In a recent study, J.D. Powers states that the tight market and commoditization of auto insurance is pushing insurers to invest in digital channels and functions. This finding correlates with Novarica’s New Normal study showing a rise in the availability of digital consumer engagement capabilities. But no carrier should be surprised by these trends. Insurers should always have the consumer experience in mind, but historically they have underinvested in this area.
It’s interesting to note that the study shows brand recognition as a top driver of consumer choice. Despite the notion that consumer experience is the ultimate deciding factor, advertising still rules the auto insurance marketplace. But no caliber of branding is enough if an insurer doesn’t offer a multi-channel approach. Insurers should remember that not all channels are created equal and that multi-channel isn’t the same as omni-channel. Technology investment should be balanced with other factors. While integration with comparative raters and other common consumer entry points is critical, at this time integration with AI assistants like Alexa or voice channels isn’t going to make a major difference for new consumer acquisition.
Finally, despite InsureTechs dominating the press inside the insurance space, they haven’t worked their way into the broader consumer consciousness outside that bubble. Insurer branding isn’t solely about name recognition — it’s about building trust. Just as insurer IT groups hesitate before licensing technology from smaller vendors, concerned about future support, consumers worry about purchasing from an unknown insurer. Some InsureTechs are likely to pierce through the bubble and build up mainstream trust in the marketplace, but others are unlikely to make the leap. Still others may partner with (or be acquired by) incumbent insurers, relying on their existing market presence to bring both a modern consumer experience and a trusted name.
The findings of J.D. Powers’ study are unsurprising; as consumers become more digitally savvy, all industries should adapt to customers’ digital preferences. Carriers should take time to invest in the consumer experience, with a particular focus on maintaining brand recognition.
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