Despite Seasonal Dip in Q4 2023, Insurance Shopping Likely to Remain Strong in 2024
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Insights
The recent findings from TransUnion indicate a potential uptick in personal and auto insurance shopping for 2024, influenced by factors such as declining mortgage rates and an increase in vehicle purchases. This trend reversal, following a decline in late 2023, could have significant implications for insurance companies. A rise in insurance shopping activity suggests an opportunity for insurers to capture new customers and increase market share.
From a market research perspective, the emphasis on targeted marketing strategies, akin to pricing strategies, is a noteworthy development. Insurers are expected to refine their marketing approaches, leveraging enhanced customer data and audience segmentation to improve efficiency and cost-effectiveness. This shift towards data-driven marketing could result in more personalized customer engagement, potentially leading to higher conversion rates and improved customer loyalty.
The focus on high-value customers, such as Millennials and Gen Z with high credit-based insurance scores, hints at a strategic pivot towards these demographics. Understanding consumer behaviors and preferences will be crucial in tailoring marketing messages and offers to these segments, which could drive profitability and sustainable growth for insurers.
TransUnion's report suggests that insurers are approaching a point of rate adequacy, with some reporting near-target profitability. This is a positive signal for investors, as it indicates that the insurance industry may be moving towards a more stable financial footing after a period of rate adjustments. An increase in targeted marketing efforts could further enhance profitability by attracting higher-value customers and reducing acquisition costs.
However, it is important to note that while the financial outlook is improving, profitability is still not guaranteed. Insurers must navigate the fine line between investing in marketing to capitalize on increased shopping activity and maintaining disciplined expense management to protect their bottom line.
Investors should monitor insurers' marketing efficiency ratios and customer acquisition costs in the coming quarters. These metrics will be critical in assessing whether increased marketing spend translates into profitable growth or if it merely inflates operational costs without yielding a proportional return on investment.
The application of data analytics in insurance marketing, as highlighted by TransUnion's report, underscores the industry's shift towards more sophisticated customer outreach strategies. The use of identity resolution and data appending techniques to update customer contact information is a crucial step in ensuring marketing communications are not only received but are also relevant to the consumer.
Segmentation strategies will rely heavily on the analysis of first- and third-party data to identify and engage with high-value prospects. By integrating various data points, such as financial behavior and driving records, insurers can develop a more granular understanding of risk and potential customer value. This approach can lead to more efficient use of marketing budgets and potentially higher ROI.
As data becomes increasingly central to marketing strategies in the insurance sector, the role of data analysts will expand. Their expertise in interpreting complex data sets and translating them into actionable marketing insights will be vital for insurers looking to gain a competitive edge in a market poised for increased consumer activity.
TransUnion report suggests insurers approach marketing similar to pricing in order to target desired prospects
CHICAGO, Feb. 22, 2024 (GLOBE NEWSWIRE) -- Personal and auto insurance shopping is likely to increase in 2024 due to several market factors, according to new research from TransUnion (NYSE: TRU). This observation comes at a time when shopping for both insurance lines dropped at the end of 2023, mostly because of predictable seasonality as consumers focused on holiday gift buying and travel.
Increases in insurance shopping will partly be spurred on by changing mortgage rates, which are expected to decline in 2024. As a result, consumers are expected to enter the housing market and shop for insurance along with new homes. In addition,
“We are seeing signs that consumers have begun to accept that premiums are higher across the board, so there is less desire to shop with multiple carriers,” said Stothard Deal, vice president of strategic planning for TransUnion’s insurance business. “That said, there are other factors that will likely inspire consumers to shop.”
The report notes that insurers have made significant progress in closing the gap for rate adequacy, with some reporting near-target profitability. As a result, marketing efforts are likely to pick up in 2024. Consumers may be more likely to consider switching with increased ad exposure.
Approaching marketing like pricing
While the financial picture for insurers is improving, profitability remains in a precarious position. The report notes that insurers’ marketing spend will need to be efficient and highly targeted to yield effective results.
A critical first step is to enhance customer data to ensure consumers, who might have multiple email addresses or other outdated contact information on file, only hear from companies through current and appropriate channels. De-duplicating records with identity resolution and appending up to date points of contact helps carriers reach the intended customer while reducing waste from direct mail advertisements being sent to old addresses and multiple locations.
In addition, audience segmentation is critical to find and reach high-value consumers. For example, Millennials, Gen Z and high credit-based insurance score (signifying the lowest risk) consumers are most likely to shop for insurance in general; however, insights into attitudes and preferences, asset ownership or other consumer behaviors may indicate the prospect is a less valuable target.
“In the same way that actuaries look at multiple layers of information to better calculate risk, marketers can use rich data to segment their target audiences and reveal high-value individuals,” said Deal. “This could include combining traditional characteristics like financial behavior and driving record with other individual and household profiles and behaviors.”
Marketers who refine their audiences will realize savings and efficiency while feeding more high-value customers into the sales pipeline. The capability to segment a marketing audience based on first- and third-party attributes is available through TransUnion’s TruAudience™ Identity and Audience Solutions.
Click here to read the Insurance Personal Lines Trends and Perspectives Report.
About TransUnion’s Insurance Personal Lines Trends and Perspectives Report
This quarterly publication examines trends in the personal lines insurance industry, including shopping, migration, violation, credit-based insurance stability and more. The Trends and Perspectives Report research is based almost entirely on TransUnion’s extensive internal data and analyses. It includes information on insurance shopping transactions from Jul 2022 to December 2023. However, the report excludes shopping data from insurance customers in California, Hawaii (auto), Massachusetts (auto), and Maryland (property), where credit-based insurance scoring information is not used for insurance rating or underwriting.
About TransUnion (NYSE: TRU)
TransUnion is a global information and insights company with over 13,000 associates operating in more than 30 countries. We make trust possible by ensuring each person is reliably represented in the marketplace. We do this with a Tru™ picture of each person: an actionable view of consumers, stewarded with care. Through our acquisitions and technology investments we have developed innovative solutions that extend beyond our strong foundation in core credit into areas such as marketing, fraud, risk and advanced analytics. As a result, consumers and businesses can transact with confidence and achieve great things. We call this Information for Good® — and it leads to economic opportunity, great experiences and personal empowerment for millions of people around the world. http://www.transunion.com/business
| Contact | Dave Blumberg |
| TransUnion | |
| david.blumberg@transunion.com | |
| Telephone | 312-972-6646 |
FAQ
Why is insurance shopping expected to increase in 2024 according to TransUnion's report?
What percentage of consumers plan to purchase or lease a new vehicle in 2024?
How can insurers improve marketing effectiveness according to the report?
What solution does TransUnion offer for audience segmentation in marketing?
Who is the vice president of strategic planning for TransUnion's insurance business mentioned in the report?
