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Digital transformation

Driving Change: Digitizing the Auto Insurance Industry

January 3, 2022
4 min

Digital is the name of the game when it comes to attracting auto insurance customers. The convenience of transacting online simply can’t be matched by traditional brick and mortar insurance providers.

Moving to digital auto insurance doesn’t mean that brick and mortar auto insurance companies need to go completely virtual. In fact, a combination of agent and digital offering provides the most flexibility for consumers with different preferences.

Digital offerings add convenience and choice

In their annual auto insurance study that rates auto insurance providers, JD Power notes that “satisfaction scores improve about 100 points or more when customers say that completing tasks is ‘very easy’ vs. ‘somewhat easy.’” The study also proves that people now have dramatically higher expectations. Not only do they want to be able to get digital auto insurance, they want it to be fast, convenient and intuitive.

These expectations are driven by the massive shift in online activity that happened as a result of Covid-19, but even as consumers are slowly shifting back to everyday in-person activities, their interest in digital options is by no means going away. If anything, the innovations that they’ve experienced when interacting with companies like Amazon and Google have raised the bar on what kind of experience they should be getting with every company they interact with, including auto insurers.

Digital auto insurance offers a competitive advantage

Digital insurance provides a host of benefits for consumers and insurers: it’s faster, more flexible and convenient, and data can be kept safely in a secure database rather than on sheets of loose paper.

Despite these obvious advantages to digital auto insurance, the US is actually lagging compared to other regions (such as Europe) when it comes to moving online. Research from McKinsey shows that while 70% of European auto insurers have a digital options, only 20% of companies in the US have online offerings. However, the consumer demand for digital goods and services is surging, and the report urges auto insurers to focus on digital as the future of customer acquisition is online.

Younger generations in particular want online auto insurance options. A study found that 63% of millennials and Gen Z customers prefer online auto insurance. Even for older generations, there are major opportunities for auto insurance companies to capture new customers online. In fact 69% of all auto insurance consumers searched online as a first step in their process, and 68% of auto insurance consumers don’t have a particular provider in mind. This combination of online-first and lack of brand loyalty means that the company with the easiest online process and best online offerings will have the advantage.

Innovative digital auto insurance companies

Traditional auto insurance companies are not only competing with other local insurance providers, they are competing with a host of digital-first auto insurance companies, too. These companies have the benefit of a highly intuitive design and a host of beneficial features built to attract and close online auto insurance shoppers.

For example, Esurance, a subsidiary of Allstate, not only has a great website, but the company also grabs customers with their easy-to-use mobile app and a host of online discounts that can be redeemed during the closing process. This means that consumers don’t need to negotiate with an insurer in person in order to get a good price. Also, they can easily pay and manage their insurance on the app from virtually anywhere, at any time.

Of course, being backed by Allstate means that Esurance understands the value of having agents available for customers when they need it. Although they don’t have brick and mortar locations, the company encourages customers to reach out whenever they need anything. This combination of the convenience of digital with great customer service earns the company high ratings.

Having the best of both worlds

Many people search online for “auto insurance near me,” assuming that they’ll have to transact in person. A provider that is local, but also offers a convenient mobile app can deliver that personal touch while also creating a smoother process and long term customer satisfaction.

Creating a digital presence doesn’t have to mean reinventing the business. Auto insurers can get up and running with a digital website and app that starts out with only a few key features, such as information about different insurance products and prices, the ability to book appointments, and a way to securely facilitate insurance purchases. While some of the big name digital providers offer much more than that, even basic digital auto insurance offerings provide a competitive (and hybrid) advantage for brick and mortar insurers.

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