The Voice of The

Personal Lines Insurance Consumer

Insights from a Deloitte Survey

of Auto & Homeowners Policyholders:
Buyers in the Driver’s Seat

Sam Friedman, Insurance Leader,

Deloitte Research
Why do these surveys and why now?

– Auto and homeowners insurers are eager to find organic growth opportunities in a very
competitive market.

– Carriers challenged to effectively reach a new generation of consumers who are

increasingly seeking multi-channel and multi-platform sales and service options.

– Intelligence on buyer motivations and preferences can help insurers refine marketing
and distribution strategies.

1 Copyright © 2011 Deloitte Development LLC. All rights reserved.

Whom did we query and how?

• Deloitte survey participants were solicited from pre-screened online respondent

panels over the summer of 2011.
• Two separate respondent panels were assembled—about 1,100 each—among
buyers of homeowners and auto insurance.
• Each survey panel included statistically significant segment sizes within four
“core” demographic attributes: age, education, household income and family
status to provide a representative cross-section of the population.
• See the Appendix for a detailed demographic breakdown.

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How did personal lines respondents buy their insurance?

How did you purchase

your current auto insurance? How did you purchase
your current homeowners insurance?

5% 3%

49% 45%

49%
56%

Direct from Insurance Company Direct from insurance company

Agent or Broker Agent or Broker
Another Intermediary Another intermediary

• The homeowners respondents were more likely to have purchased their coverage through an agent,
broker or some other intermediary. The auto survey respondents were fairly well split between those
who used an agent and those who bought direct from a carrier.
• However, a deeper dive into the respondents’ awareness about how many carriers their agents
represented revealed a significant degree of consumer ignorance on that point. (See next slide.)

* Percentages for those that bought their current insurance adds to above 100%, as certain respondents have more than 1 insurer.

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For those with agents, how many personal lines insurers
did the buyer’s current agent represent?
How many auto insurers How many homeowner insurers
does your current agent represent? does your current agent represent?

30%
39% 38%
49%

21%
23%

Only my current insurer

Only my current insurer
Multiple insurers
Multiple insurers
I don’t know I don’t know

• Among the two samples who bought via agents, 30% of auto respondents and 39% of homeowners did
not know how many insurers their agent represented.
• Takeaway: This indicates that consumer loyalty to an agent likely goes beyond who the agent
represents, or even whether the agent is independent or exclusive to one carrier, with respondents
citing a number of value-added attributes that agents bring to the table.

* Percentages for those that bought their current insurance adds to above 100%, as certain respondents have more than 1 insurer.

4 Copyright © 2011 Deloitte Development LLC. All rights reserved.

Satisfaction Levels
Insurers keeping the customers satisfied!

Takeaway: Satisfaction levels with auto and homeowner policyholders ran fairly
high, particularly among auto respondents. But the numbers of those who
characterized themselves as “very satisfied” leaves a lot of room for improvement.

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Respondents happy with their agents as well
Takeaway: High satisfaction levels among auto and homeowner policyholders
with their agents could make it difficult to convince these respondents to
change channels and buy direct.

0%
Very dissatisfied
2%

2%
Dissatisfied
2%

10%
Neither satisfied nor dissatisfied
10%

41%
Satisfied
47%

47%
Very satisfied
40%

Auto Homeowners

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Channel Surfing
Personal lines buyers stick with agents for the long term
How long have you been doing business with your current insurance agency?
42%
39%

23% 24%

16%
13% 13% 13%
10%
8%

One year Two years 3-5 years 6-9 years More than 10 years

Auto Homeowners

Takeaway: Those insurers looking to sell direct only may have a hard time
convincing some people to drop their intermediaries, as a large percentage have
been with their agency for over a decade, demonstrating that many buyers will
insist on the personal touch and arguing for a multi-channel sales strategy.

9 Copyright © 2011 Deloitte Development LLC. All rights reserved.

Why use an independent agent?

