermediary, or their interest in high-tech options for sales and service.
  • Technology, especially mobile options, is likely to play an increasingly critical role in the marketing, sale, servicing, and retention of insurance customers—particularly those coming into the market as new drivers and homeowners.
  • Trust is a big issue when doing business with insurers and their agents, and it’s an attribute in short supply in the view of many respondents. 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.
  • Price remains the single biggest element respondents consider when purchasing personal lines insurance. However, the survey results also indicate that price is far from the sole decision point when a prospect is determining whether to become (or remain) a policyholder. The surveys identify a number of other factors insurers might leverage to convince a prospect to switch companies and/or channels.
  • In the following report, we offer highlights of the survey results, focusing on the customer experience, the influential role age plays in a prospect’s approach to insurance, the channel preferences and decision points most prominent in the minds of consumers, as well as the increasing prominence of web and mobile technology as potential differentiators for carriers. We’ll conclude with a brief look at how economic conditions might impact personal lines insurers, as well as provide a profile of the survey respondents.

The customer experience: Are insurers and agents keeping consumers satisfied?

High satisfaction levels and renewal inertia pose stiff challenges to auto and home insurers looking to grow organically. Indeed, nearly a quarter of survey respondents said they never shop for alternatives to their current auto insurance at renewal, while one-third rarely do so. Only 16 percent shop every few years. One in 10 shop every other year and fewer than one in five (18 percent) do so annually.

The challenge to convince policyholders to change carriers is even greater in the homeowners market, where only one in 10 shop annually, while another 10 percent do so every other year. A little over one in four (27 percent) said they never shop for a new homeowners policy at renewal, and a third rarely do.

This certainly helps explain the staying power of this survey sample, although auto policyholders queried for this study were more likely to change carriers than were homeowner insureds. But among homeowner respondents, even fewer—one in 10—reported a change in insurers in either the prior 24 months, or over the past year.


Sky-high satisfaction levels among this survey sample likely is a prime reason for the lack of movement among consumers polled. In terms of price (the most important factor for the vast majority of buyers surveyed), 80 percent of auto consumers reported being very satisfied (37 percent) or at least satisfied (43 percent) with what they are paying for coverage, with only a handful either dissatisfied (6 percent) or very dissatisfied (1 percent). Results among homeowner respondents were similar.

The two samples produced even higher satisfaction rates when it comes to the service they receive from their insurance carriers—with 88 percent of auto consumers and 82 percent of homeowners reporting they are satisfied. However, auto policyholders had a higher percentage of those who were very satisfied—46 percent versus 39 percent among homeowner respondents.

These factors would also seem to support the strong likelihood that the vast majority of both sets of respondents expected to renew with their current carriers. About 90 percent of auto policyholders said they expected to stay put (including 61 percent who said they were very likely to renew). Only 5 percent said they were unlikely or very unlikely to renew, while another 5 percent did not know. The numbers were similar on the homeowner side.

DUP136_fig3In reviewing this set of responses, high satisfaction levels with current carriers and a general lack of initiative when it comes to seeking out alternative sources of coverage might make it difficult for carriers to take business away from their rivals, at least among those in these two survey samples.

However, as we’ll document in the next section of this report, not all consumers are created equal. There are policyholders who do put their business into play more routinely—particularly younger consumers, who are more open to a change at renewal time than were many of the older survey respondents.

The young and the restless: Should insurers seek the fountain of youth?

The survey results indicate that carriers that can most effectively bridge the generation gap and attract consumers when they are young have a better shot at improving retention rates and achieving organic growth in personal lines.

A key lesson suggested by the results of these surveys could be summed up with the following advice to personal lines insurers: Get consumers while they’re young!

Indeed, the surveys found that the two youngest age segments (respondents aged 18-25 and 26-34) were the least inclined to renew their current coverage and the ones who shopped for their personal lines business most frequently. In addition, a higher percentage of younger respondents bought directly from carriers (even though they had the most serious trust issues in dealing with the industry), while those young consumers who had bought through agents expressed less loyalty to their intermediaries.

Younger respondents were also more tech-dependent, putting a greater emphasis on the value of online services and mobile applications than did older consumers responding to the survey. They are also far more influenced by their family and friends when it comes to buying insurance than by professional sales people.

Around 20 percent of those in the 18-25 and 26-34 segments had changed auto carriers in the prior 12 months, compared to only 10 percent of those 51 and older. About 15 percent in the two younger age groups signed with a new auto insurer in the previous two years, compared to 9 percent of those over 50. Among homeowners queried, about 12 percent of the two youngest groups had changed insurers in the previous year, compared to just 5 percent of those 51 and older. Over the prior two years, 15 percent of the two younger segments bought from a new carrier, compared to 6 percent of the oldest segment.

