Friday, March 9, 2018

Three Consumer Trends Impacting the Auto and Home Insurance Industry

As technology and connectivity continue to transform the daily lives and shopping behaviors of consumers, we need to be focused on what Farnaz Wallace, founder of the strategic consulting firm Farnaz Global, calls the “New World Marketplace.” 1

As Baby Boomers and Generation X age out, the millennials who grew up with mobile technology are going to drive market behavior. While they are currently only 25 percent of the population, millennials are projected to make up 75 percent of the population in 2025. For them, 24/7 service is the norm, online reviews carry significant weight and interaction with brands on social media is an everyday occurrence.

This “New World Marketplace” has paved the way for a host of new trends that are shaping the insurance industry—not only the products themselves, but the way consumers shop for them. Here is a snapshot of three consumer trends impacting the A&H industry in 2018:

1. Continued direct channel growth.
While direct channels have been steadily growing over a period of years, without a doubt this continued trend demands our ongoing attention. The rapid and continued rise of direct channels is being driven by consumers’ desires to instantly fulfill their needs, mostly due to access to smartphones. Today, 77 percent of adults in the United States use a smartphone, a significant increase from just 35 percent in 2011.2

2. The prevalence of web and mobile as a research platform.
Seventy four percent of insurance shoppers research online before they buy, but only 25 percent actually purchase online.3 This gap signifies an opportunity for credit unions not just to close the deal but to improve the impression shoppers are getting from their experience. Even when just checking prices, consumers are absorbing an abundance of other information—everything from how your navigation works to the availability of customer service and support—that will eventually inform purchase decisions.

3. A continued desire to shop around.
Statistics show most consumers saw a cost increase of about 8 percent in 2017,4 and that price is the number one factor that drives people to research and shop insurance options. With additional cost increases projected for 2018, and the comparison shopping that will inevitably follow, how will you package your products to be value-forward

When it comes to insurance, the bigger question for credit unions is how they will serve this New World Marketplace by transforming their offerings, service and online experience to meet the consumer expectations and demands of 2018 and beyond.

For more information about auto and home insurance trends to watch, download our infographic.

1.     Andy Serowitz,, “Demographics and P&C Insurance” February 15, 2016.
2.     Pew Research Center, “Record shares of Americans now own smartphones, have home broadband,” January 12, 2017.
3.     J.D. Power, “2016 U.S. Insurance Shopping Study: Insurers Lean on Online Presence to Grow Premiums,” May 1, 2016.
4., “Car Insurance Buying Guide: Finding the Policy That’s Best for You,” October 2017.