Today’s world is a digital one. We’ve all got about a half dozen devices within reach at any given moment, and customers expect that kind of immediate convenience to extend to every aspect of their shopping lives – including when shopping for car insurance.
Consumer Affairs, citing data from a recent J.D. Power study, reported that 74 percent of shoppers now use insurance provider websites or aggregators for obtaining cheap car insurance quotes and researching coverage-related information. The shift toward online shopping is definitely underway, though it isn’t yet complete.
The J.D. Power study found that while about half of customers go online to get a quote, only 25 percent actually make the policy purchase through the insurer website. Fifty percent close their deal the old fashioned way, by speaking directly to an agent, and 22 percent go through a call center. So, while insurance customers are moving online, they’ve still got some boxes on the curb.
“While many customers want to shop online, they often still want to talk to someone when they buy their insurance to make sure they are getting the right coverage or have questions about their policy answered,” Greg Hoeg, Vice President of U.S. insurance operations at J.D. Power, told Consumer Affairs. “Insurers need to focus on the delicate balance of providing an easy shopping experience while providing product differentiation and professional service.”
This balance between ease-of-use, an outstanding product, and quality customer service cuts right to the heart of why customers are making the switch to online shopping. It can be a deeply satisfying purchase experience, one that’s well suited to the age of digital immediacy heralded by Facebook and Snapchat. But above all else, it’s about the advantages of online car insurance.
Why shoppers are going online
The convenience of online shopping is a major selling point, but it’s hardly the only factor drawing in customers. Using a single website to compare car insurance quotes means drivers no longer have to visit multiple sites to find a quote with the costs and coverage details they desire. Comparing quotes saves money, and comparing them online saves time. That’s an offer that’s hard to beat.
The insurance market is ultra-competitive, with so many coverage options to choose from that it’s easily understandable why shoppers would feel trepidation over the process. Research suggests that comparing plans can save a car owner more than 25 percent on expenses, but even with that in mind, it’s hard to venture out into the insurance market.
Online shopping simplifies things. Rather than trudge through a half dozen insurers, they can jump online and find answers in just minutes. Different types of plans, policies, deductibles, terms – it’s all available 24 hours a day on an easily accessible platform. This is insurance shopping of the future, and direct writers aren’t ignoring it.
“Direct writers have invested heavily in digital channels to increase the functionality and ease of using their websites, which has clearly created an advantage for direct distribution relative to traditional agency distribution in some respects and has supported agency distribution in others,” Hoeg told Consumer Affairs.
Still, even with the switch, insurance agents needn’t worry about going the way of the dinosaur. The rate of customers still purchasing directly from agents suggests there is still great importance placed on personal interaction. Contact with a real person, either face-to-face or over the phone, is obviously still valued.
Nor is personal communication totally separate from the online experience. Customers begin online by researching quotes, but, as we’ve seen, they often end up speaking directly to an agent. For now anyway, online and in-person are both important parts of the shopping process.
Fewer customers to go around
The many advantages of online insurance present certain challenges for insurance providers. With so many companies offering online services in conjunction with flat or even lowered premiums, there are fewer reasons for consumers to go looking for cheaper policies with other insurers. In effect, the pool of potential customers has shrunk.
“With more price competition and smaller savings, there simply is not as much motivation for most customers to switch,” said Hoeg. “Many policyholders see insurance as a price-differentiated commodity, and as shoppers are opting to remain with their incumbent insurer as they find the savings offered by competitors is not as great as they had expected, or as much as they saved the last time they switched.”
Average savings from a switch have fallen in the last year. According to Consumer Affairs, customers who change providers now save an average of $356 on their annual premiums, down from $388 in savings in 2015. If that trend continues, it will only mean fewer customers to go around in the future. But that just makes things more interesting for customers.
With car insurance following just about every other type of shopping online, the customer experience will only continue to grow more convenient and expedient. Insurance shoppers are embracing online shopping in greater numbers than ever before.