Auto Insurance Customers Are Shopping Around; Four Ways Providers Can Keep Them

As much as Americans love their cars, it doesn't appear they feel the same affinity for their car insurance. In survey findings released by Acxiom and BIG Research on May 17, about two-thirds of respondents reveal that they're more likely to shop around than renew coverage with the same insurance provider.

Considering U.S. drivers paid $40 billion in auto insurance premiums in 2009, Little Rock, Ark.-based data solutions firm Acxiom decided to look into why consumers stay or go.

The Insurance Consumer Dynamics Study polled 2,368 insured motorists in February 2010 about their attitudes toward auto insurance. While 62 percent wanted to shop around, a third said they were likely to renew with their current providers.

Acxiom Managing Director Tim Prunk reveals how insurers can help more consumers join that third of Americans who want to renew:

• The survey indicates that 59 percent of customers who are "more likely to shop" around are more likely to change for savings of less than $300. Recognizing who, within your own customer file, may be "more likely to shop" can help flag those at risk and allow marketers to target them with a specific retention-oriented communications strategy. For example, the survey suggests that there is a stronger risk of changing carriers among consumers with various combinations of the following characteristics:

• Younger
• Been with the carrier less than 10 years
• Carry only one type of insurance

Such a strategy could offer periodic discount opportunities or remind customers of the savings they have achieved. Most importantly, says Prunk, this effort does not need to be applied to all customers, but rather a more select at-risk group. In fact, this group can be even further segmented and uniquely targeted according to more specific factors based on individual lifestage considerations.

• Monitoring life-stage transitions and events with a customer can be a trigger to anticipate needs—e.g., anticipating pre-driving teens in the household allows for connecting with customers before they engage in a shopping exercise. Of those who changed auto insurance carriers in the last 12 months, 16.2 percent of customers paying premiums of $1,500 or more changed carriers because they added new members (that's three times more likely than the average). Anticipating that event and providing attractive, timely new offers for adding new members could mitigate risk of change.

• Fourteen percent of all respondents indicated that "moving" was a reason for changing carriers, and nearly half of those with auto insurance also have homeowners or renters insurance from the same carrier. Targeting customers not carrying homeowners/renters insurance certainly creates immediate revenue opportunities, but also increases the likelihood of retention, as those customers will a) then have multiple coverages with the carrier and b) be more likely to approach the carrier if a move is likely.

• Carriers with a greater percentage of extremely satisfied customers tend to have fewer customers that were "more likely to shop" or actually change providers. Maintaining a rigorous method of gauging customer satisfaction and being proactive to improve those results will likely result in fewer defections.

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