That means 33 percent of auto consumers surveyed who are under 35 reported changing carriers over the prior 24 months, compared to 19 percent of those over 50. About 27 percent of the two younger sets of homeowners surveyed had bought coverage from a new carrier over a two-year period, compared to just 11 percent of the oldest buyer segment.

Looking ahead, 47 percent of the youngest auto consumer respondents (18-25) and 56 percent of the next youngest (26-34) said they are very likely to renew their policy—far below the nearly 70 percent likely renewal rate recorded among those 51 and older. The generation gap was echoed among homeowners, with about 45 percent of respondents under 35 saying they are very likely to remain with their current insurer, against 62 percent of those over 50.

There wasn’t much difference among the various age segments on auto insurance when it came to price satisfaction, with between 37 and 40 percent of respondents reporting they are very satisfied with what they are paying. When it comes to service, however, only about 40 percent of the youngest segment (18-25) said they are very satisfied, compared with 53 percent of those over 50. A similar comparison emerged among homeowner respondents.

Meanwhile, younger respondents were much more likely to buy direct from an insurer rather than through an agent. On auto, about 58 percent of respondents under 35 bought direct compared with 45 percent of those over 50. The gap was even wider for homeowners insurance, with 65 percent of respondents between 18 and 25 years old and 55 percent of those under 35 buying direct, compared with 42 percent between 36 and 50 years old and only 37 percent of those over 51.

Younger buyers surveyed were also far less loyal to their agents if they used one. Indeed, while 34 percent of auto respondents and 29 percent of homeowners over 50 said they would not buy insurance without an agent, those numbers dropped to 19 percent and 17 percent, respectively, for those between 34 and 50 and 11 percent for both coverages among those 26-34. For those below 26, only 15 percent indicated they would never buy auto insurance without an agent, along with just 5 percent for the youngest homeowner respondents.

One factor might be that younger respondents have not worked with their current agents for nearly as long as older buyers surveyed. The percentage of respondents working with the same agent for a decade or more climbs in each age segment, topping out at around 57 percent for auto and homeowners over 50, while only a handful of respondents in the youngest age segments have been with the same agent for even as long as five years.


Among those surveyed who use agents, younger buyers tend to believe more strongly that an agent will get them a better price than if they buy on their own—71 percent of auto insurance respondents under 26 agreed with that sentiment, compared to 53 percent for those over 50 who were surveyed. Among homeowner respondents, 75 percent of those under 26 think using an agent will get them a better price, compared with 56 percent of those over 50.

Trust was a big factor for a significant number of respondents, with four out of 10 auto and homeowners surveyed indicating they use an agent because they don’t trust insurers to deal with them fairly. But younger respondents were less trustful toward carriers than were older respondents. Among the youngest age segment (18-25), 54 percent of auto respondents with agents cited a lack of trust when dealing with insurers, but that sentiment fell with age to 40 percent for those 26-34 and around 36 percent for those 35 and older. The feeling was even stronger among the youngest homeowners (69 percent of those under 26, along with 50 percent of those 26-34), dropping to 38 percent for those 35-50 and 34 percent for those over 50.


From this set of responses, it appears carriers that can most effectively bridge the generation gap might have a better shot at organic growth in personal lines. To accomplish this, however, the results indicate that insurers will likely have to overcome trust issues on the part of younger buyers, as well as demonstrate that they can deliver a better price directly than is available through an agent. More effective marketing with a strong educational component in terms of both reputation and cost will therefore be in order.

Channel surfing: Can insurers convince “independents” to switch distributors?

Disintermediation won’t be easy in the personal lines market, at least among those who work with agents today, with one in four auto policyholders and one in five homeowner respondents indicating they would not buy without their agent or some other intermediary.

However, while the surveys found that a number of auto and home insurance buyers say they cannot do without an intermediary, the vast majority of respondents working with an agent appear to be “independent” in that they are at least open to the idea of leaving their intermediary and going direct, given the proper incentives and services.

Indeed, when those who used an agent were asked what would be their preferred way to purchase a new insurance policy, 22 percent of auto respondents and 20 percent of homeowners said buying direct from an insurer instead would be their top option.



In addition, when this segment was asked if the price of coverage was relatively equal, how likely would they be to change auto insurers to buy over the Internet without an agent or broker, 26 percent of auto respondents said they would be very likely (9 percent) or likely (17 percent) to do so. Among homeowners, 27 percent who used an agent said they would be very likely (8 percent) or likely (19 percent) to buy direct over the web.

