The Auto Insurance Customer Journey: Why Customers Switch Insurers

Motor vehicle insurance is a lucrative and highly competitive segment. Willingness to change and exchange rates are significantly higher compared to other sectors. Yet one in two auto insurance customers who are interested in switching can imagine themselves staying loyal to their old insurer if the offer is right. Supplier switching can therefore be counteracted, as a current study shows.

Car insurance is a very lucrative and at the same time particularly competitive business. Many insurance customers know how to take advantage of the latter: the willingness to switch and the rates of switching are significantly higher in the auto line of insurance compared to other lines of insurance. Therefore, for motor vehicle insurers, it is important, to acquire new customers or to avoid change, to know exactly the customer journey of customers who are generally willing to change and with their various seasons.

And to be taken into account accordingly. This is currently showing itself, for example: Customers are more actively and extensively informed before concluding a contract. Compared to previous years, auto insurance customers who are willing to switch use more sources of information, involve more providers in their decision-making process, and actively seek deals more often.

Therefore, whoever is well established as a supplier to the “relevant set” of motor vehicle customers who are willing to switch has an advantage. And, like the insurer above, it maintains trusting relationships with customers and doesn’t stand in the way of potential rate changes and optimizations. These are some of the conclusions of the current study “Customer Journey to Motor Vehicle Insurance” (2022 edition) of the Cologne-based market research institute Today and Tomorrow.

Master direct termination

Every second motor vehicle insurance customer who is interested in switching and who actively obtains offers from different insurers during the information and decision-making phase, also requests a new offer from the previous motor vehicle insurer. This is significantly more than in previous years (2022: 52 percent; 2019: 35 percent).

Thus, product providers can counter widespread “vendor hopping” with forward-looking measures. And reduce customer “willingness to switch” with attractive loyalty offers and flexible fare change offers. Online offers continue to dominate, but consultants remain important drivers of change a direct way to get deals A full 57 percent of all transactions are done online through comparison sites or vendor websites. In the case of consultants, on the other hand, only 39 percent of the contracts are concluded.

Personalized advice on retirement.

Clients resort less frequently than before to personal advice in the information and decision-making process. Advisors (representatives, brokers) remain particularly strong and successful drivers of change, especially when the advice is experienced by the client as competent, objective and fair.

Today and Tomorrow representatively surveyed more than 500 adult German citizens, divided into two groups: motor vehicle insurance customers who have changed their motor vehicle insurance in the last twelve months, the so-called changers; and car insurance customers who have also actively informed themselves about a possible change of supplier but have not changed supplier at the end of the process, that is, those who are willing to switch without changing supplier. In addition to current aspects of the various phases and touchpoints in the customer journey in motor vehicle insurance, the study also examined development trends compared to studies from the previous years 2019 and 2016.

“A well-grounded understanding of the customer journey process when switching motor vehicle insurance allows for effective strategies to be derived to gain new market share while retaining existing customers and preventing them from switching,” says Dr. Michaela Broke, CEO of Today and Tomorrow. “Depending on vendors’ specific positioning goals and sales structures, those strategies can differ significantly in their architecture.”

Price is the trigger for change, not service

A detailed look at the various stations and touchpoints of the customer journey in the motor vehicle division shows, among other things: According to Brocke, the main trigger for considering changing previous auto insurance is dissatisfaction with price or price in about eight out of ten cases the prospect of financial savings (78 percent).

Other reasons, such as dissatisfaction with the service provided by the previous provider, only play a minor role. At the same time, advertising measures by competing providers are gaining importance as a push to deal with motor vehicle insurance itself.

According to the study, the Internet remains by far the most used source when searching for car insurance during the information phase. After all, 85 percent of everyone interested in switching uses it. Comparison portals continue to play a central role. According to Today and Tomorrow, Check24 dominates here. Compared to previous years, however, with a downward trend. At the same time, the total number of contact points used in the information phase is increasing.

More offers, more comparisons, more time to decide

The number of providers in the “relevant set” of customers is also growing: more providers are included in the search than in previous years. Those interested in switching are also more active in their search: more than one in three actively obtain offers from (several) product providers during the information phase. A very significant increase compared to previous years. From 2019 to 2022, the number increased from 21 to 36 percent. Still, it can be seen in this context that those interested in switching are currently taking longer to make their decision to switch than they were a few years ago, says Broke.

In addition, personal consultations are used less and less in the “decision phase”. At the same time, consultants remain a strong driver of change. Customer journeys that run exclusively over the Internet lead, relative to usage, comparatively rarely to sales. The Internet can also be a barrier to change.

High Level Online Degrees

When it comes to the “bottom line” itself, the Internet remains the leading medium with 57 percent of those switching. Comparison portals and provider websites in particular dominate here. Compared to the rapid growth of online degrees before 2015, this trend is currently stalling at a high level (2019: 60% of online degrees).

Around four in ten car changers (39 per cent), on the other hand, continue to close deals with consultants (2019: 36 per cent). Telephone contact is increasing, in part due to the pandemic, while direct personal contact is decreasing somewhat. Consultants are strong drivers of change with high closing success rates. The core organization appears to be able to expand its position in terms of deals compared to independent brokers, according to another finding from the market research firm.

Reasons not to change: If the price is not right

Most of those who were originally interested in switching cite the experience that the price-performance ratio, or even the price alone, has not improved compared to the previous provider as the main reason for not changing providers at the time. end of the customer journey.

Those who don’t switch are less likely to cite continued trust in the provider (22 percent) as the reason that stands in the way of switching. “Despite some positive developments, keeping existing customers is still being neglected compared to acquiring new customers,” says Cathrin Cramer, study director for Today and Tomorrow.

“Today, however, many customers are no longer as convenient or as attached to the brand as they were years ago. For example, they expect loyalty discounts and active information about better conditions for new policies. Furthermore, the growing number of regular customers buying electric cars poses new challenges for insurers, especially as specialized providers and electric car manufacturers are entering the market.”

Current Vendor Preferences: Huk, Allianz, ADAC, and VHV

Currently, among the HUK vetted car insurance providers (HUK 24 and HUK-Coburg), Allianz, ADAC and VHV are ahead (in the top 5). In an individual comparison with HUK 24 and HUK-Coburg, Allianz stood out in the study sample.

At the same time, the ADAC has gained more in recent years as a provider of motor vehicle insurance. The consultancy’s conclusion is that it is not yet entirely clear who will be among the winners and losers in the competitive motor vehicle insurance market in the upcoming 2022/2023 transition season.

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