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Is Online Auto on the Way Out?

As we reported here a few months ago (PIA National Newsline 5/13/14), shopping over the internet for auto insurance is down for the second year in a row...
August 7, 2014

As we reported here a few months ago (PIA National Newsline 5/13/14), shopping over the internet for auto insurance is down for the second year in a row. The latest TransUnion Auto Insurance Shopping Index reports that shopping rates for auto insurance were down about 3 percent in the 12 months ending Feb 2014 relative to a year earlier. Similarly, declines for auto insurance shopping rates were observed for the full year of 2012 to 2013.

“We are finding that despite billions of dollars being spent on advertising each year, the percentage of consumers shopping for auto insurance has been dropping for approximately the last two years,” said Mark McElroy, executive vice president of TransUnion’s insurance business unit. “This places additional pressure on insurance carriers as their pool of potential customers declines.”

Brian S. Cohen, operating partner at Altamont Capital Partners, who formerly directed the agent sales force for the Farmers Insurance Group of Companies, recently told Insurance Business magazine that while auto insurance is the most “pure form of commoditization,” the industry overall is reverting back to the traditional distribution model of the independent agent.

“I know these comparison shopping sites seem to be all the rage, but if you look at their production—the number of policies they’re actually issuing—it’s miniscule,” Cohen said. “What’s happening is that individuals are visiting these sites to get a sense of a reasonable price, but they still want to go to a professional to figure out what’s best for them.”
“The average business person, no matter how smart or savvy they may be, still has difficulty being able to make that shopping decision on their own,” he said. “I believe this is currently the age of the independent agent and broker, and for that reason, it will continue to be for some time.” Cohen added that the idea that commercial insurance could be sold through similar comparison sites is simply not feasible.

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