Every year, Forrester surveys U.S. adults about their online and cross-channel (call center, in-person, mail) shopping behavior. In 2008, we found that more than 18 million U.S. consumers applied for, or purchased, auto insurance via the Web (versus 9 million in 2007). Surprisingly, only 9% U.S. online adult consumers used a comparison Web site when researching auto insurance. In comparison, more than 58% of UK online adult shoppers used a comparison site to purchase auto insurance in 2008.
So why aren’t more U.S. consumers using Insurance Comparison Shopping Sites?
Many U.S. insurers already use a comparison site strategy to generate demand. Progressive has communicated the value of comparison price shopping in their advertising for years. In addition, Esurance recently purchased Answer Financial to offer is customers comparison pricing. Several factors influence consumer adoption of comparison shopping sites including:
• Agents on the ground. The UK auto insurance market is dominated by online comparison shopping sites because of fewer agents on the ground. This is not the case in the United States, where traditional agent-based insurers such as Allstate (14,000 agents) and State Farm (17,000) have thousands of agents on around every street corner. Progressive also touts the strength of its 30,000 independent agents in many advertising spots.
• Awareness. Comparison sites are not an initial go-to resource for most online researchers. When we asked consumers where they typically start their online research, only 4% of U.S. online researchers said they first go to a price comparison site. In contrast, 52% said they start by going to a search engine, and 20% said they begin by going to their primary financial institution (e.g. bank, insurance) Web site.
• Low adoption across industries. Insurance isn’t the problem. No U.S. product comparison Web site has attracted more than 5% of U.S. online adults, including established brands like Bankrate.com, LendingTree, and LowerMyBills.com.
I expect U.S. consumers to use comparison sites more over the next two years. Our data shows continued growth in online auto insurance shopping. More U.S. consumers will go online to lower their premiums during the recession, and comparison sites are the perfect tool.
We are also seeing signs of growth for U.S. comparative Web sites. For example, InsWeb and NetQuote are among the leaders in display ad views for auto insurance research.
Finally, major insurers such as New York Life are evaluating pricing comparison strategies. The firm is investigating price comparison Web sites, and evaluating online quoting functionality. Ken Hittel, VP of corporate Internet, said his goal is to develop a "greater degree of transparency in respect to the cost of some of our core products." All of these factors will lead to more U.S. consumers using comparison sites.
What do you think?
Chad Mitchell is a senior analyst with Forrester Research. He covers trends in global insurance; eBusiness and channel strategy; emerging Web and call center technologies; consumer trends in researching and buying insurance; and best practices and rankings of leading insurers. He can be reached at cmitchell@forrester.com.
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