Price Objectivity

Trust Advocacy/
Leverage
What factors motivate buyers to
do business with independent agents?
Diversity of Consultative
Options Role

Those respondents who use independent agents value having an intermediary providing
multiple alternatives and a broader perspective, and feel most strongly about what an agent
can provide in terms of price, advice and service.

10 Copyright © 2011 Deloitte Development LLC. All rights reserved.

 Are Personal Lines buyers open to changing channels?
Direct Buyers
Auto: 70% 30%

Home: 61% 39%

Repeat Buyers (Would prefer to keep buying direct without an agent or other intermediary)
Channel Changers (Would prefer to buy with an agent or other intermediary next time)

Agent Buyers

Auto: 24% 56% 20%

Home: 20% 60% 20%

Hardcore (Unwilling to buy without an agent under any circumstances)

Repeat Buyers (Would prefer to keep buying via an agent or other intermediary)
Channel Changers (Would prefer to buy direct without an agent or other intermediary)

Takeaways
• A significant percentage of consumers are not satisfied with the direct experience.
• Agents appear to be better at creating a consistently positive buying experience.
• Both sets of "channel changers" had the same demographic profile: Skewing older,
11
with lower income and less education. Copyright © 2011 Deloitte Development LLC. All rights reserved.
Money Talks:
How much would it take to convince respondents to give
up their agents?

24%
23%
22%
21%
20%
19%

16%
16%
15%
14%

6%
5%

1-5% 6-10% 11-15% 16-20% Over 20% None, I would not buy
insurance without an
agent or intermediary
Auto Homeowners

• Takeaway: Those who buy their insurance through intermediaries generally

won’t give up their agent without a substantial discount, and there is a hardcore
group of consumers who apparently won’t buy auto or homeowners insurance
without the help of an intermediary.
12 Copyright © 2011 Deloitte Development LLC. All rights reserved.
Why do direct buyers prefer working without an agent?

• Cost and convenience were major considerations for respondents who

bought direct.
– Around 60% said intermediaries just add cost to the transaction.
– About 2 out of 3 believe buying direct would get them a better price.
– 3 out of 4 say it’s more convenient to buy direct.

• Trust is also a relevant factor.

– 4 of 10 said they bought direct because they don’t trust agents to objectively represent
their interests. (The flip side of those who say they use agents because they don’t trust
insurers to deal with them fairly. Either way, overcoming trust issues is a serious
reputational challenge facing the industry.)

• Age makes a big difference.

– Younger respondents appear more likely to buy direct, perhaps in part because of their
generation’s proclivity to live their social lives and conduct their business online.

13 Copyright © 2011 Deloitte Development LLC. All rights reserved.

The Fountain Of Youth
Can insurers bridge the generation gap?

Age was the biggest single differentiator among survey respondents.

Younger personal lines consumers were:
• Least inclined to renew their current policies by about a
2-1 margin.
• More likely to shop and change carriers.
• More likely to buy direct from the insurer.
• Less loyal to their agents, if they used one.
• More convinced that agents could get them a better price.
• More tech-friendly in terms of web-based services,
mobile apps and social media.
• Much less trustful of insurance companies.
• More influenced by family and friends than by
insurance professionals.
• Lesson: Get ‘em while they’re young!

15 Copyright © 2011 Deloitte Development LLC. All rights reserved.

Younger respondents
more likely to go direct

• Younger consumers in both samples bought

direct at a higher rate (6 in 10 among those
under 35, compared to 4 in 10 for those 35 and
older).

• Of those over 50, 59% are very satisfied with

their current auto agent, but that drops to 43%
for those 26-34 and to 31% for those under 26.

• Among homeowners, 46% of those over 50 are

very satisfied with their agent, dropping to 31%
for those 26-34 and 25% for those under 26.

• Of those over 50, more than 1 in 3 in both samples

said they would not buy personal lines insurance
without an agent, compared to fewer than 1 in 5 for
those 34-50, only 1 in 10 for those 26–34, and 15%
of those under 26.