On the other hand, “independence” is not a one-way street, as the potential for some buyers to change channels was even more pronounced for those who last bought direct. Among direct homeowner respondents, 39 percent said their top preference the next time they buy a new policy was to work with an agent or some other intermediary, along with 30 percent of auto respondents. (Among the direct auto respondents, 15 percent said they would prefer to work with an agent exclusive to one carrier, while 11 percent prefer to go to an independent agent representing multiple carriers. Among homeowners, the breakdown was 19 percent exclusive agents, 16 percent independents).


And when asked if the price of coverage was relatively equal, how likely would they be to change insurers to work with an insurance agent or broker rather than shop and buy on their own, 29 percent of auto respondents who had bought direct said they would be very likely (9 percent) or likely (20 percent) to switch channels, along with 36 percent of homeowners who said they would be very likely (15 percent) or likely (21 percent) to go with an agent.

Interestingly, both sets of “independents”—agent respondents looking to go direct as well as direct respondents likely to switch to an agent of some sort—generally featured in the same demographic profile: older, with less education and often with lower household incomes.

What specifically might prompt consumers to switch channels?

Because price in general was by far the biggest decision point cited by the overall sample (54 percent of auto buyers and 45 percent of homeowners said price was extremely influential, while another 28 percent and 30 percent, respectively, characterized it as very influential in their purchase decision), it’s only natural that a majority of those buying through an agent (56 percent of auto respondents and 58 percent of homeowners consumers) said they used an intermediary to secure a better price. Similarly, about 55 percent of each sample said an agent would get them more coverage for the same price.

These feelings were stronger among those who said they work with an agency representing more than one carrier. Seventy-five percent of both samples said their independent agent can deliver a better price, while 70 percent of auto buyers and 74 percent of homeowners believe their independent agent can get them more coverage for the same price. Therefore, demonstrating to agency buyers that they can save significant money on their premiums by going direct would appear to be the first challenges facing direct carriers. The question is how these prospects would define “significant.”

Indeed, of those with agents who would consider buying direct, it came down to how much the respondent could save on the auto or home insurance premium.

About 23 percent of auto buyers and 21 percent of homeowners said they would not abandon their agent and buy direct unless they could save more than 20 percent on their premium. Around 15 percent of both samples would go direct for a price difference between 16 and 20 percent, with 20 percent willing to consider a shift for 11-15 percent in savings. About 15 percent would drop their agent for a price cut of 6-10 percent. Only a handful (around 5 percent) would go direct if they could save only 5 percent or less on their premium.

In looking at another aspect of cost—value for the premium dollar—about 62 percent of those using agents would consider going direct if they could get more coverage for the same price.

Still, while price is important, it’s not the sole factor respondents cited when asked why they work with an agent. In fact, price wasn’t even the most highly rated factor.

Among respondents who use intermediaries rather than buy direct, consumers in much higher numbers are attracted to the support and services agents can provide. They cited the belief that an agent would more clearly explain their coverage (a little over 80 percent of both samples), could identify all of their potential losses and make sure they are covered (75 percent), as well as be their advocate to help get claims paid quickly and fairly (75 percent).

In addition, between 70 and 75 percent of the respondents said agents would give them more objective advice, better represent their interests, and take care of all their insurance needs beyond either auto or homeowner coverage. Seventy percent of both groups also said it would be more convenient to buy coverage through an agent.

Trust was a big factor as well for a large segment of respondents. Four in 10 of both samples said they use an agent because they don’t trust insurers to deal with them fairly.

Among other motivating factors cited, about half of the respondents using agents said they might buy directly from a carrier if the insurer more clearly explained their coverage, offered more expert advice, took care of all their insurance needs beyond just auto or home coverage, and if it were easier and more convenient to buy straight from the company. However, fewer than one in five strongly agreed about the influence of any of these factors in their decision on whether to go direct.

In any case, disintermediation will not come easy. For those respondents who work with agents—representing half of auto consumers and 55 percent of homeowners surveyed—satisfaction levels and loyalty were very high. Indeed, 89 percent of auto consumers are either very satisfied (47 percent) or at least satisfied (42 percent) with their current agent, a result echoed by respondents with home policies.

As a result, about half (49 percent for auto and 55 percent for homeowners) have been with the same agency for at least six years, while four in 10 auto and homeowner respondents have been with the same agency for over a decade. Fewer than a third of auto respondents and only one in five homeowners reported being with their current agency for two years or less, most commonly among the younger age segments.

