Due to COVID-19, consumer acceptance of digitization has accelerated over the past two years. This has greatly impacted accelerated business practices of insurance carriers throughout the industry.
An in-depth survey of 2,761 U.S. consumers with active auto, homeowners, renters, and life insurance policies was conducted by TransUnion in November 2021 to provide insurers with a deeper understanding of these key trends.
Consumers' attitudes towards online insurance shopping, property and auto telematics, which monitor and report on driving behaviors and property damage conditions, and more are included in the study.
Digital experiences are increasingly important to consumers
Most survey respondents were life insurance consumers and personal lines property and auto insurance. It was found that the group prefers digital channels for requesting quotes, asking questions, and discussing policies, such as email and mobile apps.
More than half (52%) of respondents prefer digital channels, 29% prefer email, and mobile apps or websites were at 23%. The average percentage of respondents who indicated that their preferred communication channel was an insurer's mobile app or website portal increased by 28% during the last year.
As consumers adopt these technologies faster, commercial insurance's digital transformation lags. This sector, however, is just beginning to climb the steep curve.
According to McElroy, one opportunity for digitization in commercial lines is to leverage underutilized third-party data to autofill much of the information about corporate real estate and vehicles required to be manually entered by customers.
To continue digitization, fairness must be demonstrated
Credit-based insurance scores (CBIS) and other third-party data drive accelerated underwriting. Over the past few years, CBIS has been scrutinized by regulators.
To demonstrate that CBIS is an essential element of the overall insurance underwriting process, there must be evidence that it has increased insurance availability in many instances and works for the better of the customer.
For instance, accelerated and data-driven underwriting has usually reduced prices for customers with good risk scores who may otherwise have been unfairly disadvantaged due to being renters rather than homeowners, according to the report.
Commercial landlords whose policies are otherwise priced solely on the location and age of the building can benefit from aggregated credit-based scoring on tenants. Rents can be lowered due to these savings, thereby allowing landlords to offer more affordable housing to consumers.
Auto insurers are embracing telematics
Mobile phones, connected devices, or car manufacturer apps can be used to monitor and report detailed driving behaviors, and 49% of respondents said they were interested in participating.
Participants in telematics programs saw their insurance rates drop by nearly half (48%) while their rates remained the same by 30%. Sixty-four percent of consumers were "very satisfied" or "extremely satisfied" with their telematics experience, and 26% were "neutral." The majority of consumers say that they are still using their telematics program.
However, homeowners seem less open to using connected devices to detect fires, floods, and other hazards in their homes. Only 33% of respondents said they would allow an insurer to monitor such a device in their homes, while 26% were unsure.