Gartner's Dataquest Perspective
EMIN-US-DP-0004, 10 July 2000.
While
Internet usage in the insurance industry lags behind other industries,
the number of insurance consumers using the Internet is still
substantial. More than 11 million consumers have used the Internet
or online service in the last year to shop for auto, homeowners,
life, medical or travel insurance. Gartner's research and rich
data make it possible to do some market-related, demographic analyses
to help marketers target new online insurance customers. Marketers
need to focus on those regions where usage is the highest. Even
though online insurance is in its infancy, certain sectors of
the marketplace are outperforming others.
Online Insurance Must Woo the West
Key
Business Issue
What Regions do we target insurance customers?
Recommendations
- Insurance institutions and insurance aggregators seeking to
build their online business should target the regions with the
highest number of Internet users, specifically the Mountain
and Pacific regions, while also targeting those users that are
buying products and services over the Internet.
- Marketers should target consumers already conducting financial
activities over the Internet (for example banking, investing,
or credit and lending), because insurance is just one more financial
activity that lends itself to online access.
- Marketers should target the online car buyer: a ready market
for auto insurance.
- Companies marketing in regions that are not Internet savvy
need to educate the consumer in the benefits of anytime, anywhere
access, as well as the ease and convenience of using the Internet
for e-commerce and e-finance activities.
A Market With Potential
While
online insurance is still in its infancy, more than 11 million consumers
have used the Internet or online service in the last year to shop
for insurance -- auto, homeowners, life, medical or travel insurance.
Introduction
Even
though online insurance is still in its infancy, the number of
consumers who used the Internet to shop for different types of
insurance last year reached 11 million. It has now become possible
to identify certain demographic patterns and the types of insurance
shopped for, all of which will prove useful to insurance institutions
and aggregators that want to build their online business. For
instance, the most popular insurance shopped for is auto insurance,
although consumers are also shopping for other types of insurance
such as homeowners, life, medical and travel insurance. The greatest
penetration of insurance shoppers is in the Pacific and Mountain
regions.
Business
Trend
Internet
usage is on the rise in every region of the United States, but
penetration levels in some regions are significantly higher than
in other regions. The Pacific Region with high Internet users
contrasts sharply with the East South Central region, which, overall,
has less savvy Internet users. As Table 1 shows, there is a high
penetration of consumers in the Pacific region using the Internet
for e-commerce and general online financial activities that includes
banking, investing, credit and loans, and insurance compared with
the East South Central Region.
The
Pacific and Mountain regions are still the heaviest Internet users
with penetration rates of 70 percent and 71 percent, compared
with the East South Central Region, which shows the lowest rate
at 59 percent (see Table 2).
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Table 1
Internet User Activities by Percentage
|
|
|
Pacific
Region
