What Customers Care About the Most in Car Insurance

Women with car keys

The needs of car insurance customers have never been so complicated. They need good coverage at fair prices and easy ways to filing claims with minimal amount of paperwork and back-and-forths.

An increasing number of insurers are offering additional services such as roadside assistance to differentiate themselves. The industry, while more incumbent heavy, is also not safe from the rise of startups.

For instance, Root, which raised another $350 million in 2019,  uses AI to assess the individual risk level based on driving behaviours and patterns and then matches each driver to the right car insurance policies. There is no doubt that disruption is in the cards for the auto insurance players in 2020.

So, what are the most important factors for customers, how are they changing, and how can car insurers excel at meeting those needs?

What matters most to the customers?

According to McKinsey’s study, there are five main factors that impact customer loyalty:

  • Seamless (digital) and fast claim settlement
  • Able to get all the policy info easily and contact the insurer for questions
  • Employees knowledge
  • Employee attitude
  • Transparency (or at least the perception of it)

Studies show that the digital presence is more key to the customers of a car insurance than any other insurance type. Comparing insurance policies gets exhausting and at some point, that fatigue is going to override the drive to find the absolute best provider, pushing customers to resort to whichever one seemed decent and had the most readily available information. Humans are not good at predicting disasters or situations they haven’t experienced yet; thus, the insurance agent’s display of knowledge and ability to recommend based on the budget, history, and the environment of the customer will have a significant influence on the customer’s decision making. They will pay to have some peace of mind.

There’s no doubt that customers are extremely price sensitive. But their price sensitivity level can be reduced by memorable or differentiated customer service. Insurance policy holders dread the day that they must file a claim and deal with their insurance provider beyond paying monthly premiums. Often, something has gone horribly wrong and they are in extremely stressful situations.

Ernst & Young’s study found that 40% of customers decide to continue insurer relationships because of the quality of the experience. Customer support interactions in car insurance can be more emotional in nature than in other sectors; this presents unique opportunities to create a stronger bond with your customers. Many of your customers will have family members and friends who would have advised them to pick a provider that will not leave them high and dry in a crisis. This is why people often look for car insurance providers with the best customer service when making comparisons. It matters!

How can insurers meet their evolving needs of the customers?

In the US, about 13% of drivers in the country are estimated to be currently uninsured, with Florida taking the crown. The reason for remaining uninsured is likely financial. With ridesharing and self-driving car on the rise, insurers need to be able to provide customized policy packages to much more granular customer segments.

Investment in AI to have more real-time and accurate risk and need assessments of each individual customer will be critical. In 2018, 10% of insurance customers signed up for usage-based insurance programs mainly due to financial benefits and their popularity is only expected to grow.

Expanding the products alone will not suffice – the ease of accessing/matching with the right package(s), the ease of communications when they need to change policies or claim settlements, and the ease of managing their accounts will be almost as important as the policies you sell.

While the digital experience will be a key differentiator, the need for human assistance will always remain pivotal to providing a loyalty-creating experience. Thus, a flexible omnichannel approach to customer interactions will be necessary.

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