New Research Report finds Personal Lines Insurers Redefining in the Face of Changing Consumer Trends
Changing demographics of the U.S. population, technological innovation and societal and cultural forces are fundamentally changing the insurance marketplace says the research and consulting firm Conning. As a result, personal lines insurers in the United States are radically changing their business models in order to meet their customers’ changing needs.
“Changes in consumer preferences and behaviors have accelerated in recent years, and likely will for the foreseeable future, thanks in large part to demographic, economic and technology impacts,” said Alan Dobbins, analyst at Conning Research & Consulting. “Information flow has increased significantly, and consumers are willingly trading privacy for empowerment. Consumers now have the ability to shop price or opt for usage-based coverage to reduce their costs, and carriers have much more behavioral information available to set rates appropriately and compete for new business.”
“Consumer Trends in Personal Lines Insurance: Preparing for Tomorrow’s Market” cites four major trends which have led to this seismic change; internet shopping, increased dissemination and disclosure of personal information online, the consumers born of the Great Recession and the so-called “network” consumer. Conning explains each trend as follows:
- Internet shopping. As online shopping continues to grow within the personal lines insurance industry, the new shopping dynamics are changing the interaction with the customer.
- Consumer tolerance for sharing personal information. People are willingly leading more transparent lives, and this increasing comfort with surrendering personal information is working to the advantage of insurers, which are capturing more pricing data and opening new market segmentation opportunities.
- The new economy consumer. The Great Depression certainly changed consumer behavior and attitudes for a generation; will the Great Recession have a similar influence? The older generations may not change their behavior, but the generations below that group are severely affected by the recession and can be expected to change their spending patterns in response.
- The networked consumer. Pervasive social media technologies create for insurers a number of opportunities that did not exist just a few years earlier: new marketing opportunities, expanded customer information and segmentation opportunities, as well as disruptive impacts on existing distribution channels.
The Consumer of 1990 versus 2010
Adding to these trends is the fundamental transformation that the actual consumers have undergone since 1990. Age; ethnic diversity; mobile telephone usage; computer ownership; and composition of household have forever changed the makeup of today’s insurance consumer. Simply put, the consumer of 1990 is vastly different from the consumer of 2010. Now more than any other time in history, the internet and social media has given the consumer more leverage than any other time in recent memory, says Conning.
As a result of these seismic changes occurring in the marketplace, Conning undertook this study to examine and educate on how consumers are changing, what are causing these fundamental changes influencing consumers and what it all means for personal lines insurers.
“Keeping pace with the myriad changes to consumer makeup and preferences is a challenge for personal lines insurers, but now represents table stakes for the national carriers,” said Stephan Christiansen, director of research at Conning. “The continuing shift to direct distribution is changing the relationship with the insured and the expectations for service and communication. Resolving the tensions arising from the rapidly evolving relationships represents a significant opportunity for leading firms.”