Turning “Trending” Insurance Industry Challenges Into New Opportunity

Inflation, digital transformation, regulatory changes, and DEI (diversity, equity, and inclusion). These are some of the biggest challenges you see in all areas of the insurance industry today. While the “trending” issues may evolve over the years, these four will likely continue to hold top slots for the foreseeable future. That means insurance providers will need to have both a plan in place for today and tomorrow.

In the 2023 Insurance Report from Claritas, we examine each of these challenges through the lens of our industry-leading data and provide practical solutions for consideration to help improve your go-to-market strategy. Let’s break it down with some industry specific examples.

Inflation

How is inflation impacting the auto insurance industry? When deciding on insurance premiums, providers look at factors like number of claims or repair costs and how they’ve changed over time. If the costs of repairs are on the rise, consumers can likely expect premiums to increase. If they’re already feeling the squeeze financially, it might be a deciding factor on whether to seek another provider with lower rates. While some may look at their finances and determine a variance of a few dollars per month isn’t critical, for others that may absolutely be enough.
How can Claritas help auto insurance providers deal with inflation blowback? Unfortunately, we don’t have control over the economy at large, but we can help you react to what is happening. Our 2023 Insurance Report specifically looked at the most recent time U.S. households shopped for auto insurance and found that nearly 21% of consumers reported they were in the market as recently as 6 months ago. While that number may include some first-time shoppers, you can assume that potential switchers also make up a good portion of that percentage.

Pro tip: While we don’t explore the reasons why these consumers shopped for auto insurance in our report, we can conduct re-contact surveys to provide clarity on their reasons for shopping around. We can also build a custom survey with your own set of questions for consumer groups if there are specific insights you’re interested in. If you were to leverage that information, you can easily address issues within your marketing approach to make switching less desirable to consumers.

Digital Transformation

Digital transformation can mean any number of things. It can refer to your internal infrastructure. It can also mean digital ease of use for consumers, whether that’s managing an account via an app, searching for new products or services on your website, asking for help in understanding a bill via a chatbot, or otherwise. You may think digital is the way of the future, and while it is in many cases, there is still a surprisingly strong desire for in-person, or at least human, interaction.

In fact, we looked at preferences in channel of service in our insurance report for residential and renters insurance policies. What we saw is, over 36% of U.S. households actually prefer to work with a local agent to acquire a new renters insurance policy. True, this may mean digitally, but it is also a good indicator that it might not be the best idea to swap all of your agents over to digital assistants, or close down any brick-and-mortar office locations…yet.

Digital transformation may seem like a budget saving strategy for providers of residential insurance, but you should also consider any unwanted consequences that need to be accounted for. These could include frustration from those who aren’t as digitally savvy, for example. Potentially alienating loyal policyholders might have a ripple effect when it comes to recommendations they give to family and friends or loss of revenue if they switch.

On the other hand, making things easier for those that are digitally savvy might be just the thing you need as a provider. If those policyholders happen to be younger, then that’s potentially a longer lifetime value from a desirable consumer group. And if they recommend you to friends and family – essentially doing your marketing for you – that could turn into more policyholders in your future. Consider all aspects of what digital transformation means for you as a residential insurance provider. That said, be careful that you don’t let the marketplace outpace you.

Pro Tip: When you understand your current and potential policyholders at a more granular level, you gain true insight into how digital transformation might impact various subsets. Claritas has insights you can’t find elsewhere to help you do just that.

Regulatory Changes

For the first episode of every new season of our podcast, The Marketing Insider, we talk about what new industry regulations are affecting marketers. 2023 has been a particularly heavy year for consumer privacy laws. This is especially true in states like Virginia where in the simplest way we can explain it, consumers have to opt-in to having their data used by businesses for marketing purposes, instead of opting out like other states require. Remember, there is no federal law for all things privacy and right now, it doesn’t look likely that there will be one anytime soon.

For insurance industry marketers looking to reach current or potential policyholders with their messaging, it is a lot to keep up with and that’s one of the reasons why it’s so important to work with a data or service provider that you know puts privacy concerns front and center of everything they do.

Pro Tip: Not only does Claritas have our podcast to share the ins and outs of the regulatory landscape, but we also have a privacy team that consults with our clients regularly to help interpret the regulations that are being passed into law.

DEI

Diversity, equity, and inclusion have been major talking points in recent years. As the makeup of the U.S. becomes more diverse, so do the wants and needs of consumers. Claritas has unique data on underserved communities that can help you understand the inefficiencies that might be holding you back both internally and with your potential and existing policyholder communities. This includes reasons why some would-be life insurance policyholders have yet to acquire said policies. From ensuring you’re serving your entire community to having data to help you benchmark your efforts, we have the insights you need to make investments where it matters.

Pro Tip: Considering the industry’s regulations and hesitation around sensitive data, it’s important to note that there are compliant ways of approaching DEI with the assistance of a third-party provider like Claritas. In fact, we recently published a case study with one of our consulting firm clients that goes into the details on how we were able to do this for a network of credit unions. Find that, here.

A Partnership That Matters

There will always be challenges that keep insurance industry marketers up at night, but with a partner like Claritas by your side, we can work together to find solutions with accurate, up-to-date data that helps you make informed decisions and foster a loyal and growing policyholder base. To learn more about how we can help you succeed in today’s market, visit our homepage at www.claritas.com