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Property and Casualty Insurance - US - January 2017

OVERVIEW
What you need to know
Definition
EXECUTIVE SUMMARY
The issues
Mobile is not being used
Figure 1: Use of mobile apps, October 2016
Figure 2: GEICO garage email ad, 2016
Consumers need help understanding their policies
Figure 3: Understanding of policy, by generation, October 2016
Few would recommend their insurance provider
Figure 4: Understanding of policy, by gender and age, October 2016
The opportunities
Few Millennials are confident they have the right insurance
Figure 5: Believe they have the right insurance, by generation, October 2016
Reaching Hispanics with agents
Figure 6: Attitudes toward insurance and insurance providers, by Hispanic origin and generation, October 2016
Education can be a differentiating factor
Figure 7: Attitudes toward insurance and insurance providers, by gender, October 2016
Most are satisfied with their providers, but few would recommend
Figure 8: Attitudes toward insurance and insurance providers, by generation, October 2016
Bundled products appeal to women
Figure 9: Factors in choice of policy, by gender, October 2016
What it means
THE MARKET – WHAT YOU NEED TO KNOW
Industry financials show a mixed bag
Unemployment is still low
Continued development of self-driving cars
More driving means more crashes
New home sales are increasing
MARKET SIZE
Industry Financials
Figure 10: Industry financials, H1 2015 vs H1 2016 (in billions)
Premiums
Figure 11: Net written premiums, 2006-15
Top ten writers of P&C insurance
Figure 12: Top ten writers of property and casualty insurance, by direct premiums written, 2015
MARKET BREAKDOWN
Auto insurance industry is being challenged
Figure 13: Incurred losses for auto insurance*, 2011-15, (000s)
Top ten writers of private passenger auto insurance
Figure 14: Top ten writers of private passenger auto insurance, by direct written premiums, 2015
Homeowner premiums increase while renters premiums go down
Figure 15: Average premiums for homeowners and renters, US, 2004-13
Top ten writers of homeowners insurance
Figure 16: Top ten writers of homeowners insurance, by direct premiums written, 2015
MARKET FACTORS
Unemployment is still low
Figure 17: Unemployment rate, January 2012-October 2016
Self-driving cars
More driving, more crashes
Figure 18: Number of crashes, 2005-14
New home sales are increasing
Figure 19: New home sales (seasonally adjusted), Sept. 2015-Sept. 2016
KEY PLAYERS – WHAT YOU NEED TO KNOW
Drones
Telematics
The “sharing economy” is a challenge
Appealing to Millennials
Verifly – Insurance for drones
What happened to privacy concerns?
WHAT’S WORKING?
Drones
Figure 20: Reason for switching insurers, by household income, October 2016
Telematics
Figure 21: Interest in new products and services, by generation, January 2015
Figure 22: Progressive Snapshot ads, 2016
WHAT’S STRUGGLING?
The “sharing economy” is a challenge
Figure 23: Allstate email ad, 2015
WHAT’S NEXT?
Targeting Millennials
Root – One-stop car insurance shopping
Lemonade – Peer-to-peer insurance
Meet Margo
Slice – For home sharing hosts
Verifly – Insurance for drones
Using social media to reduce premiums – but what about privacy?
Will auto insurers sell the data they collect?
P&C INSURANCE EMAIL PERFORMANCE
USAA is the most frequent emailer
Figure 24: Volume of marketing emails delivered, June 1, 2016-November 30, 2016
Figure 25: Average email read rate by select companies, June 1, 2016-November 30, 2016
What gets read the most?
