Insurance Journal Forums

Do you guys think that the profile of internet insurance shoppers reflects that of the public at large?

I don't think it's the majority yet....but I do think it's growing rapidly.

If you look at the tv ads for a firm like eSurance, they're promoting that you can either obtain coverage online, or talk to a real person. The reality is, when you have a claim, you want to be able to interact with a real human, not a keyboard.

Additonally, one of the big downsides of purchasing insurance online, is that the client isn't receiving sound guidance as to the amount/type of coverage that they actually need. We (I work for a major hospital system) have had a couple of vendors that purchased their business insurance online. In all cases, they had inadequate limits, and in fact didn't have the right coverages for what their exposures were (i.e. having an E&O exposure and no coverage for it.

This was discussed here a few months ago.

There will always be two types of insurance buyer.
Those that only care about having the minimum coverage required to be legal at the absolute lowest premiums or those that are concerned that they are properly covered.

The strong majority of people know nothing about insurance and the majority of the ones that are concerned about being covered will seek out an agent.

Are we discussing shoppers or buyers?

Shoppers I think just bounce around until they find what makes sense to them....then only about 5% of the time they will actually pull the trigger & purchase. Shoppers will probably bounce again in 6 months....or at least once a year.

Buyer's are a little different... and especially if you want to pick up that 95% of the internet shopper that doesn't pull the trigger from shopping online. Internet Buyer's can now buy from local agents through the internet & the trend is growing because the local agents can pretty much beat the price of those internet shoppers in every case.

I do think that the majority of people still want to speak with an agent because they just don't want to know about insurance....they just know they have to have it. Kind of like taxes... I mean TurboTax came out years ago....but I still go to my tax guy.

So I guess that's why I ask...shopper or buyer? Tools are now available so you can make it more convenient for your customers to make use of the internet without having them fly blind & choose a program that just isn't going to work for them. So Internet 'Buying' is definately up using the local agencies...but I don't believe it's up with the 'quote/buy/print' method.

The question was about shoppers - consumers that get a quote, regardless of whether they purchase or not.

I think the profile for buyers is much clearer than that of shoppers. From what I've heard and read buyers tend to skew younger, purchase lower limits etc., and are not representative of the general off-line insurance buying public.

What about shoppers? Are they representative of the general off-line insurance buying public, or are they skewed in some way as well?

I think this is a question for carriers. They keep a lot of data on quotes to conversion and do a lot of work, looking or not lookup up 3rd party data sources such as MVR, Claims, etc. I know the conversion rate is really bad, less than 1% for the carriers I have discussed this with. Several carriers keep a 'driveby' realtime engine for net aggregators and a 'real' realtime engine for consumers and agents for just this reason. The driveby does not do any lookups that cost $$$.

sankykid wrote:Do you guys think that the profile of internet insurance shoppers reflects that of the public at large?

I'm assuming that shoppers here will end up as buyers. After all, there are a lot more fun things to do than "shop" for insurance online. But I think it's more of a question about what defines that profile. The attraction is the "convenience", "ease of use" or availability. Perhaps there may be incentive to avoid sales tax here and there on certain items. But it's the convenience part that makes most internet shoppers want to use it and therefore becomes part of their profile. That is why each year more and more consumers do their Christmas shopping online. Who wants to drive to a mall, fight parking, fight crowds, pay $4 a gallon for gas, take hours to do something that can takes minutes online. Insurance is just another commodity to transact online. There are still a lot of old-fashioned buyers out there who are afraid to use the internet or still believe in a handshake. That's okay. But the number of new-fashioned online buyers is growing in leaps. I read a thing not that long ago that said the fastest growing segment of internet users are older people 50 and above. Those are the old-fashioned types I am referring to and they are even coming around. This all seems to be the profile big picture. If the profile included customers who wanted to use carrier pigeons, I would have to consider it. If the customer wants to talk coverage, I'm easy to get a hold of. But if they think they know enough to buy on their own from me, who am I to stand in their way. Just as long as its from me. So does the profile of the internet insurance shopper reflect the public at large? I say yes because that is fast becoming the majority. And this isn't "shilling" mica so no name calling. This is just one reporter's opinion.

ComScore http://www.ComScore.com has done some great studies on online Auto insurance shopping habits over the past few years. Pretty interesting stuff and although it only addresses Auto insurance I have to think that a lot of the stats are applicable to other lines.

Here are the highlights:

**Note** Source: http://personallinesgrowth.org/highlights-of-comscores/

I. ComScores Sample

The survey includes only online consumers (referred to as “consumers” below and throughout the survey). ComScore passively observes a panel of one million U.S. consumers and specifically surveyed 2000 online consumers in February and March, 2010.

