Consumers now prefer online insurers – but here’s why that could change quickly

Consumers now prefer online insurers – but here’s why that could change quickly

Consumers now prefer online insurers – but here’s why that could change quickly Brand equity among US insurance companies is on the decline in comparison with other businesses in the financial services sector, though one distribution channel is showing greater promise than others.

According to a recently released analysis from the Harris Poll, the online insurance channel is showing the strongest positive momentum among American consumers. Twenty-two percent of survey respondents expressed favorability toward online channels and confidence that that sales method would increase in popularity in the future.

 “We’re seeing anything tech-based having more positive momentum,” said Joan Sinopoli, vice president of brand solutions at Nielsen, which owns The Harris Poll. “It’s pervasive across all industries, and you don’t need much of a crystal ball to see that brand equity among online channels is going to increase.”

Yet this growth is not without its drawbacks, nor does it mean an automatic loss for the traditional agent/broker model. The Harris Poll report noted that while many consumers prefer the online channel, just as many (20%) see it as “on the way down.”

What’s more, Generation X and Millennial consumers are behind much of the sales model’s current popularity. As this demographic ages and its insurance needs become more complex, Sinopoli feels there may be a shift that favors more involved interaction with an intermediary, such as an agent.

Millennials range from age 18 to age 36, “and those 18 years are a very active time of your life filled with huge triggers like buying a home, having a family or starting a business,” Sinopoli said. “That’s the perfect time for an agent to reach out and engage.”

The Harris Poll report already reflects what it calls “showrooming” – a behavior in which consumers research their options and compare prices online, but ultimately buy from an agent. Currently, 38% of adults already engage in “showrooming,” and Millennials are poised to follow the pattern as they enter later life stages.

The distribution channel also has inherent qualities young people prefer.

“The whole idea of honesty, transparency, community involvement and social responsibility – all of which engage and excite Millennials – are the sorts of things an agent-based model should be able to excel in,” she said.

Laird Rixford, president of software company Insurance Technologies Corp., also sees the Millennial generation as a tremendous opportunity for agents. Though not involved with the Harris Poll report, Rixford noted the research suggests Millennials are among the most disengaged with insurance brands. If agents can connect with the generation in a way traditional insurers have not managed, they will secure themselves a seat at the table for many years to come.

“One thing we’re seeing across all industries is that brand loyalty is eroding, but if you look at companies that do enjoy brand loyalty – like Amazon or Netflix – you see that they make their product easy to use. That’s where a lot of carriers are missing the boat,” Rixford told Insurance Business America.

Smaller agencies may even have an advantage over large, captive-model carriers as they can “hyper-localize branding and target messaging” to a select audience, he said, such as younger consumers.

 “Millennials and GenX-ers are more apt to look at price evaluation rather than branding, and the technology that allows them to do that is available to agents on a local, regional level,” Rixford said. “Right now, producers are able to put something up on their website that allows customers to get rates from multiple brands at once, and to buy those policies directly on the site.

“Making it work and making it easy to do business with you, whatever the customer’s preferred method – that’s the key.”

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