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Savvy Insurance Shopper, Where Art Thou?

I have always been dumbfounded by the demographics of traffic generated by comparison sites in the property & casualty insurance space (auto & home). Twenty-five percent unemployed? Nearly three quarters renters? Half with no college degree? This isn’t the Internet I know. Where are all the savvy online consumers* shopping for insurance? Surely, these consumers want to [compare car insurance efficiently]( -- with the same level of choice they are given in other online verticals, especially since [auto insurance is mandatory]( in every state except New Hampshire. The truth is, they aren’t because there are no good options for comparing insurance. Let’s take a look at this interesting phenomenon in more detail:

As I said, savvy consumers are not comparison shopping for insurance.

Here are some demographic stats of the top 5 insurance comparison sites for November 2011 (source: Quantcast):

insurance aggregator chart

Insurance comparison sites’ traffic mix is considerably older, less educated, and lower income than the typical Internet user.

Why are savvy consumers not comparison shopping for insurance? Because insurance comparison websites suck.

Fool me once, shame on you. Fool me twice, shame on me. Repeat usage on comparison sites is practically non-existent, and referrals unheard of. Why?

They usher you through their form as quickly as possible, so quick that you forget to read the fine print:

spammy ad

After submitting the form, instead of seeing a set of policy options with instant rates, you’ll soon realize that your information was sold and shipped to 8 local agents and national carriers. You'll receive phone calls and emails incessantly for the following week; and that is just to get a quote. Six months later they will contact you again. For most people, this is overwhelming at best and traumatic at worst, hence no referral or repeat usage.

So who's going to these sites? Consumers who get tricked by deceptive advertising and/or end up on SEO affiliate sites (this just in: Google isn’t perfect).

From experience, I can tell you that the most effective value propositions in the insurance space speak to savings and convenience, summed up concisely in Geico’s famous, “Save 15% or more in 15 minutes.” This is totally intuitive and reasonable – if I’m going to shop for insurance. I want to it to be as painless as possible (time), and effective (savings).

Comparison sites (and their affiliates) however, have doubled down and taken that a step further. Ads such as these have become ubiquitous in the space, and do a solid job of tricking quite a few folks.

Additionally, Google is not doing consumers any favors when the top 3 SERP’s for “auto insurance” look like this:

Car insurance SERPs

So where are savvy consumers going today to shop for insurance?

Because they are left with no other choice, savvy consumers are going directly to carriers if shopping at all. Again, using Quantcast demo statistics, you can see evidence of this when comparing the top 5 insurance comparison sites to the top 5 US carriers:

carriers chart

Most of these consumers are going directly to carriers because of a recommendation from a friend, or because the top carriers dominate the airwaves. This is not a great solution as pricing for insurance is complex, and highly segmented. Geico will only be the lowest rate for at best 20% of the market. It takes about 8 minutes on average to fill out a quote form, but that’s only a single quote. To get a true comparison experience using this method, it will at least take 40 minutes; although time-consuming, this is still likely a better option for most consumers than using comparison sites.

Savvy consumers are comparison shopping in other verticals

Looking at airlines/OTA’s helps further prove the point that savvy consumers do like to comparison shop. Using Quantcast demo stats once again you can see that there isn’t a material difference in the mix of consumers going to the top 5 OTA’s/Travel Search Sites, and the top 5 airlines directly:

OTA chart

Consumers are increasingly interested in comparison shopping insurance

Savvy consumers have short attention spans when it comes to shopping online, especially when it comes to looking for auto insurance. The below chart with data provided from Google Insights for Search compares the trend of searches within the auto insurance category over the last 5 years to those for two specific terms: "auto insurance quote," and "auto insurance quotes."

Trend chart

As you can see, searches for "auto insurance quotes" have increased steadily over the past 5 years, while searches for "auto insurance quote" and in the category as a whole have declined or been stagnant. This analysis is a great proxy for consumers' increasing desire to comparison shop insurance.

CoverHound will fill the void

CoverHound is launching a new platform early this year that will appeal to all consumers, my savvy self included. We are using technology to help advise consumers during the quote process. Then, we’ll use algorithms to recommend personalized coverage and curate the best carrier options along with instant, accurate, and actionable rates. In many cases, CoverHound will sell these policies directly to consumers. Not only will consumers be able to comparison shop in a timely fashion, but will be confident in their purchase decision, like never before.

In summary:

* Savvy online consumer: a totally subjective classification attempting to segment those who know how to use the Internet versus those that do not. Generally speaking, “savvy’ consumers are younger, educated, and have middle-high income.

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