II. Online Shopping

* 72% of consumers have used the Internet to find auto insurance information at some time.
* 71% who see an ad and want to learn more, go online to the referenced website, a search engine or to find an agent.
* 52% of consumers shopped auto insurance in 2008, whether online or off line and 39% of those switched insurers.
* 50% of online insurance shoppers are under 35.
* 44% of online shoppers are on the Internet 20+ hours a week.
* 21% said they are more likely to shop for insurance due to the current economy (up 3 percentage points from prior year).
o 44% of consumers said they are happy with current company and are unlikely to consider changing (down from 50% 3 years ago).

III. Online Quoting

* 67% of those who shopped for auto insurance in the past year went online to get a quote (up 4%), while 22% went to a multiple carrier agent to get a quote (down 3%) and 22% went to a single company agent (down 4%).
* 38.8 million quotes were submitted online in 2009, a 21% increase from 2008. (Online quotes had actually gone down 1% in 2008).
* 73 million quotes were started online in 2009 (about 50-55% of these quotes were completed). (Source- comScore webinar, May 6, 2010).
o 83% of online quotes were from insurer sites and 17% were from aggregators (including online agents and lead generators). See page 7 of survey for percentage of online quotes by carrier.

IV. Online Purchases

* 2.8 million auto insurance policies were purchased online in 2009, up 22% from 2008.
* 23% of 18-24 year old shoppers purchased their policies online versus 9% of those 55+.
* 22% of online quotes were taken to online policy purchase initiation in 2009 (up 2 percentage points).
* 78% of consumers who have received an online quote at some time said they have made a purchase offline soon thereafter. 59% of these offline purchasers have bought from a local agent in person, 35% have bought from an agent on the phone, and 27% have bought over a toll free number.
* 63% of consumers said they originally purchased their auto policy with a local agent (down from 68% in 2008). 45% buying from an agent bought in person and 18% bought from the agent over the phone.
o 17% of consumers said they originally purchased their auto policy online (up from 15% in 2008) and 15% said they originally bought over a toll free number (up from 13% in 2008). However, if the consumer has had the policy less than a year, the percentage who bought online jumps to 26%.

V. Changing Perceptions of Buying Online

* 35% of those who haven’t purchased auto insurance online to-date say they are likely to do so in the future (up 7 percentage points from prior year).
* The number one reason given by those who are unlikely to purchase online is because they want to speak to or meet with a person (66%; but this is down 5 percentage points from the prior year).
* Fewer consumers are indicating resistance to online purchases because of a reluctance to provide personal information on a website.
o Providing a discount would be the biggest incentive to encourage reluctant online purchasers to purchase online, followed by guaranteed website security.

VI. Consumer Buying Habits

* 49% of purchasers of auto insurance said price was the most important factor (62% of online purchasers compared to 45% of those who purchased through an agent).
* The survey provides good information on the reasons why consumers chose to buy through an agent (top four-wanted real person; have always used an agent; wanted local agent from one company who could help with all insurance needs; agent quoted best price) (p. 29).
* The survey also provides good information on why consumers chose not to go through an agent (top four- convenience; speed; started with a toll number and wanted to finish by that method; prefer website or toll free number) (p.30).
* The survey provides a ranking of factors that would cause consumers to consider changing companies (p. 31); and the coverage features consumers are willing to pay for (pp.36-37).

VII. Changing Processes

* 82% of online auto insurance purchasers completed all forms online (21% of phone purchasers were referred to website to complete forms).
* Over the last three years, the percentage of consumers getting their bill or payment reminder through the mail has declined to 64% from 70%. The percentage getting their bill by email has increased to 31% (up 4 points), and 24% of those still getting their bill by mail would like to get it by email. 4% of consumers get their bill or payment reminder by text message (up from 2%).
* 34% of consumers pay their bills online through a bank site or carrier site.
o Mobile apps are being used primarily for reviewing payment balances & bills, filing claims and providing claims information. (Source: comScore webinar, May 6, 2010)

It actually has been for sometime, the internet in its current form has been around for close to 20 years. The simple transactions such as auto only are the type of policies that are being purchased online. If someone owns a home and needs an umbrella (most if not all homeowners nowadays), this is still being handled by an agent and this transaction (Auto-Home-Umbrella) does not seem to be going the way of the internet anytime soon. As far as commercial, it's very unlikely that a huge part of the commercial business will go the way of the internet at all and this is going to be even more true on the higher premium accounts. If an agency wants job security, building a mid to high net worth personal lines and a commercial book is the way to go. As far at the auto only accounts, the internet has probably done the agency system a favor by handling a good percentage of these policies. Nevertheless an agency still needs and internet presence and as many online resources to supliment their personalized services.

Hunter, thanks for that awesome post.