Property & Casualty Insurance - US - April 2021

OVERVIEW
What you need to know
Key issues covered in this Report
Definition
COVID-19: market context
Economic and other assumptions
EXECUTIVE SUMMARY 
Top takeaways 
Ideal P&amp;C insurers in the next normal will provide value through personalized offerings, digital solutions and exemplary customer service 
Providers should reward loyalty in a high-switching marketplace 
Figure 1: Top causes of P&C insurance switching, January 2021
Digital is a key differentiator when seeking the business of young consumers 
Figure 2: Usage of mobile capabilities through P&C provider, by generation, January 2021
Market overview 
Impact of COVID-19 on property and casualty insurance
Figure 3: Short-, medium- and long-term impact of COVID-19 on property and casualty insurance, April 2021
Opportunities and challenges  
While low prices are king, a customer-centric approach should be critical
Innovation is no longer an option, but a necessity for P&amp;C insurers
Continue leveraging smart partnerships that provide value for consumers
Figure 4: Hippo partners with Xfinity, June 2019
THE MARKET – KEY TAKEAWAYS 
Net premiums written grew by 3.5%, totaling $634 billion for the P&amp;C insurance industry 
State Farm remains the biggest P&amp;C insurer, with a 9% market share
Homeowners insurance premiums continued growing, as renters stagnated 
Consumers are continuing to drive more – Another good sign for auto insurers
MARKET SIZE  
Net premiums written grew by 3.5%, totaling $634 billion for the P&amp;C insurance industry 
Figure 5: P&C insurance industry income analysis, in current dollars, 2015-19
State Farm remains the biggest P&amp;C insurer, with a 9% market share
Figure 6: Top 10 writers of property and casualty insurance, by direct premiums written, 2020
Homeowners insurance premiums continued growing, as renters stagnated 
Figure 7: Average premiums for homeowners and renters insurance, in current dollars, 2008-18
Consumers pay over $1,000 a year for auto insurance
Figure 8: Average auto insurance expenditures, in current dollars, 2008-18
Impact of COVID-19 on property and casualty insurance
Figure 9: Short-, medium- and long-term impact of COVID-19 on property and casualty insurance, April 2021
Lockdown
Reemergence
Recovery
COVID-19: US context
Learnings from the last recession
MARKET FACTORS 
Lower unemployment rates mean more confident consumers
Figure 10: Consumer confidence and unemployment, 2000-January 2021
Consumers are continuing to drive more – Another good sign for auto insurers
Figure 11: Seasonally adjusted vehicle miles traveled by month, January 2015-January 2021
Climate change remains a long-term threat to P&C insurers
MARKET OPPORTUNITIES 
Being open to more partnerships can further P&amp;C brands’ digital footprint
Figure 12: Usage of mobile capabilities through P&C provider, by generation, January 2021
Parametric policies could help mitigate climate risk
P&amp;C insurers should look to target the growing homesharing market
Figure 13: App usage and interest in past year, January 2021
COMPANIES AND BRANDS – KEY TAKEAWAYS 
USAA collaborates with State Farm to settle subrogation claims via blockchain
Metromile continues to find its niche in the pay-per-mile space, but competition could spell trouble
Figure 14: Metromile direct mail, December 2019
Liberty Mutual uses AI to prevent workplace injuries through its ErgoValuatorTM app
Figure 15: Liberty Mutual’s ErgoValuatorTM, November 2020
COMPETITIVE STRATEGIES
Embracing innovative technologies will set apart P&amp;C insurers in the future
Metromile teams up with Ford for easier access to usage-based insurance
Figure 16: Ford partners with Metromile, September 2020
Lemonade uses AI to power its focus on speed and simplicity
Figure 17: Lemonade, Get insurance in 90 seconds with Lemonade’s app, July 2018
AmFam’s KnowYourDrive incentivizes safe driving with behavioral-based telematics
Figure 18: American Family Insurance, KnowYourDrive, March 2021
THE CONSUMER – KEY TAKEAWAYS  
Majority of consumers own one P&amp;C policy, with auto insurance the most popular one
Over half still prefer to bundle their policies with one insurer 
Consumers still focus on price – Providers need to change the conversation to focus on value
Customer service still matters
A third of Millennials would pay more for a policy if the company had a great reputation
WHAT THE FUTURE HOLDS FOR P&C CUSTOMERS 
Consumers will be looking for more flexible auto coverage