However, one possible point for insurers to leverage is the fact that a large segment of respondents were not aware whether their intermediary is independent or exclusive to their current carrier. Among auto respondents, half said their intermediary only represents their current insurer and 21 percent said their agent is independent and sells coverage for multiple carriers.

But 30 percent said they did not know whether their current agent represents just their current insurer, or additional carriers as well. The finding was even more pronounced among homeowner respondents, as 39 percent said they don’t know whether their agent represents just one or multiple carriers, while 38 percent work with exclusive agents and 23 percent with independents.

Once again, delving deeper into this particular subgroup, respondents who don’t know how many carriers their agent represents are generally older (about half of both samples are over 50, while about a third are between 35 and 50), less educated (65 percent of auto and 57 percent of homeowner respondents had less than a four-year college degree), and had lower incomes (although this was more pronounced among auto respondents, with 60 percent earning less than $50,000 annually, compared to 40 percent for homeowners, perhaps because lower-income individuals are less likely to own a home).

Another point of distinction is that those who do recognize their agents as independent producers are the most enthusiastic about the benefits their intermediary has to offer, while their expectations of what agents can deliver in terms of price and service are the highest recorded in the survey.

So, why do certain respondents prefer to deal directly with a carrier, without an agent?

Price and convenience are the two key factors. About 60 percent of direct personal lines buyers responding to the surveys indicated that intermediaries just add cost to the transaction, while two out of three auto respondents (and 59 percent of homeowners) believe that buying direct would get them a better price. In addition, three out of four auto buyers (including a third who strongly agree) said it’s more convenient to buy direct, a view echoed by 70 percent of homeowner respondents (including 29 percent who strongly agree).

And as noted earlier, among these two samples, younger respondents were more likely to go direct, perhaps in part because of their greater proclivity to live their social lives and do their business online.

DUP136_fig9Interestingly, there is another side to the coin on the trust factor cited earlier, as around four out of 10 in both samples said they buy direct because they don’t trust agents to objectively represent their interests.

However, on a wide array of additional factors, from whether insurers will manage claims fairly, cover all their exposures, or handle all of their insurance needs beyond a single policy, direct buyer respondents were less enthusiastic about the benefits of going direct than were those who had bought through agents.

But no matter how consumers buy personal lines insurance, the survey results also indicate that respondents are keen on accessing information and interacting with carriers via a variety of channels, as our next section shows.

Tech rules: Do consumers value multi-platform access and mobility?

While Marshall McLuhan coined the phrase “the medium is the message” back in 1964, his hypothesis still resonates today when it comes to personal lines insurance marketing in that the medium itself—not merely the message it delivers—has intrinsic value by establishing a symbiotic relationship between insurer and consumer.

Indeed, across the board, the vast majority of respondents in both surveys say that the ability to interact with their insurers over a multitude of channels—in person or on the phone, over the Internet or via applications on their smartphones—will be a critical consideration when they make their next personal lines policy purchase, regardless of how or from whom they buy their coverage.

However, delving deeper into the importance of technology in personal lines, a generation gap emerges here as well, with younger respondents far keener on having multi-channel options available. For example, the younger segments were at least twice as likely as older respondents to say they would change carriers to secure online services.

And while the use of smartphone applications (better known as “apps”) is in its very early stages in insurance, younger consumers were much more enthusiastic about the need for them. (There was one glaring exception, however—when it comes to those who would agree to have telematic technology installed to monitor their driving in return for a potential auto premium discount, the younger the respondent, the less open they were to the idea.)


In any case, demand for web-based, social media, and smartphone capabilities is likely to rise as younger, more tech-dependent drivers and home buyers enter the market, and older policyholders fully adopt the latest tech tools.

Twenty-eight percent of auto buyers surveyed said having multiple touchpoint options to communicate with their insurer was an extremely or very influential factor the last time they changed carriers. However, age was a big differentiator, as 42 percent of those 18-25 and 46 percent in the 26-34 segment listed this element as extremely or very influential, compared with 26 percent of those 35-50 and only 21 percent of respondents over 50.

Moreover, looking ahead, 84 percent of auto insurance buyers surveyed said having multiple touchpoint options would influence their decision when they next shop for coverage (including 59 percent who cited this as an extremely influential factor prospectively), with each of the age groups ranking this element very high. With price being equal, 41 percent of the total auto sample said they would be very likely (15 percent) or likely (26 percent) to change carriers to secure the ability to communicate in multiple ways with their carriers. However, that figure jumps to 50 percent among those 18-34, against only 31 percent for those over 50.

