Table of Contents
Scope and Themes
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- What you need to know
- Data sources
- Consumer survey data
- VMS
- Abbreviations and terms
- Abbreviations
- Terms
- Companies mentioned in this report:
Executive Summary
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- Industry overview
- Shifts in market share
- The clash of low price versus quality
- Advertising in the time of uncertainty
- Buying online appeals to young adults
- Smartphones and social media expand selling opportunities
- Stopping texting when driving
- Say goodbye to the “wealth effect”
- Violent storms in 2011
Insights and Opportunities
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- Key points
- Being connected and responsive is key
- Continue to show cost savings, but trust and customer service still key
- Delivering fairness via telematics
- Confronting a lack of loyalty
- Make websites complete for answering questions
Inspire Insights
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- Trend: Prepare for the Worst
- Industry Application
Market Size
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- Key points
- The industry has not yet recovered
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- Figure 1: Financial results for U.S. property and casualty insurers, 2006-10
- Homeowners coverage shows the strongest growth
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- Figure 2: Total U.S. property and casualty direct written premium at current prices, 2007-10
- Personal lines insurance taking an underwriting loss
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- Figure 3: P&C Industry combined ratios, 2001-11
Competitive Context
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- Key points
- The price wars
- Relationship building via Twitter
- Esurance: Twitter
- American Family: Twitter
- Allstate Insurance: Twitter
- Liberty Mutual: Twitter
- M&A activity of insurers
Segment Performance
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- Key points
- Auto insurance DWP little changed…
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- Figure 4: Total U.S. private passenger auto insurance direct written premium at current prices, 1993-2010
- …but in real terms, premiums have fallen substantially
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- Figure 5: Total U.S. private passenger auto insurance direct written premium at constant prices, 1993-2010
- Average expenditure falls
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- Figure 6: Average expenditures for auto insurance, by state, 2006 and 2008
- Homeowners DWP gains by 5% in 2010…
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- Figure 7: Total U.S. homeowners insurance direct written premium at current prices, 1993-2010
- …and real premiums have doubled since 1993
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- Figure 8: Total U.S. homeowners insurance direct written premium at 2010 inflated prices, 1993-2010
- Average premiums fall back from their 2007 peak
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- Figure 9: Average premiums for homeowners and renters insurance, 2000-08
- Figure 10: Average premiums for homeowners and renters insurance at 2008 inflated prices, 2000-08
- Homeowners combined ratio expected to rise again
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- Figure 11: Combined ratios for personal lines, 1993-2011
Marketing Channels
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- Key points
- Most sales through direct writers
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- Figure 12: Types of agents as a percentage of net written premium, 2010
- Most buy auto insurance through an agent
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- Figure 13: Channel used for purchase of auto insurance, by gender, July 2011
- Internet becomes part of buying process among those 18-34
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- Figure 14: Channel used for purchase of auto insurance, by age, July 2011
- Hispanics and Asians work around speaking with an agent
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- Figure 15: Channel used for purchase of auto insurance, by race/Hispanic origin, July 2011
- Figure 16: Channel used for purchase of auto insurance, by household income, July 2011
- The internet mostly cannibalizes sales from agents
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- Figure 17: Distribution channels used by new buyers, 2007 and 2011
- Agents and the internet are primary information sources
- Men more active than women in exploring different channels
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- Figure 18: Sources used for obtaining information before purchase, by gender, July 2011
- Agents appeal to those 55+
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- Figure 19: Sources used for obtaining information before purchase, by age, July 2011
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- Figure 20: Sources used for obtaining information before purchase, by ethnicity, July 2011
- Higher earners comfortable with online research
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- Figure 21: Sources used for obtaining information before purchase, by household income, July 2011
- The impact of marketing channels overall – the internet
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- Figure 22: Influence of internet on media consumption, by generation, February 2009-March 2010
- The impact of marketing channels overall—smartphones
- Smartphone insurance apps appeal more to men than women
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- Figure 24: Whether have an app from auto insurance company on smartphone, by gender, July 2011
- Figure 25: Whether have an app from auto insurance company on smartphone, by age, July 2011
- Insurance app usage
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- Figure 26: Smartphone owners who have an insurance app, by gender, July 2011
- The aggregator channel is growing in the U.S.
