A snapshot: Today's car insurance customer
At Clearcover, we believe in being customer-driven, which means asking our customers the important questions and then listening to what they say.
And while we’re not a car insurance company designed for millennials—we are a company for anyone who values convenience and affordability—we also know that this is the year millennials will overtake Baby Boomers as the largest living adult generation. That means we need to know what they prefer and not just assume we understand.
So we asked.
We commissioned a survey of 800 people* across the country to find out what the new generation of drivers thinks about car insurance. We wanted to know what we’re doing right and what we could be doing better. One of the biggest findings? The billions of dollars that insurance companies spend on advertising each year might not be as effective as they hope.
Here’s what we mean: Today’s drivers get insurance advertising by the bucketload. Our respondents could name five different car insurance brands off the top of their heads and more than half had received advertising from a car insurance company within the past month. But all that advertising spend isn’t translating to loyalty. Not even close. A recent LexisNexis survey found that 75% of American households had shopped around for car insurance in the last five years. And 87% of our survey respondents said they would consider switching carriers if a new brand offered easy-to-understand policies and competitive pricing.
So, why—despite all the evidence that current generations spend more on brands they love—are well-known insurance brands having trouble connecting with and retaining the next generation of drivers? What’s the disconnect?
Let’s look at what we found.
Younger drivers are actually pretty confused by car insurance
Our survey respondents knew exactly how much they were shelling out for car insurance—but many didn’t know what they were getting for their money. 78% said that their insurance company has been helpful in explaining what their policy costs—but only 63% stated that their insurer clearly communicated what the policy covered. Even more telling: almost 4 out of 10 millennials aren’t clear on what expenses their insurance company would cover if they got in an accident.
This lack of transparency surrounding coverage has left customers frustrated. 73% of millennials feel that that car insurance companies make it intentionally difficult to understand policies (compared to 51% of the population at large).
With all the confusion, it’s no wonder that younger drivers are searching for a better experience.
Today’s customer takes insurance seriously
Today’s car insurance customers are both savvy and highly motivated to protect their property. Millennials aren’t buying houses at the same rate as Baby Boomers, so cars are often their most significant financial investment. In fact, 95% of survey respondents - with an average age of 33 - stated that their car is their first or second-largest asset—so it’s really important.
Today’s customers are also responsible. They don’t want car insurance just because it’s required—they also want it because it offers vital protection for themselves and for others. Millennials are 10% more likely than other generations to say that they purchase car insurance because they want financial support for the other party in the event of an accident.
Put simply: Millennials have high expectations of themselves and their insurance. It stands to reason they’ll be on the lookout for an insurer with equally high standards.
Customers aren’t ready to go fully digital
The biggest surprise of our survey? There’s not much interest in an all-digital insurance product. Instead, 90% of survey respondents stated that they’d prefer a hybrid insurance product that blended both human and digital elements.
Customers know exactly where they want the digital experience to get better, too. An overwhelming majority of respondents (76%) stated that they want digital improvements to make the purchase process easier and insurance policies that are accessible via mobile phone. In addition, 70% said that payment processing should be digitized.
Still, while survey respondents were very open to digital improvements, the overall picture is clear—don’t go full chatbot yet. When push comes to shove, most customers still want the option to talk with a real person.
Three key takeaways for the auto insurance industry
Stop focusing on brand recognition and make a better product instead
Despite massive advertising spend on brand recognition, almost 9 out of 10 drivers would consider dropping their car insurance company if they found a better product at a better price. That’s a wake-up call to insurers. In the long run, brand loyalty is worth more than brand recognition. The best way to earn loyalty? Make an affordable, high-quality product using modern technology. We believe insurance should be a seamless part of customers’ lives that lives behind the scenes, versus something that frequently demands their attention - a commodity that’s already in short supply.
Make it easy for consumers to understand their insurance policy
It’s sobering that the new generation of insurance customers assumes that auto insurers intentionally make policies difficult to understand. As an industry, we need to do better. (We take this especially seriously at Clearcover, and we have some new features rolling out later this year to ensure our customers know exactly what they’re buying and how we’ll take care of them if they get in an accident.)
Be tech-friendly—but don’t get rid of the human element
Our data was pretty clear: Millennials want their car insurance to be simple, convenient, and understandable, but they don’t want convenience at the expense of human interaction. So we need to be smart and strategic about implementing technology—and, most importantly, make sure that our digital solutions never get in the way of providing personal, human-to-human customer service.
This last takeaway is especially important to us. Want to see for yourself? Try Clearcover today.
Interested in citing our data? We feel privileged for the opportunity. Visit here.
*Survey methodology: We polled 800 U.S. residents responsible for purchasing insurance for themselves and their families and who held an active auto insurance policy. The survey was conducted at 95% confidence, +/- 3% margin of error.