|
East South
Central Region
|
|
Use the Internet
|
70
|
59
|
|
Online Insurance (Shopping for Auto, Homeowners, Life, Medical
and Travel Insurance)
|
10.1
|
8.3
|
|
Likely to Use the Internet in the Future for Insurance
|
18.9
|
16.0
|
|
Conduct Financial Activities Online (Banking, Investing,
Loans or Insurance)
|
43.9
|
34.4
|
|
Purchased Product Online in Last Three Months
|
44.9
|
38.4
|
|
Used Internet to Shop Online for Last Car Purchase
(Accessing Information, Quotes, or Purchasing/Selling Online)
|
12.3
|
10.0
|
| |
|
|
|
|
|
|
|
|
|
|
|
Table 2
Internet User Profile |
|
|
New
England
|
Mid-
Atlantic
|
East
North
Central
|
West
North
Central
|
South
Atlantic
|
East
South
Central
|
West
South
Central
|
Mountain
|
Pacific
|
|
Total Adult Population (Millions)
|
10.1
|
28.6
|
32.3
|
13.6
|
36.6
|
12.2
|
21.7
|
12.4
|
30.7
|
|
|
|
Total Adults Using Internet (Millions)
|
6.7
|
17.4
|
20.2
|
8.9
|
23.2
|
7.2
|
13.6
|
8.8
|
21.5
|
|
Use the Internet (%)
|
66.0
|
61.0
|
63.0
|
65.0
|
63.0
|
59.0
|
63.0
|
71.0
|
70.0
|
| Internet-Using Adults Performing This Activity Online |
|
|
|
|
|
|
|
|
|
|
Used Internet to Shop for Insurance Quotes/Information (%)
|
7.4
|
7.6
|
7.7
|
7.4
|
8.0
|
7.1
|
8.7
|
9.1
|
9.4
|
|
Used Internet to Buy or Renew Insurance (%)
|
2.4
|
1.8
|
2.5
|
2.0
|
2.1
|
1.9
|
2.4
|
1.9
|
1.9
|
|
Used Internet to File Insurance Claim or Make Inquiry (%)
|
2.1
|
1.5
|
1.7
|
1.6
|
1.1
|
1.8
|
1.8
|
1.7
|
1.4
|
|
Total (All Insurance Activities for the Five Insurance
Types Listed) (%)
|
8.2
|
8.1
|
8.2
|
8.1
|
8.7
|
8.3
|
9.2
|
9.7
|
10.1
|
|
|
|
Insurance Type
|
|
Used Internet to Shop for Auto Insurance (%)
|
3.6
|
4.5
|
4.4
|
3.8
|
4.9
|
4.9
|
5.4
|
5.5
|
6.2
|
|
Used Internet to Shop for Homeowners/Renters Insurance (%)
|
1.4
|
1.4
|
1.9
|
1.5
|
1.7
|
1.4
|
2.0
|
1.9
|
2.6
|
|
Used Internet to Shop for Life Insurance (%)
|
2.7
|
1.1
|
1.7
|
1.9
|
2.3
|
2.1
|
2.0
|
2.2
|
2.0
|
|
Used Internet to Shop for Medical Insurance (%)
|
1.1
|
1.1
|
1.3
|
1.4
|
1.7
|
1.6
|
2.3
|
1.6
|
1.9
|
|
Used Internet to Shop for Travel Insurance (%)
|
2.5
|
2.5
|
2.3
|
2.6
|
2.1
|
1.9
|
2.1
|
2.1
|
1.6
|
| All Online Financial Services Activity |
|
|
|
|
|
|
|
|
|
|
Used Internet for Any Online Financial Services: Banking,
Investing, Loans, Insurance (%)
|
42.7
|
39.2
|
34.6
|
35.4
|
42.1
|
34.4
|
40.0
|
44.0
|
43.9
|
|
Purchases
|
|
Purchased Product Online in Last Three Months (%)
|
46.7
|
44.1
|
42.5
|
39.7
|
42.4
|
38.4
|
41.2
|
43.1
|
44.9
|
|
Purchased Car Online (%)
|
1.0
|
0.7
|
0.6
|
0.5
|
0.8
|
0.3
|
0.5
|
0.3
|
0.9
|
|
Used Internet for Any Online Car Purchasing Activity (%)
|
13.8
|
12.8
|
12.4
|
11.6
|
12.5
|
9.9
|
13.0
|
12.7
|
12.3
|
| Likely to Use Internet in Future for Insurance Shopping |
|
|
|
|
|
|
|
|
|
|
Auto Insurance (%)
|
15.0
|
13.2
|
13.8
|
12.2
|
14.2
|
13.6
|
16.1
|
15.5
|
16.4
|
|
Homeowners/Renters Insurance (%)
|
9.8
|
10.3
|
10.1
|
8.6
|
9.4
|
9.7
|
12.1
|
10.6
|
11.0
|
|
Life Insurance (%)
|
6.6
|
6.0
|
5.7
|
5.6
|
6.1
|
7.2
|
7.5
|
6.6
|
6.6
|
|
Medical Insurance (%)
|
5.2
|
4.5
|
4.9
|
4.6
|
6.6
|
5.2
|
7.4
|
5.5
|
6.2
|
|
Travel Insurance (%)
|
2.3
|
2.4
|
2.3
|
3.1
|
2.4
|
3.1
|
3.2
|
2.3
|
2.9
|
|
Total (All Insurance Activities)%
|
17.2
|
16.0
|
15.9
|
14.7
|
16.7
|
15.9
|
19.6
|
18.3
|
18.9
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shopping Activity
Shopping
for insurance is defined as those consumers using the Internet to
get insurance quotes/information, buy/renew insurance or file a
claim or to make an inquiry.