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- Figure 27: Insurance aggregators ranked by total unique visitors, Q4 2009 vs. Q4 2010
Insurance Sales Channels – the UK Experience
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- Key points
- A radically different distribution model
- Key lessons for U.S. insurers
- Market dynamics
- Defending against comparison sites
- Impact on risk management
- Online sales exacerbate existing trends
- Online sales vary by product type
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- Figure 28: Preferred channels for arranging different general insurance products in the UK, August 2010
- Three quarters of UK consumers have used comparison sites for financial research
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- Figure 29: Aggregator usage in the UK, April 2011
- Aggregator usage snowballs after the first purchase
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- Figure 30: Repertoire of aggregator usage for research, April 2011
- …and in buying behavior
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- Figure 31: Repertoire of aggregator usage for purchase, April 2011
- The impact on loyalty
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- Figure 32: Insurance product ownership, by length of time insurance products held, August 2010
Market Drivers
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- Key points
- The U.S. population matures
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- Figure 33: U.S. population, by age, 2010-15
- Unemployment stubbornly high
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- Figure 34: Unemployment (U3) and underemployment (U6) rates, January 2007-August 2011
- Figure 35: Employment – population ratio, January 2000-August 2011
- Job creation anemic
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- Figure 36: Total non-farm payroll losses and gains, in thousands, January 2009-August 2011
- Consumers overloaded on debt
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- Figure 37: Total debt balance and its composition, Q1 1999-Q1 2011
- Foreclosures, bankruptcies populate the landscape
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- Figure 38: Number of consumers with new foreclosures and bankruptcies, 1999-2010
- The bursting of the Housing Bubble
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- Figure 39: Case-Schiller 20-city composite, seasonally adjusted, January 2000-April 2011
- Figure 40: Median price for homes, 1998-2010
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- Figure 41: Private housing starts (in millions), 2000-12
- Figure 42: Existing home sales, 1998-2010
- Some improvement in auto sales
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- Figure 43: Auto and light truck sales (in millions), 2000-12
- Consumers uneasy about money, future
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- Figure 44: Median change in family wealth, 2007-09, by age of household head and region
- Figure 45: Consumer sentiment, March 2007-August 2011
Leading Companies
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- Key points
- State Farm: significantly in the lead
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- Figure 46: Top writers of property/casualty insurance by direct written premiums written, 2008-10
- State Farm, GEICO, Liberty Mutual gain share in auto
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- Figure 47: U.S. private passenger auto insurance top writers, by direct written premium 2007-10
- Liberty Mutual, Travelers, USAA gain big for homeowners
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- Figure 48: Homeowners insurance top writers, by direct written premium 2007 and 2010
Brand Qualities
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- Key points
- Being dependable/trustworthy most important
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- Figure 49: Important qualities of auto insurance provider, July 2011
- Men place more importance on social media
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- Figure 50: Important qualities of auto insurance provider, by gender, July 2011
- Company websites are important to younger adults
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- Figure 51: Important qualities of auto insurance provider, July 2011
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- Figure 52: Important qualities of auto insurance provider, by household income, July 2011
- Geico, Progressive liked for their websites, social media communications
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- Figure 53: Important qualities of auto insurance provider, by household income, July 2011
- Amica Mutual and USAA highest rated on satisfaction
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- Figure 54: Satisfaction ratings given to highest rated auto insurers and homeowners insurers, 2010
Innovation and Innovators
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- Key points
- State Farm’s Discount Double Check
- Allstate’s Drive Wise
- Progressive’s Snapshot Pay As You Drive
- Allstate’s X the TXT
- State Farm’s On the Move
- Allstate’s keepthedrive.com
- PhoneGuard
- Progressive’s Flo-isms App
- GEICO HomeFront
- GEICO Glovebox
- Esurance RepairView
- Allstate’s GoodRide
- State Farm NEXT DOOR
- State Farm 60-second text-to-quote for car insurance
Marketing Strategies
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- Key points
- Overview
- Print advertising
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- Figure 55: GEICO Glovebox app print ad, 2011
- Figure 56: Progressive homeowners insurance print ad, 2011
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- Figure 57: Progressive Snapshot Discount insurance print ad, 2011
- Direct-mail advertising
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- Figure 58: AARP/The Hartford auto insurance direct mail ad, 2011
- Figure 59: Farmers homeowners insurance direct mail ad, 2011
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- Figure 60: USAA auto insurance direct mail ad, 2011
- Figure 61: Nationwide auto insurance direct mail ad, 2011
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- Figure 62: Allstate motorcycle insurance direct mail ad, 2011
- Online and email advertising
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- Figure 63: State Farm Discount Double Check online advertisement, 2011
- Figure 64: Allstate Truth auto insurance online advertisement, 2011
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- Figure 65: Liberty Mutual Subaru Advantage Plan email advertisement, 2011
- Figure 66: Esurance email advertisement, 2011
- Television advertising
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- Figure 67: Esurance “Alan is a technical genius”, 2011
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- Figure 68: Progressive Snapshot Strike a Pose, 2011
- Figure 69: State Farm, New Boyfriend, New Girlfriend, 2011
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- Figure 70: Allstate’s Mayhem Motorcycle, 2011
- Figure 71: Hawaiian Farmers Insurance, 2011
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- Figure 72: Travelers Cat Burglar, 2011
The Consumer – P&C Insurance Ownership
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- Key points
- More than three in four have auto insurance
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- Figure 73: Ownership of financial products, by gender, July 2011
- A strong link between age and insurance ownership
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- Figure 74: Ownership of financial products, by age, July 2011
- Auto insurance is near-universal among higher earners
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- Figure 75: Ownership of financial products, by household income, July 2011
- A risk of under-insurance among black households?
