Insurance company ratings agency A.M. Best Co. says it is increasingly looking at auto insurers' distribution management practices when rating.
“Companies that can demonstrate defensible and sustainable competitive advantages—such as control over distribution, multiple distribution channels, low-cost structure, and the effective utilization of technology—are likely to be viewed favorable from a rating perspective,” A.M. Best states in a special report on the U.S. auto insurance market.
Clearly, the use of technology plays a large role in an insurer’s grasp of and flexibility to adapt to the market.
Insurers are using technology to distribute auto products directly and through multiple channels, as well as to strengthen singular distribution channels, according to A.M. Best.
The ratings agency notes consumers are increasingly at least using the Internet to shop and gather information about the auto-insurance purchase. Moreover, policies purchased online have risen steadily since 2004.
“The direct channel’s rise has been driven by aggressive marketing, competitive pricing, user-friendly online tools and innovative technologies, all of which can be funded with money once earmarked for agent commissions,” says A.M. Best.
In terms of market share, the top 10 private passenger auto writers haven’t changed in a decade but the share by the top two—State Farm (19.3 percent) and Allstate (10.7 percent)—has declined.
However, the order of the top 10 carriers has changed since 2002. Berkshire Hathaway’s Geico moved from 6 to 3. Progressive’s rank of 4 remained unchanged but its market share improved to 8.4 percent in 2012 from 5.8 percent in 2002.
The market share of the top 10 carriers increased to 69.8 percent from 58.8 percent in 2002.
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
