Technology Vroom, vroom, vroom Online personal auto quotes and sales gain momentum By Len Strazewski It’s way past midnight and it’s her first opportunity to shop for auto insurance. She’s on the Internet learning about her coverage needs and comparing quotes—and in the morning, she’ll be ready to make a buying decision. It’s becoming a common scenario. Time-strapped consumers turn to the convenience of the Internet when their immediate needs crash up against the service provider’s office hours. In general, online financial transactions have lagged behind shopping for gifts, clothing, and other traditional products; but that trend is reversing, according to new online market research. People are more comfortable than ever with shopping for personal auto insurance online, taking advantage of 24-hour service and new interactive technology, according to a new market study conducted by comScore Networks in Reston, Virginia.
The research firm says that the total number of auto insurance quotes provided online jumped 24% in 2005 and insurance policy purchases increased 29%. However, online shoppers are still a little reluctant to close their purchasing deals online and tend to turn to their agents or direct marketer representatives to make their final purchase, the research indicates. “The auto insurance sector has been slow to find its footing online, but it grew faster in 2005 than any other financial services category,” notes Nicolas Tabbal, vice president of comScore’s financial services division. Direct writers such as Allstate, State Farm, and Nationwide reported the biggest jump in online personal auto marketing with the number of quotes provided to online shoppers increasing 75% and policy purchases increasing 42%. Aggregator Web sites, such as InsWeb, InsureCom, and ComparisonMarket, that provide quotations from several insurers and referrals to agents who then complete purchases, also reported an increase, but not nearly as much. Quotes provided by aggregators increased 11%. However, the leaders that hold more than 60% of the online personal auto insurance marketplace continue to be the group of insurers that primarily market direct to consumers, including Geico, Esurance and Progressive. This category reported another year of steady growth, with quotes provided increasing 23% and policy purchasing increasing 29%. “Allstate, State Farm, and Nationwide [and companies] that refer leads to their own agents are relatively new to the online channel, so their increases reflect a new commitment to providing online resources,” Tabbal notes. However, Tabbal points out that the direct writers have strong brands and generally use their agent network as marketing strength. “These companies are now providing more quotation information online and then referring shoppers to their local agents who can quickly complete the purchases.” Tabbal explains that one motivator for the overall increase is improved technology. Correspond-ingly, there has been a sharp decrease in “abandon-ment,” where online shoppers leave quotation sites without completing their research and accepting a referral. Abandonment rates dropped from 51% in 2004 to 44% in 2005, he says, due in part to visual and functional improvements on insurer Web sites, better navigability, and general ease of use. Tabbal also cited increased use of voice over the Internet technology (VoIP) and online chat as tools that provide a direct connection to insurers during the quote process. “Having the ability to interact with a human source during the process eases potential frustration with technology and has helped moderate abandonment,” he explains. Direct-to-consumer insurers have generally invested more heavily in interactive and multiple quotation technology, Tabbal notes, contributing to their online marketing edge. For example, last November, California-domiciled Esurance, a division of White Mountains Insurance Group, Ltd., became the first insurance company to accept PayPal, the popular online payment system. PayPal has more than 79 million users in 56 markets around the world who use the system as an alternative to transmitting credit card information over the Internet. At the Esurance site, shoppers can compare Esurance prices to those of competitors and then purchase a policy from either Esurance or a competitor. Although comScore did not measure online activity of insurers that tradition-ally deal with independent agents, Tabbal noted an increase in their online marketing activity. “Most of these insurers are beginning to provide some resources on their company Web sites, notably agent search engines and educational materials about the products they offer.” St. Paul Travelers continues to expand its use of the Internet as a marketing tool says Peter Crichton, director of market distribution for Travelers, the personal lines division of the company. “Everything we’ve seen indicates that consumers search for price and coverage information online,” he explains, “but prefer to consult with an agent before completing their transaction.” The insurer has provided quotation services online since 2001 and features a “coverage wizard” on its personal lines Web site (http://www.travelers.com) that allows consumers to enter coverage needs and underwriting information to generate a non-binding online quote. The online shoppers are then referred to a local agent who can conduct a more specific evaluation and provide coverage. “Personal insurance needs continue to evolve, becoming increasingly more complicated,” Crichton says. “A sophisticated evaluation of an individual’s needs requires understanding of local government regulations, personal financial condition, and other factors. These evaluations are the strength of the independent agent.” However, Crichton notes that the insurer continues to expand its use of the Web as a promotional and educational tool. For example, in January, the company announced a 10% discount on auto insurance to owners of hybrid automobiles, one of the fastest growing categories of new vehicle purchases. The insurer also launched a new Web site (www.hybridtravelers.com) to promote the discount and provide information on insurance coverage for hybrid vehicles. The site also provides regulatory news about hybrid vehicles, music downloads, and an interactive feature that allows owners to post their own “hybrid travelers” stories. Crichton says the site has been a great success for the company in promoting the coverage discount and providing agents leads and may serve as a model for other promotions in the future. Several other independent agency insurers declined to be interviewed about their personal lines online marketing, but spokespeople cited the companies’ involvement with online aggregators, notably Sacramento, California-based InsWeb. InsWeb says the site has provided more than 500,000 agent leads since its inception in 1995. Last year, the company launched AgentInsider, a lead generation program for independent agents that allows agents to bid for leads in their geographic area as defined by target ZIP codes. The distribution of leads is always limited to a maximum of five local agents and never more than one agent from the same carrier affiliation, the company says. In September 2005, the company reported enrollment of more than 650 agents. * |
|||||
|
