Catching Up: Online Direct Sales in U.S. Personal Lines Insurance (Strategic Focus)

Introduction

The need to improve operations and meet customer needs is being met by two counterforces: a powerful agent force and a cumbersome regulatory system. In the long run, the driving forces will outweigh the counterforces and direct online insurance will prevail in the United States personal lines market.

Scope

• This report looks at direct online insurance in the United States personal lines market
• Auto insurance, which makes up the large majority of personal lines market, is often highlighted
• The gamut of technologies that enable a direct online strategy are discussed

Highlights

A direct online sales strategy, which can lead to lower operating costs and greater customer control, can enable insurers to excel in today’s market. But more importantly, a direct strategy is what the consumer is coming to expect. Insurers that fail to react to consumer demands will lose market share - which will be costly to regain.

Premiums booked through the direct channel are growing at a 7.5% annual rate, which far outpaces both the independent and captive agent channels. Auto lines are the most promising; in 2007, 2.15 million policies were sold online in the United States, up 37% from the year before.

Agent forces can be a powerful deterrent to a direct sales strategy. But all deterrents can be overcome with the right plan. Insurers with existing agent channels can achieve a successful direct strategy if they properly transition their agent force.

Reasons to Purchase

• Gain insight into the technology and strategic dynamics currently taking place within the insurance landscape
• Gain market insight to assist in your strategic planning and go-to-market strategy