Comparing
Regional Penetration Levels by Insurance Type
A
closer look at regional online shopping patterns for different
types of insurance follows:
- Auto
insurance: Auto insurance now ranks as the most popular kind of
insurance shopped online. Recent data shows that 6 million auto
insurance consumers are using the online service in some aspect
of the buying process. The Pacific Region is the industry leader
(6.2 percent), with New England showing the lowest penetration.
But the future for online auto insurance appears to be bright
in every region of the country. Gartner data shows that 16 percent
of consumers in both the Pacific and West South Central regions
say that they are likely to use the Internet for auto insurance
in the future. The other regions are not far behind with anticipated
future growth.
- Homeowners
and renters insurance: As online options, homeowners and renters
insurance are not as popular as auto insurance. But recent data
shows that slightly more than 2 million consumers are using the
Internet to shop for such insurance. The Pacific Region has the
highest penetration rate of all regions, although penetration
is low (2.6 percent penetration) compared with auto insurance
(6.2 percent). However, there is growth potential. Gartner data
shows that 11 percent to 12 percent of the consumers in the Pacific,
Mountain and West South Central regions say they are likely to
use the Internet for homeowners and renters insurance in the future.
- Life
insurance: Life insurance is not shopped online as often as auto
insurance, although almost 2.5 million adults are using the Internet
to shop for this insurance. The greatest concentration of consumers
shopping for life insurance online is not in the Pacific Region
but in the New England Region with a penetration of 2.7 percent
compared with 2.0 percent. Some future growth is expected with
6 percent to 7 percent of the consumers in all regions indicating
they are likely to use the Internet for life insurance in the
future.
- Travel
insurance: The second most popular insurance shopped of the four
types of insurance mentioned is Travel insurance, with slightly
more than 2.7 million adults using the Internet to shop for this
type of insurance; however the penetration rate is relatively
low in all regions (2 percent). Gartner data shows that only 2
percent to 3 percent of the consumers in each of the regions say
they are likely to use the Internet for this insurance in the
future.
Dataquest
Perspective
The
Internet is now emerging as an important new channel for insurers
to market, sell and support their products and services. While shopping
for insurance online is still in its infancy, there are more than
11 million consumers who have shopped for insurance online. Marketers
need to focus on those regions that have the highest Internet usage
and online insurance usage. Consumers in these regions have already
demonstrated a comfort level in shopping over the Internet. Regions
are shown in Figure 1.
|
Figure 1
Regional Boundaries
|
|
|
|
Two
regions the marketer should target are the Mountain and Pacific
regions. Not only do these two regions have the highest concentration
of Internet users, they also have more than 40 percent of these
consumers purchasing products and services online. These consumers
are also using the Internet for other financial services activities
such as banking, investing or borrowing online. Insurance is just
one more financial activity that lends itself to online access.
The
Mountain and Pacific regions have a high concentration of auto shoppers
using the Internet to access auto quotes as well as other auto activities.
The online consumer looking at auto information will also need auto
insurance. The Internet is the likely source.
Companies
marketing in regions that are not Internet savvy need to educate
the consumer on the benefits of anytime, anywhere access, as well
as the ease and convenience of using the Internet for e-commerce
activities and e-finance activities.
Data
Sources
The
research basis consists of a representative survey of 40,000 households
conducted in March 2000 which has been weighted and projected to
Census Bureau projections for U.S. households (103 million) and
adults (198 million).
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