16 Copyright © 2011 Deloitte Development LLC. All rights reserved.

How can insurers attract the young and the restless?

Multiple
communication
options

More mobile Recommendations

applications on social media
Important
Factors For
Younger
Customers

Better online User-friendly

services website

17 Copyright © 2011 Deloitte Development LLC. All rights reserved.

Decision Points
What motivates buyers to change carriers?

• Price is still key, with 8 of 10 citing cost as

Influential the last time they changed carriers,
although far fewer said it would be influential in
their next purchase decision.
• Amount & type of coverage a clear second.
• Claims handling critical—1 in 3 changed carriers
after a bad claims experience.
• Many would be swayed by multi-policy discounts.
• Brand, reputation and trust were key factors.
• 4 in 10 would be influenced by an affiliation
between their bank and their insurer.
• 1 in 4 said a recommendation from their auto
dealer or real estate broker would be influential.

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Telematics: Only if the price is right
How much of a discount would auto respondents require to install a telematic
device to monitor their driving experience?
Over 20% 47%

16-20% 22%

11-15% 17%

6-10% 11%

1-5% 2% Auto

Takeaways
• One-third of respondents would agree to install such a device without any guarantee of
a discount, but 42% would require an immediate discount (see above).
• Auto insurers will have to sweeten the pot up front to convince many policyholders to try
the new tracking system, which in theory would reward those with the safest records.
• There is a generation gap here as well, but in this instance it is older drivers who would
be more open to telematic monitoring, not younger policyholders.
20 Copyright © 2011 Deloitte Development LLC. All rights reserved.
 The more policies the merrier
How much influence would getting a discount for buying both
auto and home insurance from the same carrier have on respondents?*

Auto 17% 21% 19% 10% 34%

Homeowners 28% 30% 18% 8% 17%

Extremely influential Very influential Somewhat influential Not very influential Not at all influential

Takeaways
• Multi-line insurers have an opportunity to cross-sell their products, particularly in marketing
auto coverage to homeowners, who place a much higher value on multi-policy discounts
than among auto insureds.
• This makes sense because homeowners most likely own a car as well, while not all drivers
necessarily own a home.
*Figures are for respondents who have switched insurers in the past. The base is 591 respondents for Homeowners and
754 respondents for Auto.
21 Copyright © 2011 Deloitte Development LLC. All rights reserved.
What Web Services
Do Respondents Want Most?

• Among the most important web services (cited by nearly 3

of 4 respondents) were checking on the status of a claim,
Tier 1
information about products and coverage, and price
quotes.

• The next tier of responses (cited by about 2 of 3) were for

renewing a policy, updating account information, locating
Tier 2 an insurer-approved repair facility, paying your bill,
contacting your agent or finding one nearby, and
submitting a claim.

• Services cited by the third tier (more than half) of

respondents were insurance card access and policy
Tier 3
information, cancelling a policy, and getting information on
coverage besides auto.

• Among the web capabilities cited as important by fewer

than half the respondents were the ability to share
accident or claims experiences with other policyholders,
Tier 4
view safety and maintenance videos, clarify coverage or
claims questions in an online chat, and having a mobile
smartphone friendly website.

22 Copyright © 2011 Deloitte Development LLC. All rights reserved.

Mobile Not Yet On The Radar
(But those respondents who have them, like them)

How useful have mobile smartphone applications been (among

the 10% who say their carriers offer them)?

31% 30%

26%

8%
5%

Extremely useful Very useful Somewhat useful Not very useful Not at all useful

Takeaways:

Three out of four survey respondents don’t even know whether their insurer offers
mobile applications. But those who do find them very useful—younger buyers in
particular like them.

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Social media also in its infancy

• Only 1 in 5 surveyed said their auto insurer provides information over social
media.
– Of those who do get auto information that way, 1 in 5 said such information is not at
all useful.

• But 1 in 4 found such information very useful and 13% found it extremely useful.
– Age once again is a significant factor here with the youngest two segments much more
positive about the value of information provided over social media by insurers.