Homeowners showed a similar disparity among age segments, with 31 percent overall indicating that having multiple options to communicate with their insurer was extremely (11 percent) or very (20 percent) influential in their decision to change carriers, compared to 51 percent of those 18-25 and 44 percent of those 26-34, as opposed to only 19 percent among respondents over 50.

Prospectively among homeowner respondents, there was much less enthusiasm overall for this element (23 percent), although again age is a key factor, with the response jumping to 40 percent among those 18-25 and 35 percent for those 26-34, compared to 14 percent for buyers over 50. Price being equal, 42 percent overall said this would be a very influential factor, rising to 55 percent among those 18-24 and 51 percent for those 25-34, while dropping to 34 percent for the over-50 crowd.

When it comes to web-based services, among the features rated as extremely or very useful to auto buyers surveyed (cited by nearly three of four respondents) was the ability to check on the status of a claim, get information about products and services, and secure price quotes. The second tier of responses (cited by about two out of three) focused on renewing a policy, updating account information, locating an insurer-recommended repair facility, paying a bill, contacting an agent or finding one nearby, and submitting a claim online. The third tier (named by over half of respondents) cited insurance card access and policy information, the ability to cancel a policy, and getting information on coverage besides auto.

Among the web services rated as very or extremely useful by fewer than half of those surveyed were options such as online chat capabilities to clarify coverage or claims questions (41 percent), the ability to share accident or claims experience with other policyholders (37 percent), or view videos on safety, security, and maintenance (35 percent).

The individual percentages were slightly different among homeowner respondents, but the online service preference rankings were closely aligned with those of auto insurance buyers.


Meanwhile, apps are being introduced by a growing number of personal lines insurers, but such options are not yet on the radar for most of those responding to this survey. Indeed, three out of four auto and homeowner respondents didn’t even know whether their carrier offered mobile apps.

However, those who do have mobile apps like them a lot. Among auto respondents, one in three found them to be very useful, and an additional one in four said they were extremely useful. Age again is a major factor, with younger consumers more likely to find the apps useful. The numbers are similar among homeowner respondents.

At this point, only about one in 10 of both samples indicated they would be likely to change insurers based on the availability of smartphone apps, but that number is likely to rise as more apps are introduced and more consumers come to depend on smartphones to conduct their everyday business. Age is the big differentiator again, as a much higher percentage of those between 18 and 34 said having options similar to those listed in the web services section available on their smartphone would be very useful to them. Indeed, the next generation of personal lines insurance consumers who are growing up with smartphones as part of their everyday lives are likely to expect mobile apps from insurers as part of their standard service options.

Similarly, the use of social media sites to share information and maintain more regular contact between insurers and policyholders is still in the embryonic stage. (Only one in five surveyed said their auto or homeowner insurers provide information over social media.) Once again, however, a significant number of those who did receive information from their insurer via social media liked what they received (around one in four found such information very useful, while 13 to 15 percent found it extremely useful), although overall the enthusiasm for insurance on social media was weaker than it was for apps. Age was a significant point of distinction here as well, particularly among auto respondents, with 56 percent of those 18-25 finding insurer information delivered via social media to be extremely (16 percent) or very (40 percent) useful, compared to 35 percent among those 35-50, and only 8 percent of those over 50. This would indicate that as the next generation of insurance consumers enters the market, demand for social media services will only continue to grow.

DUP136_fig12Once again, a major divide among the generations of respondents is apparent. Younger policyholders are much keener on the value of multiple touchpoint options, web-based and mobile services, as well as social media. And while those who are enthusiastic about these new communication capabilities remain in the minority, the tidal wave of mobile apps supporting smartphones and tablets, as well as the growing number of consumers making social media part of their everyday lives, appears to indicate that a growing number of “tech-head” consumers will emerge, demanding more and better communication and service options from their personal lines insurers as time goes on.

Price check: Cost is still critical, but is it the sole decision point?

While price is a critical element for personal lines buyers, there are other factors they consider when choosing a carrier, offering insurers a variety of decision points they can leverage to differentiate themselves.

In terms of deciding whether to change personal lines insurers and which new carrier to choose, price was the primary—but not the only—factor for respondents. And while price was somewhat less of a priority for older buyers, it remained the dominant consideration for each of the age segments surveyed.

When asked about their decision points when placing auto insurance, eight out of 10 of those surveyed said price was either extremely (54 percent) or very (28 percent) influential in their decision the last time they changed carriers. Price was still strong but not quite as important among homeowner respondents—as a lower share (45 percent) cited cost as extremely influential, along with 30 percent who said the cost was very influential.

