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February 10, 2022 at 11:21 PM
What You Need to Know
- Customers seem to be doing more comparison shopping.
- They may be harder to keep.
- Insurers have to think carefully about which customers they want to keep.
The year is still young and wrapped in haze.
2021 looked and felt more like 2020 than many of us would have liked or even anticipated. Globally, we still face uncertainty from COVID-19 and its variants, causing continued disruption to businesses, schools, health systems, and life in general. Amidst this, 2021 seemed to be a year of striving to settle into a “new normal.”
In personal lines Insurance in the United States, we saw a similar stabilization effort in 2021, with insurance providers finding their way amid a more active and sustained online shopping market. This posed unique challenges and opportunities for insurers and their distributors.
Now, insurers and distributors are trying to understand what will happen going forward.
The Pandemic’s Prolonged Impact
At Jornaya, a Verisk business, we specialize in transforming our proprietary comparison shopping data into actionable insights for major life purchase marketers to meet active shoppers in-market with timely and relevant outreach.
We have a front-row view of more than one billion online comparison shopping events every quarter. With such robust data, we can spot trends in consumer buying behavior in near real-time. 2021 showed continued increases in comparison shopping for auto and health insurance products, while shopping for property and life insurance adjusted from unprecedented highs in 2020.
Before we review these trends in detail, anecdotally, the data suggests multiple conclusions:
- Online shopping for insurance increased. There are more consumers navigating the online insurance market and with multiple shopping activities per consumer.
- Comparison shopping has become a larger part of the buying journey. Shoppers are using comparison shopping websites more than ever, suggesting a transition away from carrier sites being the only destination a consumer considers when they shop for insurance.
- This may be a permanent shift in consumer behavior. The changes that started in 2020 in how consumers shop for insurance may not have been a lightning strike; it appears to be more of a sustained shift that will remain for some time, and potentially for years to come.
How Did We Get Here?
To measure the pandemic’s impact on insurance, we need to look back to spring 2020 when Americans first began working from home — the moment insurance shopping noticeably began to shift.
Auto Insurance
In terms of initial pandemic online shopping, much can be attributed to macroeconomic factors. For example, people began driving less and insurance carriers starting aggressively advertising premium giveback programs. The intention of these givebacks was a proactive effort to retain customers; it may have had the opposite effect.
Suddenly, policyholders who otherwise may not have shopped their policies began paying attention to offers and exploring their options.
Consumers, already tightening budgets amid pandemic uncertainty, now had time on their hands and motivation to find savings. Consumers responded in droves, reviewing their policies and getting familiar with comparison shopping websites. This resulted in a 49% increase in auto insurance online shopping volume in 2020 compared to 2019.
In 2021, these levels did not drop off. Instead, and most notably, the elevated volume of shopping activity was sustained throughout the first three quarters of 2021 — proving this is more than a pandemic-related deviation. Auto Insurance saw a 16% increase in comparison shopping volume in 2021 over 2020.
Today, as drivers log miles closer to 2019 levels, the profitability surplus carriers maintained throughout the pandemic is being eaten away by increased claims frequency. Even new customer acquisition is becoming less profitable, as savvy policyholders are more likely to shop and leave prior to their first or second renewal cycle.
Home Insurance
In the spring of 2020, the US saw a housing market boom as well as historically low interest rates that sent many American homeowners rushing to refinance. Across the country, an exodus began with people exiting cities headed for the suburbs.
The combination of these new zip codes and changing driving behaviors resulted in something of a perfect storm exacerbating the online insurance shopping frenzy for auto, home, and bundled policies.
However, as median home prices skyrocketed in 2021, and available home inventory remained low, securing a new house became a challenge. Some buyers were priced out of the market or simply paused their home buying journey.
And so, after a 43% year-over-year increase from 2019 to 2020, home insurance shopping in 2021 landed almost 9% below the prior year’s volume.
