With just 2 percent of new consumers entering the personal lines auto insurance market last year, and with retention rates hovering around 88 percent, most insurers face a zero-sum proposition in which the growth of their company requires taking share from competitors. With minimal organic growth, winning and retaining the most attractive customers – those we call “High-Value Customers” – has become an increasingly critical component of a modern carrier’s growth strategy.
When looking at the rate of shopping among consumers in 2018, high-value customers, a segment of the marketplace that represents preferred risk profiles, better credit scores, fewer traffic violations, more insurance products and higher premiums, accounted for 21 percent of all insurance shoppers identified in our 2019 J.D. Power Insurance Shopping Study. By contrast, higher-risk customers comprised nearly 57 percent of all shopping activity. As a result, carriers seeking growth must be very disciplined about attracting the right types of consumers to their books. Unfortunately, many insurers are left in the dark when understanding the addressable market or further how to navigate within it.