Interestingly, among the four age segments surveyed, those 26-34 recorded the largest percentage (71 percent) of those ranking the price of auto coverage as extremely influential, but also the lowest percentage (31 percent) among homeowner respondents. This could perhaps be explained by the fact that having the right coverage for a home—most likely the consumer’s biggest investment—is simply more important than price.

Another intriguing point is that while respondents cited price in retrospect as the most influential factor in their decision to change personal lines carriers, when asked prospectively what would influence them, price did not rank nearly as high. Among auto respondents, 58 percent said price would be either extremely (27 percent) or very (31 percent) influential when they next shop for a new policy, compared to about a third each among homeowners.

However, many of the consumers surveyed indicated they would respond favorably to multi-policy discount offers. Looking back, four in 10 auto respondents cited the availability of an auto/homeowner insurance multi-policy discount as extremely (17 percent) or very (21 percent) influential in their last decision to change carriers, while one in three said such discounts would be extremely (14 percent) or very (20 percent) influential the next time they shop for coverage.

Bolstering this point, among the homeowners surveyed, the influence of multi-policy discounts was even stronger, at least retrospectively, with 58 percent citing this factor as extremely (28 percent) or very (30 percent) influential the last time they changed carriers. Looking ahead, however, it is interesting to note that only 30 percent said such a discount would be extremely (11 percent) or very (19 percent) influential in their purchase decision. Again, coverage and other factors might simply be paramount to a homeowner over just getting the lowest price.

Many auto respondents noted that the availability of telematics—technology to monitor driving experience in return for a potential break on the price of coverage—might prompt them to change carriers. Indeed, three in 10 said getting a discount for installing such a device would be extremely (12 percent) or very (17 percent) influential in their next purchase decision.


However, about 30 percent said they would not agree to install such a device. Another 30 percent said they would. But 42 percent said their answer would depend on the premium discount being offered. Nearly half said they would expect more than a 20 percent discount to make such electronic monitoring worth their while, while another 22 percent would want a price break of 16-20 percent. Only a handful (2 percent) would agree for less than 6 percent in savings, and only one in 10 would go along for even a 6-10 percent discount. About one in five would install the device for a potential discount of 11-15 percent.

Age is a factor here as well, but interestingly in this instance it is the two older segments that are likely to agree to have a monitoring device installed.

The amount and type of coverage offered was the second most important decision point among respondents retrospectively, but not nearly as strong a consideration as price, with only 31 percent of auto respondents citing this as extremely influential (compared to 54 percent on price). The same pattern held for homeowners (24 percent on coverage versus 45 percent on price).

Prospectively, however, coverage appears to be a slightly more compelling factor than price, with nearly three out of four respondents from both samples citing it as extremely or very influential.

Reputation and trust were also key factors. Three out of four auto respondents said brand name, reputation for financial strength, and the insurer’s rating were important, including one in five who considered these elements extremely influential when they last changed carriers. Looking ahead, eight out of 10 cited reputation for financial strength and claims service as important, again including 20 percent who said these would be extremely influential factors. The numbers were similar for homeowners.

Brand name recognition was a very important decision point among both auto and homeowner respondents. About three of four bought through an exclusive agent because they represented a widely known insurer, two-thirds bought direct because they prefer to do business with a widely known insurer, and about half would be more willing to buy direct if the insurer had a widely known brand.

The importance of brand recognition and perceptions of integrity highlights the need for more proactive reputational risk management efforts by insurers in general and the industry as a whole.


One particular area impacting brand reputation is claim service, which was a significant decision point among both samples, with about one in three indicating that poor claims-handling was extremely or very influential in their last decision to change carriers.

In terms of which individuals influence personal lines buyers in their purchase decisions, respondents indicated they were swayed more by recommendations from family, friends, and colleagues than from an agent. However, once again age plays a big part, with younger buyers indicating they are much more influenced by their family and acquaintances, with that influence waning as buyers get older.

A significant percentage (41 percent) indicated that an affiliation between their bank and their auto insurer would be extremely (18 percent) or very (23 percent) influential in their decision on whether to buy coverage. The numbers were similar among homeowner respondents. However, an affiliation with the respondent’s employer did not score nearly as high.

There was a split when it came to the influence of an endorsement from a group or association to which the respondent belongs. This was cited as a major factor among auto insurance buyers, cited by half of the respondents as either extremely (17 percent) or very (33 percent) influential. Among homeowners, however, this was cited by fewer than half that number—20 percent overall, and only by 8 percent—as extremely influential.