24 Copyright © 2011 Deloitte Development LLC. All rights reserved.

Growth Strategies To Consider
What are the implications for insurer growth strategies?
•Build brand loyalty with target customers while they are young.
•Containing costs matters with product becoming increasingly commoditized.
•Multi-channel sales and service is becoming table stakes for large, national
players.
•Invest in ability to engage with customers virtually (e.g., web, mobile and social
media) for both sales and service.
•Buying direct is not for everyone. Agents will continue to play a major role and
stand out for their ability to generate loyalty.
•Between 20% and 40% of consumers (depending on line of business and current
channel) are flexible in terms of their channel preferences.

26 Copyright © 2011 Deloitte Development LLC. All rights reserved.

Strategies for Direct-Only Organizations

• Lower cost structure

Advantages • Natural appeal to younger, online-savvy consumers
• Flexible to more rapidly adapt to consumer feedback

• Retaining price-sensitive consumers

Challenges • Retaining consumers as their coverage needs become more complex
• Avoiding commoditization

• Build brand awareness and credibility on their social media platforms

Potential Growth • Strengthen ability to provide advice for those customers who need it
Strategies • Strengthen loyalty by offering more products, a strong service experience and
value-added services

27 Copyright © 2011 Deloitte Development LLC. All rights reserved.

Strategies for Multi-Channel Organizations

• Ability to appeal to customers regardless of their channel preference

Advantages • Tailoring product/channel/service mix to target customer segments
• Retaining customers as their need for advice and coverage evolves over time

• Building an effective and efficient multi-channel model

• Effectively transitioning consumers to high-touch channels as their needs
Challenges
become more complex
• Tailoring product/channel/service mix to target customer segments

• Develop a differentiated sales and service experience across channels

Potential Growth
• Strengthen pricing sophistication
Strategies
• Tailor product portfolio to appeal to target segments

28 Copyright © 2011 Deloitte Development LLC. All rights reserved.

Strategies for Agent-Only Organizations

• Superior ability to build trust and loyalty, leading to better retention

Advantages • Ability to offer a diverse product portfolio
• Ability to deliver a differentiated service experience

• Customer’s loyalty to the agent versus the insurer

Challenges • Higher cost model; channel productivity (exclusive)
• Ability to consistently deliver the brand promise (independent)

• Focus on industry leading retention of existing customers

Potential Growth • Target direct consumers who want and need more advice as their coverage
Strategies needs become more complex
• Consider offering telematics-based products to price-sensitive consumers

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Appendix
Personal Lines Insurance: Whom did we survey?

Age Household Income

65+
17% Over $250K 2%
18% 5%

51-64 $125K-$250K
7% 13%
20% 21%

$75K-$125K 12% 26%

35-50
32% 31%

$50K-$75K 20%
18%
26-34
17%
17%
25%
$25K-$50K 32%
18-25
13%
14%
11%
Below $25K 29%

Auto Homeowners Auto Homeowners

Homeowners had higher household income than auto policyholders surveyed.

Source: Voice of the Personal Lines Insurance Consumer Surveys, Deloitte Research, June/July 2011
31 Copyright © 2011 Deloitte Development LLC. All rights reserved.
 Personal Lines Insurance: Whom did we survey?

Education Family Status

Single 48% 29%

Post-graduate 14% 18%

Married/Committed
40% 63%

Four-year college Widowed/Separated 12% 9%

26% 31%

Less than four-

year college 65%
61%
No Dependents
60% 51%

Dependents 35% 39%

Auto Homeowners Auto Homeowners

Homeowners were more likely to be married than auto policyholders.

Source: Voice of the Personal Lines Insurance Consumer Surveys, Deloitte Research, June/July 2011
32 Copyright © 2011 Deloitte Development LLC. All rights reserved.
Contact

Sam Friedman
Insurance Leader
Deloitte Research
+1 212 436 5521
samfriedman@deloitte.com

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