Consumers’ likelihood of purchasing insurance for valuables, pets, and family varies based on age, education, and location.
There is a new demographic shift in insurance that has the potential to transform the way carriers build more personalized relationships with their customers. To see this in action, look no further than the latest trends in insurance shopping for valuables protection, umbrella policies and pet insurance.
Perhaps not surprisingly, each of these specialty policies appeals to a slightly different population group. However, the ability to understand the specific drivers behind that shopping behavior and the precise moments in the customer journey when they trigger purchase intent can be the key to creating long-term customer lifetime value.
In fact, JD Power data on insurance customer loyalty and shopping patterns allows us to determine in real-time who is shopping for different types of insurance and how valuable a prospect they are to insurers. The phenomenon can be illustrated by tracking detailed demographics and consumer behavior across different types of specialty insurance.
Valuables Protection Insurance
It makes sense that older people are more likely to have valuables (jewelry, collectibles, etc.) that would be valuable enough to warrant insuring them. It turns out that generation is a great predictor of who will buy a valuables protection policy. Only 14% of Generation Z currently have value protection insurance, while nearly one-third (32%) of Boomers have chosen to purchase this coverage.
Education level is also a factor. Those with a master’s degree are the most likely to have a valuable insurance policy (37%), compared to only 15% of those with a high school diploma. Consumers with an excellent self-reported credit history are also more likely to purchase this insurance (34%) compared to only 15% of those with fair credit and 13% of those with poor credit. Men (30%) are slightly more likely to buy insurance for valuables than women (23%). Interest in this insurance is consistent across geographic regions with the highest in the Midwest at 28% and the lowest in the Northeast at 24%.
Umbrella insurance, excess liability insurance that provides additional liability protection beyond what is included in a person’s auto and home or rental policies, follows the same pattern as valuables protection, but to a greater extent. For example, a similar share of Boomers have umbrella insurance (31%) as valuables protection, while only 5% of Gen Z have the same.
Also, as with valuables coverage, 36% of those with a master’s degree have an umbrella policy compared to just 9% of those who completed high school. Consumers with an excellent self-reported credit history (33%) are much more likely to purchase umbrella insurance than those with poor self-reported credit (6%). Men are more likely than women to have an umbrella policy (27% vs. 16%). There is a difference, however, as it relates to geographic region as only 18% of the South has umbrella coverage compared to 25% of the Midwest.
Pet insurance, on the other hand, turns these trends on their head. This makes intuitive sense, as those with less disposable income and resources may be less prepared to cover expensive veterinary costs for their beloved pets. This is a great example of risk shifting helping people (and their little dogs too). Instead of facing the prospect of a four- or five-figure vet bill, consumers can pay a relatively small monthly premium and enjoy the benefits of that coverage should it be needed.
Gen Z (14%) are twice as likely to have pet insurance as Boomers (7%). Having pet insurance differed little by educational level, self-reported credit history, or gender. Unlike valuables protection and umbrella insurance, which are most popular in the Midwest, pet insurance is least popular in the Midwest (7%) and most popular in the West (12%).
Those involved in the marketing and sales of this type of insurance can use such trends to home in on people who are more likely to buy such products by presenting a relevant offer at the right time.
Source: JD Power Loyalty Indicators and Shopping Trends (List)
Family insurance division
Another way to see who is buying this insurance policy is to consider who is also buying other insurance policies in the family. When we look at families based on whether they have auto and homeowners insurance, it’s important to consider whether they bundle those policies with the same carrier or whether the family rents their living quarters or has some other living situation. With this information, we can create four categories of families.
Recently popularized by Progressive, the most valuable customer segment is now known throughout the insurance industry as Robinson. They are families that have auto and homeowners insurance and have both policies with the same carrier. Another segment, called rights, are those who have both policies, but with different carriers. Dianes are families who rent the place where they live and may or may not have a rental policy with the same carrier as their auto policy. Finally, the Sams are families who don’t own or rent their residence, but have some other living situation (living with family, etc.) and therefore have only one auto insurance policy.
Considering the demographic patterns mentioned earlier, it is not surprising that valuables protection and umbrella policies are generally held more by Robinson families (35% and 34%, respectively) than by Sam or Diane families (see chart below). Although pet insurance is not as popular as these other policies, pet insurance is more likely to be purchased by Sam and Diane families (12% and 10%) than Wrights and Robinsons (9% and 8%), showing that there is an opportunity to bundle products specific to these segments. to create
Source: JD Power Loyalty Indicators and Shopping Trends (List)
Insurers looking to deepen relationships with today’s Sam and Diane families, who could be tomorrow’s Robinsons, might consider targeting a pet and auto insurance bundle to provide more value to these customers. Of course, insurers would be wise to offer valuables protection and umbrella policies to their Robinson & Wrights family who do not already purchase these products, thus further expanding the relationship with these valuable customers.
Stephen Crewdson is JD Power’s Senior Director, Insurance Business Intelligence.
Note: JD Power defines the generational group as pre-boomers (born before 1946); Boomers (1946-1964); Gen X (1965-1976); Gen Y (1977-1994); and Gen Z (1995–2004). Millennials (1982-1994) are a subset of Gen Y.
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