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- Figure 76: Ownership of financial products, by race/Hispanic origin, July 2011
The Consumer – Choice of Insurer
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- Key points
- State Farm, Allstate lead in personal lines
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- Figure 77: Provider of auto insurance, homeowners insurance, renters insurance, other (marine, aviation, etc.) personal insurance, July 2011
- GEICO and Allstate compete for second place in the auto market
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- Figure 78: Provider of auto insurance, by gender, July 2011
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- Figure 79: Provider of auto insurance, by age, July 2011
- Considerable variation between different races/ethnicities…
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- Figure 80: Provider of auto insurance, by race/Hispanic origin, July 2011
- …and this variation isn’t explained by differing income levels
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- Figure 81: Provider of auto insurance, by household income, July 2011
- State Farm leads the way for homeowners
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- Figure 82: Provider of homeowners insurance, by gender, July 2011
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- Figure 83: Provider of homeowners insurance, by age, July 2011
- Hispanic and Asian consumers take a different approach to insurer selection
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- Figure 84: Provider of homeowners insurance, by race/Hispanic origin, July 2011
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- Figure 85: Provider of homeowners insurance, by household income, July 2011
- State Farm also strong among renters
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- Figure 86: Provider of renters insurance, by gender, July 2011
The Consumer – Trends in Ownership and Face Value
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- Key points
- Fewer carry P&C insurance in 2011
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- Figure 87: Trends in ownership of automotive insurance, homeowners insurance, and renters insurance, 2006-11
- Policy face values have also declined
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- Figure 88: Face value of automotive and homeowners insurance policies, 2008 and 2011
The Consumer – Overall Financial Situation
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- Key points
- Many still gloomy about the economy
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- Figure 89: Attitude about finances: better or worse than 12 months ago, 2009-11
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- Figure 90: Consumer outlook for personal finances over next 12 months, 2009-11
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- Figure 91: Consumer outlook for American economy, next 12 months, 2009-11
- Buying big-ticket items does not appeal
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- Figure 92: Likelihood of buying a big ticket item in next 30 days, 2009-11
Cluster Analysis
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- In-person Buyers
- Demographics
- Characteristics
- Opportunity
- Green Riders
- Demographics
- Characteristics
- Opportunity
- Direct Liners
- Demographics
- Characteristics
- Opportunity
- Cluster characteristic tables
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- Figure 93: Property and casualty insurance clusters, July 2011
- Figure 94: Types of financial products owned, by property and casualty insurance clusters, July 2011
- Figure 95: Channels used for researching auto insurance providers, by property and casualty insurance clusters, July 2011
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- Figure 96: How auto insurance was purchased, by property and casualty insurance clusters, July 2011
- Figure 97: Importance of qualities in purchase of auto insurance, by property and casualty insurance clusters, July 2011
- Cluster demographic tables
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- Figure 98: Property and casualty insurance clusters, by gender, July 2011
- Figure 99: Property and casualty insurance clusters, by age, July 2011
- Figure 100: Property and casualty insurance clusters, by household income, July 2011
- Figure 101: Property and casualty insurance clusters, by race/Hispanic origin, July 2011
- Figure 102: Property and casualty insurance clusters, by education, July 2011
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- Figure 103: Property and casualty insurance clusters, by employment, July 2011
- Figure 104: Property and casualty insurance clusters, by marital status, July 2011
- Cluster methodology
Appendix—Simmons Mosaic Analysis
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- Key points
- Personal lines insurance most attractive to the affluent
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- Figure 105: Ownership of automotive insurance, homeowners insurance and renters insurance, by mosaic segment, February 2010-March 2011
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- Figure 106: How obtained insurance, by mosaic segment, February 2010-March 2011
- Affluent segments heaviest users of internet websites
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- Figure 107: Visited websites in last 30 days, by mosaic segment, February 2010-March 2011
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- Figure 108: Used internet at home in last 7 days, by mosaic segment, April 2009-June 2010
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- Figure 109: Attitudes about the internet, percent agree, by mosaic segment, April 2009-June 2010
- Most are optimistic about coming year for finances
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- Figure 110: Economic outlook better/worse next 12 months, by mosaic segment, February 2010-March 2011
Appendix—Trade Associations
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