About one in four of both samples said a recommendation from their auto dealer or real estate agent would be influential in their insurance purchase decision, including about one in 10 who said these referrals would be extremely influential.

Interestingly, while about one in five said advertising was either extremely (9 percent) or very (14 percent) influential in their decision to buy auto insurance, more than half said ads were not very influential (17 percent) or not at all influential (35 percent). The numbers were similar among homeowner respondents.

When asked what would be their three most preferred ways to shop for a new auto policy, “checking a website offering quotes from multiple carriers” scored the biggest response, cited by 41 percent of those surveyed (including 15 percent who cited this as their most preferred channel). Next came independent agents representing multiple insurers at 36 percent (also including 15 percent as most preferred), followed by agents selling exclusively for one carrier at 31 percent (although this option drew the largest percentage of the top preferred choice at 17 percent).

DUP136_fig15Among homeowner respondents, about 40 percent chose either independent or exclusive agents among their top three choices, with one in five citing either one as their first choice. Checking a website offering quotes from multiple carriers made the top three among one in three respondents, but was cited as the first choice by only 13 percent.

These responses indicate that while price is a critical element for personal lines buyers, there are other factors they consider when choosing a carrier, offering insurers a variety of decision points they can leverage to differentiate themselves and thereby secure and retain new customers.

Conclusion: Where do insurers go from here?

Based on these two survey samples, auto and home insurers have a tough road ahead of them when it comes to expanding market share organically.

The good news for those worried about retaining business is that the two groups surveyed expressed high levels of satisfaction with both the price they pay for insurance and the services they receive, regardless of whether they bought coverage through an agent or directly from a carrier.

The bad news for those looking to grow by taking business away from competitors is that such high satisfaction levels means it won’t be easy to pry these prospects loose and convince them to buy from a different source. But the surveys did find a significant percentage of respondents not only open to changing carriers, but channels as well, if the price and benefits are perceived to be worth the switch.

Perhaps the most marketable finding from these surveys is that carriers would be wise to redouble their efforts to capture the business and maintain the loyalty of drivers and homeowners when they are young, as the results suggest that inertia sets in as a policyholder ages—they become less likely to shop for their business aggressively at renewal or to change carriers.

The same goes for those working with agents—the longer respondents remain with their agents, the less likely they are to change intermediaries or to buy direct. Targeting those in their mid-30s, 40s, 50s, and beyond might be tough sledding—the surveys indicate that insurers will likely find much more open-minded prospects among the under-35 crowd when it comes to changing carriers and distributors.

In contrast, those depending too heavily on a single channel either for distribution or service also could find themselves vulnerable, as consumers increasingly seek multiple touchpoint options to interact with their personal lines insurers.

And while carriers scramble to find a viable business model during this bleeding-edge phase of developing online and particularly mobile app capabilities, they should keep in mind that younger respondents are more demanding when it comes to getting their services wherever they are, at any time of the day or night, over whichever device they choose.

Some policyholders might not yet fully appreciate the value of such multi-channel options, and perhaps some won’t in the future. But the majority of individuals, no matter what their age, have fully integrated the web into their daily routines and are increasingly living their personal and professional lives at least part of the time online. Most are open to the idea of doing some of their shopping for products and services and concluding transactions over the Internet.

Demand for more insurance information, sales, and service options online are sure to follow.

Most consumers today already expect 24/7 service delivered over their computer, laptop, tablet, or smartphone via websites, mobile apps, and social media. Demand for multi-channel access is therefore likely to increase as today’s tech-immersed teenagers enter the workforce and start insuring their cars and homes.

However, those carriers looking to substitute technology for the human touch by disintermediating their agents and selling personal lines policyholders direct might be in for a rude awakening, at least in the short term, as a large segment surveyed expressed a very high degree of both satisfaction with and loyalty to their current intermediaries. In addition, a significant segment who now buy direct indicated strong interest in using an agent the next time they purchase a new policy.

But at the same time, a number of those using agents appear poised to switch to direct channels. These trends bode well for those offering online sales, or at least a direct purchase option to complement their exclusive or independent agency force.

Offering more options, not fewer, for shopping, transactions, and service appears to be the key attribute for any successful personal lines carrier going forward, no matter how their customers choose to buy a policy.

Indeed, how carriers respond to the mounting demands and rising expectations of today’s increasingly high-tech, mobile consumers may very well determine whether they can survive and prosper in the competitive, multi-channel market that’s emerging—not in the distant future, but even as we speak.

Appendix I: How might the economy impact personal lines insurers?