Figure 26: USAA email: “Hurricane Matthew,” projected volume 422,000
THE CONSUMER – WHAT YOU NEED TO KNOW
Most consumers have at least one property and casualty policy
Switching behaviors vary with consumer segment and type of insurance
Price is primary switching motivator
Most prefer to communicate via phone
Cost is most important
Young consumers more likely to use mobile
Most have positive attitude about own provider
Agents are important to Hispanics and parents
INSURANCE OWNERSHIP
Most consumers have at least one property and casualty policy
Figure 27: Insurance ownership, by generation, October 2016
SWITCHING BEHAVIORS
Auto
Male auto insurance owners are more likely to switch
Figure 28: Auto switching behavior, by gender, October 2016
Millennials are most likely to switch
Figure 29: Auto insurance switching plans, by generation, October 2016
Hispanic customers at risk of switching
Figure 30: Auto insurance switching plans, by Hispanic origin, October 2016
Homeowners
Men more likely to switch
Figure 31: Homeowners insurance switching plans, by gender, October 2016
Parents more likely to switch homeowners insurance
Figure 32: Homeowners insurance switching plans, by parental status, October 2016
Urban dwellers are switching
Figure 33: Homeowners insurance switching plans, by area, October 2016
Renters
Figure 34: Renters insurance switching plans, by generation, October 2016
Higher-income renters are switching
Figure 35: Renters insurance switching plans, by household income, October 2016
REASONS FOR SWITCHING
Price is key
Figure 36: Reasons for switching, October 2016
Increasing prices at renewal chases older consumers away
Figure 37: Reasons for switching, by generation, October 2016
Renters insurance owners more likely to value digital capabilities
Figure 38: Reasons for switching, by insurance ownership, October 2016
Price is most important to lowest income
Figure 39: Reasons for switching, by household income, October 2016
Renters insurance owners more likely to switch for better technology
Figure 40: Reasons for switching, by insurance ownership, October 2016
Figure 41: Farmers Insurance email “Three suggested actions prior to your renewal,” projected volume 732,000
COMMUNICATION PREFERENCES
Phone is preferred
Figure 42: Communication preferences, October 2016
Personal phone contact is more important than electronic contact
Figure 43: Communication preferences, by attitudes toward insurance and insurance companies, October 2016
FACTORS IN PROVIDER CHOICE
Cost is most important
Figure 44: Factors in choice of policy, October 2016
Women more likely to look at cost
Figure 45: Factors in choice of policy, by gender, October 2016
Technology and accessibility more important to Hispanics than to non-Hispanics
Figure 46: Factors in choice of policy, by Hispanic origin, October 2016
Income influences choice
Figure 47: Factors in choice of policy, by household income, October 2016
USE OF MOBILE APPS
Renters insurance owners more likely to use mobile
Figure 48: Mobile purchase and filing behavior, by insurance ownership, October 2016
Men are more likely to use insurance mobile apps
Figure 49: Use of mobile apps, by gender, October 2016
Millennials most likely to access policies through mobile apps
Figure 50: Use of mobile apps, by generation, October 2016
Mobile purchasing and filing behaviors
Millennials are more likely than older consumers to purchase policies via mobile app
Figure 51: Mobile purchase and filing behavior, by generation, October 2016
Hispanics are more likely to buy via mobile device
Figure 52: Mobile purchase and filing behavior, by Hispanic origin, October 2016
Parents like to purchase via mobile apps
Figure 53: Mobile purchase and filing behavior, by parental status, October 2016
ATTITUDES TOWARD INSURANCE AND INSURANCE COMPANIES
Renters insurance owners most likely to understand products
Figure 54: Attitudes toward insurance and insurance companies, by insurance ownership, October 2016
Satisfaction and trust in own provider are high
Figure 55: Attitude toward insurance and insurance companies, by insurance ownership, October 2016
Millennials are most positive about the industry
Figure 56: Attitudes toward insurance and insurance companies, by generation, October 2016
Agents are important to Hispanics
Figure 57: Attitudes toward insurance and insurance companies, by Hispanic origin, October 2016
Agents need to address parents
Figure 58: Attitudes toward insurance and insurance companies, by parental status, October 2016
Women need more education about insurance
Figure 59: Attitudes toward insurance and insurance companies, by gender, October 2016
How important is price?
Figure 60: Attitudes toward insurance and insurance companies, by generation, October 2016
Reputation is less important to lower-income consumers
Figure 61: Attitudes toward insurance and insurance companies, by household income, October 2016
CLUSTER ANALYSIS
Figure 62: Insurance owner clusters, October 2016
Cluster 1: Industry Loyalists
Demographics
Characteristics
Opportunity
Cluster 2: Independents
Demographics
Characteristics
Opportunity
Cluster 3: Satisfied Skeptics
Demographics
Characteristics
Opportunity
Cluster 4: Provider Loyalists
Demographics
Characteristics
Opportunity
Cluster 5: Dissatisfied Doubters
Demographics
Characteristics
Opportunity
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Sales data
Consumer survey data
Direct marketing creative
Email creative
Abbreviations and terms
Abbreviations
Terms

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