High satisfaction levels and renewal inertia pose stiff challenges to auto and home carriers looking to grow organically, Deloitte found in its recent survey project, “The Voice of the Personal Lines Insurance Consumer.”
Indeed, nearly one-quarter of the 1,080 auto policyholders responding to a Deloitte Research survey said they never shop for alternatives to their current insurance at renewal, while another third rarely do so. Only 16 percent shop every few years, while one in 10 shops every other year, and fewer than one in five do so annually.
The challenge to convince policyholders to change carriers is even greater in the homeowner's market, where only one in 10 of the 1,080 policyholders queried in a separate online survey said they shop annually, while another 10 percent do so every other year. A little over one in four said they never shop for a new homeowner's policy at renewal, and one-third rarely do.
This certainly helps explain the staying power of the buyers in these survey samples, although auto policyholders were more likely to change carriers than were homeowner insureds. Among the respondents, nearly half of homeowners said they had never switched carriers, compared to 30 percent of auto policyholders. About one-third of each sample changed carriers more than three years ago. Only one-quarter of auto consumers had signed with a new carrier within the last two years, including 14 percent in the prior 12 months.
But among homeowner respondents, even fewer—one in 10—reported a change in insurer over the past year, while another 10 percent had changed in the past 12-24 months.
Sky-high satisfaction levels among these survey samples likely is a prime reason for the lack of movement among the consumers polled. In terms of price (the most important factor for the vast majority of buyers surveyed), 37 percent of auto consumers reported being very satisfied with what they are paying for coverage, while 43 percent were at least satisfied. Only a handful of those surveyed said they were either dissatisfied (6 percent) or very dissatisfied (1 percent). The rest were neither satisfied nor dissatisfied. Results among homeowner respondents were similar.
The two samples produced even higher satisfaction rates regarding the service they receive from their insurance carriers—with 87 percent of auto consumers and 82 percent of homeowners reporting they are at least 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 explain the fact that the vast majority of both sets of respondents expected to renew with their current carriers. About 90 percent of auto policyholders said they anticipated staying 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.
At first blush, their customers' high satisfaction levels with their current carriers and a general lack of initiative when it comes to seeking out alternative sources of coverage might make it difficult for personal-lines insurers to take business away from their rivals, at least among those in these two survey samples.
However, as I'll document in my next blog on these surveys later this month, not all consumers are created equal. There are policyholders who do put their business into play more routinely and who are more open to a change at renewal time.
Indeed, the surveys revealed a big generation gap among personal-lines buyers, as the “young and the restless”—respondents who were under 35, and especially those under 26—are far less securely tied to their carriers and agents (if they even use one), while also being far more demanding in terms of the tech capabilities they consider table stakes for insurers seeking their business.
(We welcome your feedback and questions throughout this series of reports. You may download the complete report on “The Voice of the Personal Lines Insurance Consumer” from Deloitte Research.)
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