Allstate Insurance's recent announcement that it has wrapped up its acquisition of Esurance and Answer Financial has highlighted ongoing changes in the way consumers are shopping for auto coverage, and the opportunities those changes present for coverage providers, according to Online Auto Insurance (OAI).
According to a release, more American consumers than ever are sidestepping agents and buying their vehicle policies straight from insurers over the Internet, prompting major carriers like Allstate to adopt new strategies in order to get that business.
In buying Answer Financial, Allstate gets a company that helps consumers shop for policies by providing information and auto insurance quotes online from a number of providers. And with Esurance, the coverage provider takes over one of a growing number of online auto insurance companies that specialize in selling policies directly to consumers.
Federal officials say nearly 70 percent of households nationwide now have high-speed Internet access, and that percentage continues to grow.
A comScore survey released earlier this year found that 20 percent of respondents had bought auto coverage online--a 5 percentage point increase from 2009. Meanwhile, the share of those who had purchased policies through an agent fell by 6 points to 61 percent over the same two-year period.
Industry experts have said they expect Allstate's recent acquisition to help the company compete with GEICO and Progressive, coverage providers that boast smaller slices of the market but got into the direct-sales approach much earlier.
Roughly one-third of Progressive's personal vehicle policies were sold directly to consumers in 2005, and the company saw that share grow by an annual average of 2.1 percentage points annually over the next five years. Progressive is now the fourth-largest private auto insurer in the nation.
Meanwhile, GEICO, which credits its exclusively direct approach with keeping coverage costs low, has become the third-largest auto coverage provider nationwide and the leader in direct sales, according to Standard and Poor's.