Since the start of the pandemic two years ago, consumers' online insurance shopping has become increasingly active and sustained.
Here are a few highlights from Jornaya’s network of thousands of comparison shopping sites that attract millions of consumers every year:
- Auto insurance comparison shopping increased 49% from 2019 to 2020 and was up 16% from 2020 to 2021
- Home insurance comparison shopping increased 43% from 2019 to 2020 and shrunk 8% from 2020 to 2021
- Life insurance comparison shopping grew 45% from 2019 to 2020 and sat almost flat from 2020 to 2021 (-1%)
- Health insurance comparison shopping sustained consistently healthy growth throughout, with 16% and 11% increases in 2020 and 2021, respectively
However, in recent months, insurance providers have noticed a decrease in online shopping volume across auto, home and life insurance. The year-over-year comparisons, when focused on Q4 2021, paint a very different picture.
Auto insurance comparison shopping in Q4 2021 was up 5% year over year, a stark slowdown from the double-digit percentage growth in prior quarters. Year-over-year shopping growth was flat in January. Carriers' profitability surpluses are shrinking, as claims severity continues to be high, and claims frequency is on the rise as drivers return to the road. Premiums need to catch up to risk.
In late 2021, home insurance shopping levels fell 22% year over year. Home insurance shopping was down 23% in January 2022 from January 2021.
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Life insurance comparison shopping in Q4 2021 was off more than 31% from the high-water mark the market reached in Q4 2020. Shopping volumes in January were half of what they were a year ago (the most shopping Jornaya witnessed in years). While insurance providers accelerated their digital transformation efforts to meet heightened consumer interest in life insurance, demand may prove fickle over the long term as consumers become more desensitized to the risks posed by COVID-19. Call center shortages and broad staffing woes may have also hindered insurance providers’ ability to capitalize on remaining opportunities, shrinking the need for performance marketers to drive traffic to their life insurance websites.
Health insurance comparison shopping was down 4% from Q4 2020’s volume, though, with this year’s extensions to open enrollment, it may be due more to a spreading of volume over a longer time than an actual decrease. Shopping grew 3% YoY in January.
Across every line of business, the online shopping explosion of the past two years may finally be tapering, exacerbated by a drop in demand for new business leads while carriers increase rates to address profitability concerns and improve loss ratios.
Particularly in auto insurance, gaining new customers has become less profitable, especially with price-sensitive consumers more likely to leave before their first or second renewal period. Given these challenges, carriers must be thoughtful about the types of consumers they want to target.
How do insurance marketers make the most of the current landscape?
In dynamic conditions like this, where insurers and agents need to pick their spots, strengthening existing relationships, elongating the customer lifecycle and focusing on the right prospects are all important. Here are four strategies to help marketers advance efforts:
1. Invest in your existing database to learn about the customers you have and the customers you want
Insurance companies already own or have access to vast amounts of data, but often it’s not well-structured and is siloed within groups or divisions with limited data sharing.
Insurers can and must break down these barriers to better understand how customers enter, engage with and leave the business. This is critical to being able to identify opportunity and risk at scale.
Capturing, organizing, then deploying this data helps companies offer highly personalized customer interactions built on knowledge, whether through well-timed emails or phone calls to prospects or being alerted when existing customers are in-market. Marketers can anticipate customer needs, all while keeping privacy in mind and respecting consumer boundaries.
2. Implement a strategy that balances profitability and volume
In the current market, it is vital to build a marketing strategy that considers the right mix of volume and profitability. Be cautious of a strategy that focuses purely on good profitable risks, as this won't generate enough volume to meet sales goals.
Conversely, a strategy that focuses too much on active shoppers with a “come one, come all” approach will worsen existing profitability problems.
The ideal book of business is made up of both transactional business and good risk that can be written on a long-term basis.
3. Know which households to target; use data to understand customer needs
Data and technology have advanced to the point that insurance marketers no longer need to build customer “personas” or look-alike profiles of ideal customers. Today’s leading companies know, down to the household level, which consumers they want to write and their behavior. Data removes the guesswork. Take time to understand the households you want to write.
Once customer targeting is established, with the organization behind it, data can be used to dictate personalized outreach. In today’s highly competitive online insurance market, it's not enough to simply know who your customers are; marketers should also know what their customers’ needs are, when those needs are most acute and how to address them consistently. Today, marketers can leverage data to know who, what and when – applying their expertise to accomplish the how is where insurance providers can create unique advantages and differentiation from their competition.
For example, is a new baby coming, has there been a career move, is a family member attending college? Data surrounding these events is widely available to advertisers. Organizing data at the household level then enables insurers to take the next step – knowing what needs are present and when to engage – personalized outreach delivered precisely when customers are in-market and most receptive to an offer.
4. “Skate where the puck is going to be” — predict future needs
The best marketers don't just know who they're targeting today — they know what the household may need in 90 days and why, even if the household doesn't know it yet. Robust household data paired with exhibited shopping behaviors can help predict future consumer needs.
For instance, a consumer who is planning a home purchase may not be thinking about property insurance, but they absolutely will be on a property insurance buying journey soon. A recent Aite-Novarica Group survey found 87% of consumers are interested in receiving personalized recommendations about how to improve their insurance coverage. This type of data-driven head start can be precisely the edge an insurance provider needs to grow the business (or protect it).
While many factors affect the timeline of an insurance shopping journey (and sometimes lead consumers to other purchase journeys), knowing what customers need and being there at the right time to advise is a winning marketing strategy.
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Bringing it all together
Use data to be choosy about which consumers you interact with, how you engage them and when. There is little benefit in acquiring customers who buy quickly and leave quickly. Conversely, there is risk in spending all of your time and resources on a historically profitable segment of consumer that is becoming increasingly comfortable with shopping and switching their insurance. Despite recent tapering in shopping frequency, comparison shopping is still above 2019 levels.
In today’s market, insurance providers must feel comfortable with the pace of shopping and strike a balance between hunting good risks and seizing the active shoppers to meet sales goals.
Insurance carriers can capitalize on a changing profitability market by embracing technologies and digital tools that support our industry’s original mission – to help consumers make the best insurance decisions and provide peace of mind.
At Jornaya, a Verisk business, we work with insurance providers who leverage our view into daily comparison shopping behavior to acquire, retain and grow their customer base quickly, safely and confidently.