As Auto Insurance Rates Rise, Refined Customer Acquisition Strategies Support Growth

Auto insurance premiums are returning to pre-pandemic rate levels, making it likely consumers will exhibit some concerns about paying more than they have recently.

Auto insurance brands will need to be prepared with advertising strategies that address price concerns and offer incentives and reassurances to boost enrollment and retain existing customers. “It’s still a good environment for consumers who are purchasing auto insurance,” said Elyse Greenspan, a managing director at Wells Fargo. 

Auto Insurance Rates Hit Pre-Pandemic Levels As Consumers Start Driving Again

There are a number of reasons auto insurance premiums are rising, including more people driving again, which is leading to more accidents, more claims, and the return to pre-pandemic rates. The Insurance Information Institute reported in May that “Auto insurance rates were 2.5% higher in April [2021] than in March [2021] and 6.1% higher than a year ago. [Auto insurance] givebacks – which eventually totaled $14 billion – drove down the price of insurance [last year], and the official inflation numbers reflected that.” Adding, in actuality rates are just 0.01% higher than in March 2020. 

Auto Insurance Customer Acquisition Messaging That Is Price Based Should Also Include Benefit Language

Consumers shop around for auto insurance when they see rates rising. Auto insurance brands that can be honest and transparent about their rates may reassure existing consumers who feel confused about why rates are going up. Campaigns that communicate rate changes should also share promotions for re-enrollment, positive user reviews (88% of consumers are influenced by reviews when making online purchases), and information about seamless access to customer service and new digital technologies that make payments or claim filing easier.

Usage-Based Auto Insurance Could Gain Traction As Consumers Look To Pay Less

Usage-based auto insurance (UBI) is gaining in popularity. UBI is a type of auto insurance that tracks mileage and driving behaviors with telematics, offering personalized premiums based on data. Clear differentiation is part of almost every effective customer acquisition strategy. By targeting consumers shopping for lower rates and receptive to the telematic technology, auto insurance brands that offer UBI may be able to attract another audience and grow their revenue streams.

Loyalty Discounts & Seamless Transactions Can Help Auto Insurers Retain And Gain New Customers

According to the DMS 2021 Auto Insurance Shopping Trends survey, younger consumers are the most likely to shop around in search of better auto insurance rates. To engage these fickle shoppers, Taryn Lomas, EVP of Insurance at DMS, suggests auto insurance brands emphasize the services most valued by younger consumers when they are shopping for insurance. Advertising strategies that feature “renewal and bundling discounts, accident forgiveness and smooth digital claims processes” offer enticement to consumers comparing auto insurance brands. Lomas added, engaging younger consumers during their enrollment anniversaries with “discount programs and valued services” can promote loyalty and retention.

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