Home insurers should check in with customers considering renovating their homes
Renters could look to transition into homeownership to take advantage of the current low-rate environment
INSURANCE OWNERSHIP
Majority of consumers own one P&amp;C policy, with auto insurance the most popular one
Figure 19: Current property and casualty insurance ownership, January 2021
Gen Zers and Millennials are less likely to own auto and homeowners policies
Figure 20: Current property and casualty insurance ownership, by generation, January 2021
BUNDLING HABITS
Over half still prefer to bundle their policies with one insurer
Figure 21: Bundling behaviors in the past two years, January 2020 and January 2021
Gen Zers and Millennials are the least loyal to their providers
Figure 22: Bundling behaviors, by generation, January 2021
Renters policyholders are more likely to be with different companies compared to auto and homeowner policyholders
Figure 23: Bundling practices, by P&C policy type, January 2021
Figure 24: Progressive renters insurance email, January 2021
SWITCHING BEHAVIORS
Auto
Nearly a quarter of consumers have switched policies in the last two years
Figure 25: Likelihood to switch auto policies, January 2021
Millennials are most frequent auto insurance switchers
Figure 26: Likelihood to switch auto policies, by generation, January 2021
Home
Switching a homeowners policy is the least common across P&C insurance
Figure 27: Likelihood to switch home or condo policies, January 2021
Millennials are more willing to switch their homeowners policy if it means better value
Figure 28: Likelihood to switch home or condo policies, by generation, January 2021
Renters
A third of renters have switched in the past two years
Figure 29: Likelihood to switch renters policies, January 2021
ATTITUDES TOWARD SWITCHING PROVIDERS 
Consumers still focus on price – Providers need to change the conversation to focus on value
Figure 30: Top causes of P&C insurance switching, January 2021
COVID-19 changed driving habits – But not significantly
Figure 31: Top causes of P&C insurance switching, January 2021
COVID-19 has made consumers embrace digital when it comes to their insurance
Figure 32: Usage of mobile capabilities through P&C provider in the past two years, January 2021
Gen Zers and Millennials prefer a mobile app experience
Figure 33: Usage of mobile capabilities through P&C provider, by generation, January 2021
PURCHASING BEHAVIORS
Consumers still prefer traditional ways of buying P&C insurance
Figure 34: Interest in using nontraditional companies or payment methods, January 2021
Younger consumers are more open to nontraditional providers
Figure 35: Interest in using nontraditional companies or payment methods, by generation, January 2021
Gen Zers and Millennials most interested in usage-based insurance
Figure 36: Interest in usage-based insurance, by generation, January 2021
…yet they remain skeptical about sharing data with their insurers
Figure 37: Interest in sharing home or auto data for discounts, by generation, January 2021
PERSONAL DATA AND TELEMATICS
A third of consumers would share their data to get a policy discount
Figure 38: Interest in telematics or smart home technology, January 2021
Almost 30% of consumers would use smart technology to protect their property
Figure 39: Travelers teams up with Amazon, October 2018
FACTORS WHEN CHOOSING A P&C INSURER
Quality customer service remains a key factor for 61% of consumers
Figure 40: Top factors when choosing a P&C insurer, January 2021
Figure 41: Top factors when choosing a P&C insurer, by generation, January 2021
Digital capabilities are a low priority when choosing an insurer
Figure 42: Importance of digital capabilities through P&C provider, by generation, January 2021
Nearly half of consumers look for bundling discounts from an insurer
Figure 43: Importance of discounts through P&C provider, by generation, January 2021
35% of consumers acknowledged receiving credit from their insurers during the pandemic
Figure 44: Knowledge of receiving a credit from P&C insurer during COVID-19, January 2021
A third of Millennials would pay more for a policy if the company had a great reputation
Figure 45: Attitudes toward P&C insurers, by generation, January 2021
Figure 46: P&C insurers’ share of social spend, January 2021
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Consumer survey data
Direct marketing creative
Abbreviations and terms
Abbreviations
Terms