While sales of new automobiles are on the rise, the home building market has been slower to recover, making for a mixed outlook for personal lines in terms of growth in insurable exposures.

Beyond overcoming the marketing, sales, and service challenges facing carriers as indicated by the results of these Deloitte consumer surveys, economic conditions are also likely to be a key driver in personal lines insurance growth.

The picture was far brighter for auto than for homeowner carriers as 2012 got underway. Indeed, American auto manufacturers reported their most impressive sales figures since the economy tanked in the fall of 2008, thanks to a steady increase in demand for new cars. Auto sales were up 10 percent last year compared to 2010, closing out 2011 with seven straight months of gains.1

The momentum continued into January 2012, with US sales of new cars up 19 percent over the same month a year earlier, according to The Wall Street Journal Market Data Center.2

Sales are expected to increase even more in 2012 because of rising consumer confidence, cheap financing options, and the aging of current vehicles. Indeed, the National Automobile Dealers Association expects 13.9 million new cars to be sold this coming year.3 This is good news for auto carriers, which generally see insurable exposures grow along with new car sales.

There is also considerable upside potential in the market as the auto industry has a ways to go before a full recovery can be confirmed. The 12.8 million vehicles sold last year is well below the 16 million in average annual sales before 2008.1 However, with the average age of a US vehicle at a record 10.8 years—two years older than a decade earlier3—the stage appears to be set for consumers to push sales higher and thereby generate new exposure growth for auto insurers. The short-term outlook for insurers of homeowners is not as rosy, as the market remains glutted with foreclosed properties. However, there are some early signs of the start of a recovery, as the US commerce department reported that builders had broken ground on some 685,000 homes as of November 2011, up 9.3 percent from the month before and up 243percent from November 2010.4 But this figure is still well below the 1.2 million annual figure considered healthy by economists.5

What’s more, the vast majority of construction was in the rental market, up 32 percent compared to a gain of just 2.3 percent for single-family homes, the commerce department noted, as more Americans who lost their homes, their jobs, or both last year opted to rent rather than buy.5 These trends and the glut of foreclosed and distressed properties already on the market could dampen exposure growth for homeowner insurers in 2012.

The still struggling housing market might be one reason why carriers primarily writing personal lines saw new written premium growth slow a bit to 3.1 percent through the first nine months of 2011, down from 3.6 percent over the same period in 2010, according to statistics produced by the Insurance Services Office and the Property Casualty Insurers Association of America.6 However, Deloitte Research believes that higher catastrophe exposures and increased demand for coverage in a recovering economy will likely prompt personal lines insurers to raise premiums by a higher rate over the course of this year.

Indeed, a survey of insurance company CEOs and industry association leaders at the Property-Casualty Insurance Joint Industry Forum in January 2012 found that 63 percent think personal auto profitability will rise, along with 67 percent on homeowners. 7

Appendix II: Survey methodology and profile of respondents

  • Deloitte Research contracted with an independent financial services survey specialist, Andrews Research, to conduct an online survey of 1,080 US-based auto insurance policyholders and 1,080 homeowner insurance policyholders in June 2011.
  • The core demographic segments identified for the surveys were age, education, family status, and household income. A minimum of 150 completed surveys were obtained for each of the sub-categories within these four segments. The surveys also captured a set of non-core demographics, which did not have a pre-specified minimum quota, including gender and type of community.
  • In terms of age, the largest percentage of respondents in the surveys came from the 35-50 age segment (32 percent in auto and 31 percent in homeowners). The smallest percentage came among the youngest age segment, 18-25 (14 percent for auto and 13 percent for homeowners). The other three segments each represented about one-fifth of the total sample.
  • In terms of education, the majority among both surveys had less than a four-year college degree—60 percent for auto insurance and 51 percent for homeowners.
  • As for family status, about half (48 percent) of the auto survey respondents were either married or in a committed relationship, compared to 63 percent for the homeowner respondents.
  • With regards to household income, nearly two-thirds among the auto sample made less than $50,000, including 29 percent who made below $25,000. Income was higher among the homeowner survey respondents, with 44 percent making more than $75,000, compared to only 21 percent among the auto respondents making that much.
  • The gender split for both surveys was reasonably even with 47 percent male and 53 percent female for the auto insurance survey and 46 percent male and 54 percent female among the homeowners. (These figures quite closely reflect those in the 2010 US census, which found 49 percent of the population to be male and 51 percent, female.)
  • Of the various community types, for both surveys, half of the respondents lived in suburban communities, with a quarter each living in either urban or rural areas.
  • The margin of error for both surveys is +/– 3 percent at the 95 percent confidence level.