You're walking down the aisles of your favorite discount store. You stop in the auto department to pick up a few bottles of 10W-40 oil. You go over to housewares, because your wife wants you to get some of those plastic containers—you know, the kind that look like Tupperware but are a lot cheaper. You see that jars of mixed nuts are on sale, so you throw one in the cart.
Then you pass by this shelf next to the DVDs that says “Insurance.” You think to yourself, “I need coverage for my business,” so you take a box marked “BOP” and throw is in your cart next to the mixed nuts. You're about to leave, but then you think, “Maybe I need some cyber liability, too.” You toss another box in the cart. It lands on the oil.
What's wrong with this picture? Everything, because contrary to the claims of those who try to market insurance as a commodity, consumers don't see it that way. They know that insurance is a contract to protect people and their property, and a promise to be made whole in the event of a loss. It's not something that can be found in a box next to the canned tomatoes.
Insurance is serious business. It is not “stuff.”
Our own research by The PIA Partnership found that insurance consumers want a relationship. They want what Professional Insurance Agents offer. Since our findings, others have conducted research and came to similar conclusions:
- The Hanover Insurance Group found that nearly 60% of consumers who had purchased insurance through a direct channel 10 or more years ago reported switching back to an independent agent because they wanted more value.
- Ernst & Young found that consumers do not want to do all their insurance shopping online, and they care about more than just price.
- Conning & Co. found that 12 of 18 personal lines insurers that have outperformed their peers in both growth and profitability over the past decade use the independent agency distribution channel, either in whole or in part.
- The TransUnion Auto Insurance Shopping Index reported that online shopping rates for auto insurance were down about 3% in the 12 months ending February 2014, relative to a year earlier.
Recently, the CEO of one of the strategic partners who is helping a big online retailer market auto insurance was quoted as saying, “Consumers don't want a relationship with an agent or even a carrier,” and “The consumer is looking for a store or aisle in a store where the shelves are stuffed with every risk management product they need.”
They can stuff their shelves with whatever they want. If you look at the facts as opposed to the hype, consumers want a relationship. Statements to the contrary come from our competitors. What would we expect them to say?
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