Because the nation hits the one-year mark of the arrival of COVID-19, auto insurance coverage business tendencies are starting to indicate a return to the pre-pandemic baseline, which is able to additional intensify the continued buyer acquisition conflict.
As customers hunkered down underneath stay-at-home orders final spring, with their mobility restricted and their financial institution accounts braced for monetary uncertainties, they launched into a flurry of auto insurance coverage buying exercise. In accordance with J.D. Energy’s new real-time buying tracker – Loyalty Indicator and Buying Tendencies (LIST) – buying exercise surged as excessive as close to 20% within the early a part of the pandemic, as prospects regarded to chop bills.
However within the months since, buying has returned to pre-pandemic ranges.
What’s behind the slowdown? It’s seemingly a mixture of things that embody customers changing into extra bullish about their monetary outlook, coupled with prospects awaiting indicators of “regular” after making coverage adjustments final yr. It’s an encouraging signal for an business that has traditionally loved excessive retention charges. However with buyer buying patterns stabilizing on the nationwide degree, acquisition battles will more and more shift to the states.
Battleground States
To that finish, there continues to be a powerful rise in general buying in choose markets throughout the nation. Taking a look at buying exercise by area confirms that the South and Southwest have gotten key battleground areas. This is a sign that shopper buying exercise is essentially following inhabitants migration tendencies southward, (except for states like Michigan which skilled a spike because of a change in PIP legal guidelines final yr), creating a brand new problem for regional-based carriers significantly within the Northeast and Midwest.
How every service is positioned throughout these key geographical markets might present a sign of future actions throughout the property/casualty insurer leaderboard. General, over the past three months, GEICO has captured probably the most quote exercise in 18 states, adopted intently by market share chief State Farm (16), Progressive (7), and Allstate (3).
Nonetheless, when inspecting acquisition patterns inside every state, a extra advanced story begins to emerge.
Contemplate the battleground state of Texas, the place market management is separated by lower than two factors among the many high 4 auto insurance coverage carriers. Based mostly on buying patterns over the past three months, Allstate has moved to the entrance of the pack, capturing almost 28% of all quote quantity throughout that interval. Allstate has carried out significantly effectively in choose metro areas reminiscent of metro Dallas – Fort Price space, the place its share is even greater. Capturing the Lone Star State could be a key pick-up for Allstate given the state’s market measurement and rising inhabitants tendencies.
Shifting additional West and Southwest, there may be what seems to be a formidable development for GEICO. The East coast-based insurance coverage large is constant to realize floor out West – specifically in California, Arizona and Nevada. The positive factors that GEICO has made inside the state of California have been important, outpacing the closest competitor by almost 3% in quotes over the previous 90 days.
GEICO can be seeing positive factors in choose Southeastern markets. Georgia, which has been a stronghold for State Farm in years previous, sees GEICO experiencing outsized development inside the state. Over the past 90 days, GEICO has captured almost 1 / 4 of all quote quantity in a state the place State Farm controls almost one-third of complete auto premiums.
Lastly, an examination of Progressive’s efficiency reveals robust positive factors in markets experiencing greater buying exercise, reminiscent of #2 in Florida and #1 in Michigan. Michigan’s buying vacation stays above historic averages, however appears to be returning to extra regular ranges after skyrocketing final yr because of a mixture of things introduced on by the pandemic and, extra notably, a change within the state’s private harm safety legal guidelines. State Farm and Progressive are engaged in a good battle for the highest spot, after an early surge by Progressive.
As nationwide buying exercise stabilizes in 2021, it units the stage of one other large pivot for insurers to native markets of their battle for buyer courtship. With the main disruptions of the pandemic seemingly within the rearview mirror, carriers should get aggressive about ramping up native market intelligence to stay aggressive, whereas retaining the policyholders they could have acquired throughout 2020’s switching frenzy. It may make this yr a landmark occasion within the battle for auto insurance coverage supremacy.
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